China cognac probe is a reaction to EU car tariffs, says Hennessy owner LVMH

China announced plans on Friday for a hearing on European brandy imports, ramping up tension on the same day the European Commission’s provisional tariffs on Chinese-made electric vehicles took effect.

“You can be a regional player with a very particular role in globalisation, as in our case, and regardless find yourself hostage to a number of conflicts that have nothing to do with your activities,” said Jean-Jacques Guiony, chief financial officer of the luxury conglomerate.

“Every time there is a stray bullet in a trade conflict somewhere […] there’s a good chance that we end up having to negotiate, having to explain that we are not dumping, that the price of cognac is right,” Guiony said.

He was speaking on a panel about trade at an economics conference in the southern French city of Aix-en-Province.

LVMH brands produce leather goods, clothing, liquor and champagne mostly in France and Italy and export around the world.

Hennessy and other European cognac producers will attend a hearing on China’s anti-dumping probe of the industry in Beijing on July 18, Reuters reported on Friday. French cognac accounts for most of China’s brandy imports.

China launched the investigation into brandy being “dumped”, or sold at artificially low prices, in January after a complaint by the China Alcoholic Beverages Association on behalf of the domestic brandy industry.

Guiony said trade wars have negative knock-on effects economically and politically, but added that Europe must stand together, saying China currently sees the region as weaker than the United States.

“We must not be the sick man of globalisation.”