(Yicai) Oct. 9 -- China's Ministry of Commerce said it will impose a provisional anti-dumping measure on imports of brandy from the European Union.

EU brandy producers will be required to pay security deposits ranging from 30.6 percent to 39 percent starting on Oct. 11, the ministry announced yesterday.

The ministry will levy the deposits based on previously determined dumping margins for each company, Yicai learned. Among major producers, Martell will be required to pay a 30.6 percent deposit, Hennessy 39 percent, and Rémy Martin 38.1 percent.

Anti-dumping measures are often used by countries to protect their domestic industries from unfair competition when foreign businesses sell products below market value. China started an anti-dumping investigation into EU-origin brandy in January, and concluded at the end of August that it was being sold at unfairly low prices, threatening the local industry.

A number of international liquor companies have already seen demand soften for their brandy products in China, according to their latest financial reports.

Due to substantial stocks of brandy in the country, the short-term impact of the measure should be limited, Yang Zhenjian, dean of the WBO Wine Business Academy, told Yicai. But if it is in place for an extended period, the effect on the domestic market will gradually become clear, Yang added.

In the long term, the measure will help domestic brandy producers expand their market share and may also accelerate the substitution of brandy with other imported spirits, such as whiskey, according to Yang.

The move to impose security deposits will increase the cost of importing brandy into the country, and if producers are unwilling to pay it, then the burden will fall on importers, an importer of spirits told Yicai.

China is also considering increasing import tariffs on large-engine fuel vehicles, a commerce ministry spokesperson said in a separate announcement yesterday. “China will take all necessary measures to firmly safeguard the legitimate rights and interests of Chinese industries and firms,” the official said.

Editors: Tang Shihua, Martin Kadiev