Wednesday, October 10, 2012

Imported wine market in China : revealing tricks

I have been fighting many months to import wine to China. I learnt a lot both about the Chinese wine market and how to import wine. I share this knowledge with you:

Imported wine market in China
Most Chinese customers (it is changing slowly) know nothing about wine. They will only look at the price, packaging and at a few clichés: names like Bordeaux, Castell, Cabernet Sauvignon...

Therefore wine companies try to buy wines at the cheapest price in order to make maximum margins. 

  • However imported wine face huge entrance barreer: customs taxes equal 70 to 80% of the original wine bottle price!

Even though China commited to the WTO to lower its taxes, nothing was done (except for Hong Kong and this is simply part of Beijing strategy: helping some companies, attracting foreign investors to Hong Kong but this is another subject).

  • How can wholesaler import cheap wine? : revealing imported wine market tricks
Wholesalers don't pay customs taxes. 
This is very simple: the imported wine arrived in Hong Kong with zero custom... Once in Hong Kong some local people can easily smuggle the wine into mainland China. They will simply cross the border roundtrip. Hong Kong/ Shenzhen then Shenzhen/ Hong Kong. There are doing this legaly since you have the right to carry some wine for your own consumptuon. Once in mainland China, customs controls are not frequent (this is supposed to change). What wholesalers do is that they stick fake Chinese labels and serial numbers on wine bottles. (A legaly imported wine should have a label translated into Chinese and a serial number). There is therefore no way to check that the bottle was smuggled into China.

Wholesalers find cheap wine at 10 rmb from France, Italy, USA...
The wine can therefore arrive into China at 20, 25 rmb. It is finally sold to end consummers at 50 up to 300, 400 rmb... There is no limit to ripping off customers.

Importing companies buy in bulk and bottle the wine in China. 
This enables to greatly reduce the costs. This is how Castel proceed (Nicolas shops in France). achètent en gros et embouteillent en Chine.

They mix cheap Chinese wine with imported french wine!
They bottle the wine in China and have a label saying: Bordeaux Wine, French wine (made from french grapes)... 
This is 100% legal! Chinese regulation allows this! They can even import french grapes or french grape juice and produce the wine in China.

They import powder wine (chemical wine).
In China mixing the powder wine with water you can bottle the wine with a french Bordeaux label for instance.

They control the whole production and distribution Channel.
For example: big multinationals buy the lands and the castel in France they have a Chinese partners and take care of the process. This is the case of Pernod Ricard, LVMH, rich Chinese who buy their own french castle.

They buy wine from "low cost" countries: Turky, Spain, Chili, South Africa...
Cheap labour force helps to produce wine at low cost

They buy or produce fake wine
As a foreigner in China you can easily spot a fake wine: from the label written in wrong english, french...; from the color of the wine, from the shape of the bottle... 
I will try to show you some photos of fake wine. We find in Changsha in most wine shops, fake wine sold at 300 rmb! You should know that most shop owner don't know themselves that they bought fake wines! they just bought from the internet without knowing a thing and looked at prices.

Hopefuly some very rich Chinese consumer start to look for real quality wines. 
Still their purchase is mainly based on clichés, the brands, the packaging and their Chinese taste (which differs greatly from western taste) 

Real quality wine merchant open. In Changsha I believe out of 50 to 100 shops, there are 3 quality wine merchant= they don't sell fake or poor quality wines.

1 comment:

  1. Dear Georges, concerning wine, Chinese people are like you and me : we all want education and pedagogy, a hard work but essential