“Chinese consumers are being taken for a ride,” Zhou Haibo, the chairman of Zhejiang Vino Wine, recently became famous for saying. While Zhou is certainly not the first to express such sentiment, what is interesting about his statement is that Zhou was talking about his own industry, in a sense washing his “family’s” dirty linens in public. Not surprisingly, his strong words piqued the curiosity of many around China.

Source: nipic.com

Chinese consumers overpaying for imported wine

According to Zhou, China's consumers are being taken advantage of, drinking wine that is incredibly overpriced—sometimes paying more than 1,000 RMB for a bottle that's sold abroad for less than 20 Euro. The reason is rather simple, Zhou says: China's trade channels are not straight forward enough, and imported wine must pass through many hands before it eventually reaches the consumer, increasing in price every step of the way. While it may seem like Zhou, in criticizing the price disparity central to his industry’s growth, may be hurting his own bottom line, the opposite—saying nothing and letting the price of imported wine continue to increase—is more likely true.

Zhou explains, wine industries in many countries are paying close attention to the Chinese wine market, with distributers from around the world bringing their countries’ wines into every major port along China’s coast in huge numbers to meet the current demand boom. But because imported wine is incredibly expensive (and still rising), it will eventually cut many Chinese consumers out of the market, causing a huge drop in sales and surplus stocks all over the country. And that is bad for business.

Distributers deny profiteering off of wine sales

Zhou Haibo's candid remarks triggered a huge debate online. The vast majority of netizens still believe that the inflated price of imported wine in China is caused by the distributors—an allegation that distributors firmly deny. According to one distributor in Beijing (who wished to remain anonymous), it's true that a few years ago there was a wide range in wine prices, but over the past three years or so, as more distributors have entered the market, prices have balanced out: an imported bottle of wine that retailed back home for 10 Euro selling domestically for 1,000 RMB has become very rare.

Wines imported today are much more reasonably priced, according to the distributor. With the current exchange rate, that 10-Euro bottle of wine cost about 80 RMB. After factoring in the shipping costs, importation taxes and various overheads, that 80 RMB bottle of wine should retail in China for between 300-400 RMB, which is a much more reasonable price than the 1,000+ RMB bottles of previous years.

"39 out of 40 bottles of Lafite Rothschild are fake"

Due to the highly profitable nature of importing wine into China, fake and adulterated wines have become widespread in recent years, greatly undermining China’s imported fine wine market in particular. According to one industry insider, Chateau Lafite Rothschild, considered one of France’s finest vineyards, only has an annual output capacity of about 200,000 bottles, of which fewer than 50,000 are exported to China each year. Yet, in China, figures show that as many as two million bottles claiming to be Lafite are consumed each year, implying that 39 out of every 40 bottles of Lafite Rothschild sold in China are actually fake.

According to Sun Yanyuan, a wine specialist, China's wine industry is currently in a state of chaos. While Sun maintains that wine is the direction of future development for China—as it represents health, fashion, romance and taste—the massive quantity of fake wine coming out of Hong Kong and Guangzhou are tainting that image. Without stricter regulations in the industry, the prevalence of fakes will likely destroy the market for wine in China.
 

Source: http://finance.sina.com.cn
 

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Keywords: imported wine in China Chinese wine market china’s wine industry