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China and wine: A strong potential

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  1. Introduction
  2. WTO
    1. The attractiveness of the WTO remains strong
    2. The dispute settlement body works
  3. The malfunctioning of the WTO announced the end model?
    1. The Doha round of negotiations
    2. Institutional weaknesses
  4. The WTO does not have the means to ensure effective regulation of trade
  5. Conclusion

The vineyards of the Loire Valley, famous for their sweet white wines, are experiencing considerable success locally and nationally in France. Unfortunately, the label 'Val de Loire' is still largely unknown in the Chinese market, a market too young but very promising where Bordeaux wines and champagne have long been the prestigious image of French wines. Thus, the following questions arise: Is the idea of developing a flourishing trade of wines from the Loire Valley in China feasible? How to increase visibility and develop an image of prestige wines from the Loire Valley to Chinese consumers?

With only 1.1% of national consumption of alcoholic beverages, wine is still a minority in China, far behind beer and grain spirits. Chinese production of grapes for wine production increased from 104,000 tons in 1978 to 6,300,000 tons in 2006, and has been multiplied by 5 over the last 10 years. Chinese production of wine is very concentrated. 94% of national output is produced by the 10 regions (in descending order): Shandong, Hebei, Tianjin, Jilin, Xinjiang, Beijing, Henan, Gansu, Ningxia and Yunnan.

The Bohai Bay alone accounts for two thirds of this production. The income of the wine industry in China increased by an average of 12 to 20% per year since 2000. This was due to massive restructuring in the late 1990s that led to a significant concentration. Today, only 133 wineries are listed in official statistics. These are companies whose turnover exceeds 500,000 euros.

We note that the main grape varieties used in China are varieties of red grapes. The Chenin Blanc grape, commonly present in the region of the Loire Valley in France, is not widespread in China, only exists in the region of Xinjing.

The main market players and the ambition of the authorities for the last twenty years, the Chinese wine market attracts new entrants, most Chinese (including a few large groups of spirits), but also foreigners who come mostly from Europe or the New World. This allowed the emergence of products with a strong brand, thanks to the efforts of local authorities, who see wine production development opportunities in the local economy.

Currently, four Chinese groups that dominate the market representing over 60% of it: Changyu, Great Wall, Tonghua and Dynasty. The first foreign investors were Remy Martin (Dynasty) and Pernod Ricard (Dragon Seal). Subsequently, many partnerships have developed, mainly in the form of equity investments and joint venture between foreign companies and Chinese companies. These investments have had a considerable influence in the emergence of the wine sector in China; they have allowed the introduction of capital, grapes, equipment, and transmission technologies and know-how.

Apart from the four leaders who have a lot of the national market share, the other major wine cellars are primarily regional companies. Moreover, only a dozen producers have an annual production capacity exceeding 100 000 hl. The many brands share the market with performance at the regional level often higher than those of major brands.

However, the ambition of the Chinese government is clearly announced. Their priority is to serve the huge domestic market and become one of the three largest producers within a decade. The policy announced for the first time in a closer local production generally poor, with international standards. Indeed, after becoming the largest brewer in the world, will China do the same with wine?

Tags: China; wine; wine market in China; wine production

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