Australia: Wine in China
China
China is still an emerging market for wine but has great potential because of increasing disposable incomes, the promotion of the health benefits of wine and a government campaign against grain-based alcoholic drinks.
China has a large local wine production, principally at entry price levels. Imports constitute only 17.6% share of total wine consumption, with bottled wine imports reflecting only 2%.
Australia was the fourth largest exporter to China by value in 2004 - with almost 9% market share of the imported category - and the fifth largest by volume.
Distribution is a key to success in China. Recent economic growth has improved the distribution networks, particularly around the major urban areas with the construction of roads, highways and infrastructure.
Wine in China
While there have been commercial wineries in China since the end of the 19th Century, production has only evolved into a serious industry in the past two decades. There are now an estimated 450 wineries, although the largest four hold around 50% of market share.
Imported wine reached the height of its popularity in 1996 when it occupied half of the Chinese market. When China moved to restrict wine imports with quotas and high tariffs, domestically produced wine increased its dominance in low and medium end markets. The reduction in import tariffs in January 2004 has since sparked the increase in imported wine.
Chinese wine consumers are generally found in the economic growth regions - Beijing, Guangzhou, and Shanghai - because consumption of wine, especially imported wine, is closely related to consumer purchasing power. If the population of wine consumers was confined to just the economic growth regions, the consumption per capita would be around 2.7 litres compared to 0.3 litres for the total population.
94% of the wine consumed is red wine. This is often attributed to health benefits, the similarity between red wine tannins and those found in tea, and the fact that the colour red stands for happiness and celebration in Chinese symbolism. Tea is the number one beverage in China with around 50 billion litres consumed each year.
Better quality wine is largely limited to hotels and restaurants and drunk mostly by visitors. Specialty wine shops are now beginning to emerge in the growing coastal regions.
Market Requirements
Bureaucracy can make access to the Chinese market difficult, but it should not be viewed as a major impediment to exporting. A sound knowledge of the target market and sensitivity to any cultural differences, along with preparation and patience, will provide exporters with a better idea of how to embark upon any export venture.
About China
China has been moving to a market-based economy since 1978, and a relaxation of central control over certain aspects of the community has helped it become the largest developing economy and the second largest economy in the world when measured by Purchasing Power Parity.
Economic growth has been concentrated in the major urban centres and coastal regions, including Beijing in the North, Guangdong in the South and Shanghai in the East. The national average wage in 2004 was AUD$2,690 but regional variations are considerable, with up to twice that amount earned in the major urban cities such as Beijing and Shanghai.