The situation of import wine in China(2)

            3.Huge differences of marketing strategy
            Consider the above difficulties, many foreign companies chosen joint
            venture with Chinese wine company to enter the market. However,
            since understanding about China's wine market trend and the
            marketing strategy are different between the domestic and foreign
            stakeholders, many corporations were failed finally. Such as Allied
            Domecq PLC withdraw investment from Qingdao Huadong winery Ltd,
            Peter & William Co withdraw investment from Qingdao Peter & William
            wine Company, Pernod Ricard withdraw investment from Beijing Pernod
            Ricard wine Company and Beijing Dragon Seal Company. In Feb 2005,
            Changyu transferred 34% interest to an Italian company ILLVA.
            Although Franch V S O P cooperates with Tianjin Dynasty, SELLA&MOSCA
            company and Hardy Wine Company cooperate with Beijing Dragon Seal
            Company. For the foreign wine company enter into China wine market,
            they have to face the challenge about public communication, culture
            adoption, organization management and marketing promotion.
            Analysis import wine opportunity
            1. Lack of wine culture in China
            The health increase of china's wine beginning with the popularity of
            "dry wine" from 1990.the booming market of wine is caused by success
            of advertising concept. People heard "dry wine" from advertising
            frequently. Actually, most Chinese customers don't understand what
            "dry wine" is. Although some Chinese companies hold some education
            or other activities to improve the popularity of wine, the potential
            consumer still increased slowly. At same time, some foreign
            organizations (such as SOPEXA, china information center of German
            wine) have implemented many activities to promote their wine and the
            culture of wine. For example, SOPEXA held food festival, wine
            tasting activities and wine forum, trained sales, held wine
            exhibition, cooperated with involved department of Chinese
            government in technique and legal aspects, launched advertising in
            media and so on. Although the high-end customers are growing and
            maturing, except high quality of wine, personal service and culture
            value-added characters are the main driven for the purchasing.
            Therefore, foreign wine companies attached importance about wine
            culture and other promotion activities will help them to enhance
            their brand image in China market.　
            2. Short-term market activities of domestic companies are flooding
            　
            Many Chinese companies choose the similar marketing promotion
            activities. For example, many of them advertise their estate wine,
            ice wine and age wine frequently in a short term. It is hard to
            build a long-term brand image for using similar marketing strategy.
            However, foreign wine company could take their advantage of their
            capital, brand, technique and marketing to penetrate their product
            in China market.
            3. Compounding of import wine accelerate marketing penetrate　　
            At present, most of import wines are bulk wine and bottle wine in
            China market. However, from 1990, many Chinese wine companies
            imported bulk wine (most are dry wine) to compound domestic wine,
            and then produce similar taste wine with their product. Recently,
            import volume keeps 40,000 tons (including bottle wine and bulk
            wine). The import bulk wine account 85% for total import volume. In
            2003, import volume was 41.179 million liters, and increased 23%
            compare with 2002.The bulk wine was about 36.574 million liters. The
            major import countries are Chile, Argentina, Spain, France, USA and
            others. Chile and Argentina are ranked first and second in import
            volume. Although the taste of compound wine is similar with domestic
            wine. In some case, it help Chinese customers adapt foreign wine
            taste slowly.
            Threat analysis for import wine
            1.Brand barriers is deeper
            After the price war and quality war, China wine market enters into a
            new stage, which is brand war. At present, Changyu, Dynasty,
            Changcheng, Tonghua, Fengshou, Weilong are the major brands. In this
            period, for any new competitors which are not well-known brand will
            face this barrier. It will decide fate of foreign wine in China
            market.
            2.Brand concentration are expanding
            There are 200 wine companies in China. In 2004, the total production
            volume was 36.73 million KL. The sale revenue reached 7.437 billion
            RMB, and the profit reached 845 million RMB. At present, there are 7
            companies which the production volume exceeds 10 million liter and 7
            companies which sale revenue exceeds 100 million RMB. The tax
            payment of Changyu, Dynasty, Changcheng, Weilong and Huadong account
            for 87.66% of this industry. As the wine expert prospect, by 2010,
            the wine demand will reach to 60 million. Changyu successfully
            launched several high-end product, and opened a new wine estate in
            2005. Changcheng invested 100 million RMB to a wine estate in
            Yantai, Shandong in 2004. Dynasty is listed on the stock market in
            2005. Those activities that lead by those major wine brand companies
            will accelerate the brand concentration in this market.
            3.Brand consciousness are increasing for Chinese wine company　　
            Changyu launched the first wine estate in 2002. Wine estate become
            the new marketing strategy which promote Chinese wine development,
            increase wine quality and lead wine consume direction. It shows that
            Chinese companies are more concern about wine quality to enhance
            their brand image, in order to compete with foreign competitors. At
            same time, government issued some new national standard for wine. It
            will promote Chinese wine company produce more competitive product.
            If the wine has good quality, good taste and reasonable price,
            Chinese customer will choose it no matter it is domestic or foreign
            wine. In the future, wine will be popularity in China. Foreign wine
            company could attend the exhibition and get suggestions from
            distributors, choose favorable partner, enhance the strength for
            cultivate customers, prepare marketing supporting activities,
            formulate adaptable marketing strategy. Foreign wine will benefit
            from above activities for improve their market performance in
            China's wine market.