Chile's bigger dreams in the Chinese wine market

It is no secret in China's wine industry that big local companies import wine, then bottle them up under their label because the country's own production cnot meet the growing demand.

Chile, a leading wine exporter to China, has higher ambitions still. "There are already 88 different brands of Chilean wine sold in China, and the first made-in-China Chilean wine is startig production later this year," Mario Artaza, trade representative at the Embassy of Chile, said.Data from the Chinese customs show that Chilean wine imported in huge volumes has seen a 15 percent growth in 2008 compared to 2007, while bottled wine has had 70 percent growth and sparkling wine 140 percent in the same period.

In 2008, China became the South American nation's No 1 trading partner, with trade amounting to US $17 billion (16 billion yuan). "(This) is a feat for a partnership which a decade ago was a quarter of that sum," Artaza said. China ranks No 8 among countries to which Chile exports wine. This year, Chile's Wine and Culture Yearin China, the Latin American country aims to export US $1.2 billion worth of wine, particularly to places like the UK, the US, Canada, Japan, South Korea and European countries.

Chile and China signed a free trade agreement (FTA) in 2006, after which Chilean businesspeople became eager to invest here. "Chile is a country rich in resources like copper, iron ore, molybdenum and fruits like grape, cherry and kiwi. Among New World wines, hilean wine is known for its quality, and we have positive experiences to share in this field," Artaza said. The year that China and Chile signed an FTA, Andronico Luksic, vice president of the Banco de Chile, the first Latin American bank to set up an office in Beijing, teamed up with Johnny Chan, president of the Hong Kong wine club, to set up a joint venture in Xinjiang Province.

"It's a wine for the Chinese taste, for the growin up-and-coming middle class, who want to start out with local wines before moving on to higher classes of wine," Artaza said.

Other foreign investors entered the Chinese wine market about 10 years ago. Foreign grocery stores and supermarkets here and in Shanghai offer a wide variety of wine, but their Chinese counterparts usually only have brands like Great Wall or Dragon Seal.

At the Chilean Embassy, Artaza showed off two bottles of 1421 brand wine, a name that comes from the book 1421: The Year China Discovered America. The book paints a bold portrait of Zheng He, a eunuch admiral in the Ming Dynasty, who led fleets to Africa, India and Latin America.

"1421 does not aim to be a wine for the public," the trade representative said. "It does not aim to b cheap brand, but one known for the best quality at that price." A bottle costs about 70 yuan, more affordable for the average Chinese office worker than other imported wine that go for at least 140 yuan. Artaza said that a strategy going to be taken by Chilean companies is to penetrate smaller urban areas like Tianjin, since consumers in metropolises like Shanghai or Beijing are more attracted to expensive European wines.

He said that 1421, which is available in Asia in such hotels as the Crowne Plaza and the Shangri-La, aims to have a larger presence in 2009, especially in China.