Winemaker Has Right Vintage for China Success

Winemaker Has Right Vintage for China Success

China has been fermenting grains and fruits into "wine" since ancient times. But in the past 15 years, hundreds of vineyards producing Western varietal-grape wines have sprung up. Most are at an embryonic stage by European standards, though that doesn't mean they don't intend one day to rank among the world's great wineries.

Grace Vineyard, in northern China's Shanxi province, has taken only a decade to start producing quality wines recognized at home and abroad. The winery was established in 1997 by Chinese-Indonesian businessman Chan Chun Keung, who invested 60 million yuan ($8.8 million) in the 200-hectare property, complete with a replica French chateau on site.

Judy Leissner, Mr. Chan's daughter and president of Grace Vineyard, has run the family-owned winery since 2002. Grace produced its first vintage in 2001 and now produces one million to 1.2 million bottles a year of such classic wines as Cabernet Sauvignon, Cabernet Franc, Merlot and Chardonnay. The winery has brought in foreign expertise to give it an advantage over local competitors, and is in daily contact with Australia-based winemaker Ken Murchison.

Under the direction of the 31-year-old Ms. Leissner, Grace Vineyard projects revenue of 80 million yuan in 2009, up from last year's 70 million yuan. The winery doesn't disclose profit, but says it became profitable in 2007, a decade after its founding.

Ms. Leissner is optimistic about the future of the wine industry in China despite the flowering domestic competition. She is convinced that China's wine market has huge potential, in terms of both consumption and production. Most of China's wineries produce for the low-end, mass market, but she believes that as the market matures and gains sophistication it will demand better wines.

Britain's oldest wine merchant, Berry Bros. & Rudd, agrees that China is set to carve a niche as a leading wine-producing nation by volume. In its Future of Wine report last year, Berrys estimated that China's 400-odd wineries would increase more than tenfold in the next 50 years, with perhaps a quarter of them producing fine-quality wine. It also predicted that China would leap from being the world's sixth-largest wine producer by volume to the leading producer by 2058.

China has "all the essential ingredients to make fine wine to rival the best of Bordeaux" including "the right soil, low labor costs and soaring domestic demand," the report said.

Ms. Leissner has a bachelor's degree in psychology and women's studies from the University of Michigan. Before joining Grace Vineyard she worked in human resources for Goldman Sachs Group Inc. in Hong Kong for two years.

Michael Yiannakis spoke with Ms. Leissner in her Hong Kong office. The interview has been edited.

WSJ: What are the challenges you faced as a manager when you started running Grace Vineyard?

Ms. Leissner: I think the first thing was age; I was 24 so my staff members were much older than me. I was inexperienced -- I didn't know much about China, nor did I know a lot about wine. It's difficult to lead a team when you're not clear on directions yourself.

WSJ: How do you manage to oversee the business without a background in the wine industry?

Ms. Leissner: There were a couple of things that helped me along the way. One was my dad's guidance. He gave me direction without telling me specifically that this is what you should do. Second, I'm a very optimistic person, I learn fast and I have pretty strong communication skills. Those are things that helped me and I built a good relationship with my team early on.

WSJ: In the wine industry, what do you find is the biggest difference between Asia and the rest of the world?

Ms. Leissner: The wine industry in Asia is just starting. I have read extensively and spoken to a lot of people in Europe and the U.S. about how they run their business, and I realize it is very, very different. For instance, [in China] we have to deal with government departments all the time, and [the wine makers in the West] don't have to, or it's quite minimal. Our government departments then spend a lot of effort monitoring us rather than assisting us. There are about 25 departments we have to deal with. There is the village level, city level, province level and national level.

WSJ: Who gave you the best business advice?

Ms. Leissner: My dad. We are very close and very similar in character. One of the things that my dad taught me was to add up the numbers every day. Otherwise, by the time you realize you are short of cash, there is no time to recoup it.

WSJ: What sort of boss do you think you are?

Ms. Leissner: I definitely think I am not the sort of boss who constantly looks over my team's shoulders. I trust them and I only like to work with people that I trust. So building trust between me and my staff is important. I tend to give them a goal and want them to do it.

I think I am a very hands-off person. One of the difficult things is that I change my mind all the time. I have to keep explaining that our business is still taking shape and we are still finding new ways to do things.

WSJ: What are the three most important attributes of a good manager?

Ms. Leissner: People who think about the big picture; that is, people who don't just think about their own division, but about the firm as a whole. Second, they need to have strong communication skills. They need to be able to make people understand and convince them when something has to be done. The third is, the person has to be passionate. It makes a huge difference if you treat your role as more than just a job.

WSJ: Is there a business book that you enjoyed reading?

Ms. Leissner: The last business book I read was "Blue Ocean Strategy" [by W. Chan Kim and Renée Mauborgne, subtitled: "How to Create Uncontested Market Space and Make the Competition Irrelevant"]. I liked it because I read it at a time when I was seeking direction for the business. Everyone in the [Chinese] wine industry seemed to be doing the same thing, yet I couldn't see the light at the end of the tunnel by following them. I named one of our wines Deep Blue because of the book.

WSJ: What advice would you have for someone looking to establish a winery in China today?

Ms. Leissner: Don't do it. It's a very long-term investment and you make so little money. We are lucky, because we had a head-start, but wine is a complicated business. If you have a lot of money to burn, then maybe it's a good idea.