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8 Things You Need to Know Before You Expand into the Chinese Wine Market

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8 Things You Need to Know Before You Expand into the Chinese Wine Market

1. Know Yourself

Before you enter a vast market like China, it is essential to do a SWOT analysis of your business, your products, and/or your services. Having a better understanding of what you want to achieve in this market and what you can offer Chinese consumers will help you establish clear objectives and realistic expectations. 

In line with the country’s fast-paced economic growth, the wine market in China is continuously evolving. The increasing number of knowledgeable wine professionals in major cities has become a driving force in the Chinese wine industry. Before the Wine Spirit and Education Trust (WSET) suspended its operations in China in February 2021, mainland China was its second-largest market, right behind the UK, where the organization is headquartered.

2. Localize Your Marketing Strategy

Historically an imported commodity, wine has not yet established deep roots in Chinese culture or the daily routine of the majority of the population. Generally, there is little knowledge about wine. Therefore, it is important to build a reputation before you enter the market. Getting media coverage from wine critics, opinion leaders, or entering your products in wine competitions are good ways to prepare your brand for the Chinese market. The endorsement of Chinese media and influencers at an early stage will not be necessary; simply having a presence as an internationally recognized brand can be appealing to Chinese consumers. 

Once you have dived in, make sure you have localized communication for the Chinese market.

3. Participate in the Right but Not the “Best” Events

As a market with a growing influence in the world of wines, China has become a key destination for some of the world’s leading trade fairs, including ProWein, Vinexpo, and Vinitaly and joining Awards like CHINA Awards by Shanghai Paper. Additionally, there are national and regional trade fairs like Chengdu Food and Drinks Fair (or known as “Tang Jiu Hui”), Topwine in Beijing, Superwine in Shanghai, Interwine in Guangzhou, Wine to Asia in Shenzhen, and smaller events held by the interprofessional association of wine regions, local governments, and specialized agencies. 

Considering the relatively high cost of participating in the trade shows, as well as the logistical difficulties they present, the wise approach is to choose those that have the potential to provide the best outcome

Before deciding which ones to attend, research trade shows and events thoroughly. Check their official website, find information about the event history, typical exhibitors and participants, and talk to exhibitors and professionals who have previously participated. The insights you gain will help you select the events that are best for building your brand and landing your target clients the most effectively and efficiently

4. Understand Chinese Wine Consumers

The Chinese wine market has come a long way from the days of adding sodas to wines to make them more drinkable! With the rise of the urban middle class, especially in coastal regions in China, millennial wine consumers have become educated about wine and gradually incorporated wine drinking into their daily routine and social life. 

With the rise of the urban middle class, especially in coastal regions in China, millennial wine consumers have become educated about wine and gradually incorporated wine drinking into their daily routine and social life.

5. Find the Right Importer/Representation

Importers are key players in the successful penetration of the Chinese market. Over the past 20 years, large importers have witnessed the development across the entire wine industry in China. By the year 2019, there were around 4,000 licensed wine importers in mainland China and the number is growing. Taking part in trade fairs and professional networks are the most efficient ways to meet potential importers.

In a complex market with a large geographical area like China, bad representation can be worse than no representation.

6. Understand the Pricing Structure in China

Pricing in the Chinese wine market is like the wild west. Due to the lack of regulation and awareness of consumers, it is not hard to find a generic Bordeaux in China being sold at dozens of times its price in France. Nevertheless, price competition for some sought-after wines is fierce. As a consequence, some smaller importers and distributors tend to sell highly recognized brands at a low or even negative margin to attract customers, while using a higher than usual markup for the wines with little price transparency to balance their overall margin. 

Generally speaking, well-established importers and distributors in major cities have a decent margin of between 30% to 40%.

7. Harness E-commerce 

While e-commerce remains a new channel for wine sales in most countries, it is of great importance in China. E-commerce contributes over 20% of the total wine sales in China and it is predicted to increase in the future. 

Taking advantage of the country’s highly developed technology and well-established logistics network, large e-commerce platforms such as Tmall of Ali Group, Jingdong, and Suning have a wide reach of 1.4 billion consumers. With a reputation for creating online shopping festivals, Tmall introduced the “9.9 Global Wine & Spirits Festival” in 2016, which is the most important online shopping festival for wine sales. Major online wine shops, including Yesmywine, and Pinshang Fine Wine, offer a broad selection from inexpensive table wines to Bordeaux Grand Cru Classés. 

While e-commerce remains a new channel for wine sales in most countries, it is of great importance in China. E-commerce contributes over 20% of the total wine sales in China and it is predicted to increase in the future. 

8. Be Prepared for the Compliance and the Uncertainty

Although China is not a highly regulated market in terms of alcohol consumption, there are some regulations that must be adhered to. Compliance is required for all the parties in export procedures by China’s General Administration of Quality Supervision-Inspection and Quarantine (AQSIQ). When you market and localize your brand, trademark and advertising law must be taken into consideration to avoid potential legal disputes. Politics is always a sensitive issue in China. As brand owners, the best thing to do is to be neutral and stay out of topics which can easily cause a PR crisis. 

When you market and localize your brand, trademark and advertising law must be taken into consideration to avoid potential legal disputes.

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