BORDEAUX WINE:The Chinese Opportunity

I – Demographics & Economics

II – Doing business in China

III – Chinese concept of Time

IV – Wine market analysis

V - Our recommendations

AGENDA

Demographics & Economics

Social and demographic

figures

Population: 1.338 Billion people

Age: 35.2 years (Total)

Urban Population

: 43%

Education investmen

t: 1.9% GDP

GDP/Capita: US$ 6.600

Gini Index: 41.5

Social and demographic

figures

Labour Force per sectorsAgriculture:

39.5%industry:

27.2%services:

33.2%

GDP - composition by sector: agriculture:

10.6%industry:

46.8%services:

42.6% (2009 est.)

Age repartition:0-14 years:

19.8% 15-64 years:

72.1%65 years and over: 8.1%

Life expectancy: rank 108 in the world;

Total population:73

.47 years

Economics key facts

Inflation: -0.7% in 2009

Disposable Income:

US$ 2,258

Balance of Trade: US$

297.1 Billion 2009

Public Debt: 16.9 % GDP

Unemployment: Official (urban)

=> 4.3% ; Unofficial

(rural)=> 9%

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101520253035404538.924

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1.64 2.008.90 10.20

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2.80

GDP/Capita in $ US Population in Million People

GDP per Capita in Cities and urban Areas

1 October 1949 (People's Republic of China established)

Chinese Communist Party or CCP [HU Jintao];Eight registered small parties controlled by CCP

No opposition or politic group of pressure

President HU Jintao since 15 March 2003

Politic & Government

Doing Business in China

Confucianism: concept of harmonious

relationships respect and loyalty

Face: Diu-mian-zi Gei-mian-zi Liu-mian-zi Jiang-mian-zi

Meeting & Greeting: shaking of hands + slight nod of the head

No physical contact in business

Body language

DOING BUSINESS IN CHINA

Business Cards

Gold characters = positive color: fortune + luxury Hold the card in both hands when offering it, Chinese side facing

the recipient

What to Wear?

Dark colored, conservative business suits Women should wear flat shoes or shoes with very low heels Bright colors should be avoided

DOING BUSINESS IN CHINA

Meetings and Communication

Intermediary Very formal: avoid humor & politics Be patient: trust + bureaucracy Rank is very important is business

relationship Prefer face to face meetings 45 % of business managers are women

DOING BUSINESS IN CHINA

Business Meeting Etiquette

Appointment in writing (English + Chinese – no colors) Punctuality = respect / Arriving late = insult Insist on long term benefits Only senior members will speak Slow pace They never say no Tough negotiators: Their primary aim in negotiations is

'concessions‘ Don’t use high pressure tactics

DOING BUSINESS IN CHINA

The Chinese concept of Time.

CHINESE CONCEPT OF TIME

China = polychronic country Cyclical concept of time

Luni-solar calendar Gregorian calendar

CHINESE CONCEPT OF TIME

Time = change and movement of the material and natural world

Time is more elastic than in Western countries

“Shi” = “time”Not the exact definition.It is the good moment to act.

CHINESE CONCEPT OF TIME

China conception of time is past oriented (values/ family)

In Chinese chronologies, time is not counted from a single date, such as the birth of Christ.

Dedicated to long term goals

HOW CHINESE CONCEPTION OF TIME WILL ESTABLISH GOOD

BUSINESS RELATIONSHIP:

Time = High Value « Time is not money » Be patient Be always ponctual Give priority to long term relashionship

Wine market analysis

Biggest productors of wine in China :

1 Changyu Wine Group Co Ltd  2 Greatwall Wine Co 3, Yantai Weilong Grape Wine Co  4, Dynasty

Production of wine in China

China has around 400.000 hectares of vineyards.China is 11th producer

8th vineyards in the world in terms of area

Some facts about the consumption of

wine in China

Honk Kong wants to be the center of the wine market in Asia.- No taxes on wine- No taxes on added value

8th world consumer with 3,6 liter per capita and per year

First wine market in Asia with 70% of wine consumed in Asia.

2010 Today China represents

less than 7% of the consumption in the world

150 millions of consumers in China

It represents a market of 7 billion $ for a total of 153 billion $.

The consumption in the

future

Total wine consumption in China in 2013 would be 1.26

billion of bottles.

25% of growth in Asia (70% in China)

Consumption of 100 millions crates of 9 liters by year.

7th World wine market

Forecast 2013

Importations of wine in China

France represent 42% of the importations

Top 10 French red wines imported:- Château Lascombes- Lestrille Capmartin- Château Haut-Brion- Château Pétrus- Château La Croix David- Clos des Cortons Faiveley- Château Ferran- Echezeaux

2006/2009: 480% of increase

Australia is 2nd provider of China.

Today it represent 10% of the total consumption but it will reach 16% in 2013

OUR RECOMANDATIONS

Importing Wine in China

OUR TARGET

Middle class : Superior level of education : 150 million people

Young women or men living in city Young couple Officials

Richest class : 22 million people

Foreigners

MARKETING MIXObjectif : China

PRICE

High prices due to transport costs and high

import taxes (14%)However, increase of

competition, alignment of prices

PROMOTION

Luxurious packaging

Education of consumers

PLACE

Coffee, Hotel And Restaurant

Focus on East CoastFrench product

specialization shops

PRODUCT

Focus on Red Wine (67% of consumption)

OUR STRATEGY

Focus on Red Wine (67% of consumption)

Focus on Hotel, Coffee and Restaurant (65% of sales)

Insure a luxury image of our products (ostentatious consumption)

Partnership with CIVB : Set up of Wine degustation in strategic places

Partnership with Chinese government

CONCLUSIONEconomy /Social

• Upper Middle class growth (21,2 % by 2015)

• GDP & GDP/capita Growth

• Political stability

New market : new

opportunities

• 150 millions potential consumers

• Good perspectives for wine consumption (1,26 bottles consumed in 2013)

• Luxurious and renowned image of french products

• Understand business manners

Success

• Long term vision

• Relieve the lack of informations of consumers about wine with partnerships.

• Success in China = first step to succeed in Asia

Sources www.tradingeconomics.com www.economics.com The World Bank www.idealwine.net www.ciafactbook.com www.ca-vinexport.com