“Walking to Bejing also starts with making the first steps. If you don’t make them you’ll never get there. “Wim Kan ( Dutch comedian)-
Trade war Trump vs. China bad for wine trade with China?
It may be common knowledge that the wine trade, in general, is not an easy business. In the Netherlands, it is possible to get any kind of wine in any price range. You really have to distinguish yourself. The wine trade with China is quite a different challenge. Here other often unwritten rules apply. It is obvious to assume that the current trade war between the US and China will not do much good if you want to trade in wine to China. But is it as bad as it looks?
Experience trading in China
Last year I was able to assist 2 young and enthusiastic Dutch entrepreneurs with their first steps in the field of the wine trade with China. So I was in the first rank to observe the process. With a lot of entrepreneurial spirit, they created a great stand at the Prowine fair in Shanghai with quality wines from France and Spain. They had imported the wines themselves and had them sent to China. A whole undertaking for starting entrepreneurs that has my deepest respect. Agreements with winemakers, brochures, laboratory reports, customs papers. Everything was arranged to perfection. It soon became clear that trading with the Chinese has different rules in contrast to trading in the Western world. Doing business quickly does not exist. A lot of conversations, dinners, parties, etc. are needed before the topic is really about wine and trading. And signed contracts do not have the same meaning as in Europe. Here too you have to invest time to ensure that commitments are met.
It soon became clear that a low price is very important for the Chinese. This is, of course, important in every country, but it became clear wines on the basis of the price rather than the quality. If a minimum price was given, the Chinese wanted even more discount. And after that again a lower price.
It is difficult to gain a place in terms of low prices in the wine trade in China. As witnessed, it became clear that China benefits Australia and Chile do not have to pay import duties for wine. They have recently gained a free trade agreement in the field of wine. That saves 50% on the bottle and transport value. A huge sum of money that is almost impossible to compete with. Previously, a lot of China’s wine import was based on brand awareness. Bordeaux and Burgundy were resounding names for the Chinese. Now the Chinese are looking at comparable wines for better prices. The signal from French winemakers and French wine merchants last month about the declining trade with China becomes more clear with this knowledge. An almost hopeless case unless European countries also get free trade agreements for wine.
Effect of the current trade war
The effect of the current trade war on wine trade with China appears to be small for us in Europe. After all, there were already major obstacles. The elements mentioned before, such as other trade habits and different import duties, have a much greater impact at this moment. Perhaps winegrowers from the US will experience more difficulties in the short term in their wine trade with China. Let’s wait and see.