Can Chinese Wineries Compete With Europe?
Image Credit: flickr/ NomadicEntrepreneur

Can Chinese Wineries Compete With Europe?


According to The Financial Times, China has decided to halt investigations involving European wine and polysilicon exports because of a recent settlement with Brussels that would end their dispute over solar panels.

Originally, the EU threatened to impose tariffs on Chinese solar panels as a response to China allegedly dumping these products in European markets. China’s Ministry of Commerce responded by launching an investigation into European wine imports because of domestic producer complaints that European countries were illegally subsidizing many wines exported to the Chinese market. 

A senior EU official told The Financial Times, “The wine and polysilicon disputes will be left to inter-industry consultations until late next year, with Beijing freezing its own procedures in the meantime.”

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In addition to relying on European countries for wine, China has also been looking inward to develop a wine industry of its own.

Most of China’s emerging vineyards are located in the country’s western regions, in places like Tibet and Xinjiang. These areas provide more fertile grounds for growing grapes because of their drier climates, higher altitudes, sandy soils, and low precipitation. However over the last several years, vineyards have been popping up all across the country.

Local authorities have been jumping on opportunities to develop several areas with ideal environmental conditions for producing grapes. One such project has involved the transformation of Xiaojin County, a part of Aba prefecture located in Sichuan province, into a vineyard to rival France’s Bordeaux.

The Xiaojin project is already well underway with 1,000 hectares (2,500 acres) of grape vines planted in Aba prefecture. The local government plans to expand the project to 6,700 hectares (approx. 16,556 acres) by 2020.

To make this project possible, authorities are taking advantage of recent land tenure reforms that enable “farming households to transfer the operation rights of their land to outside enterprises” according to The Guardian. With these reforms, logging companies and even vineyards can get access of up to 350,000 hectares (approx. 864,868 acres) of “previously undisturbed forest”.

Many farmers have signed over their land to enterprises like Jiuzhaigou Natural Wine Industry Company in hopes of sharing in the profits provided by the developing wine industry in their region.

Naturally, acquiring such vast amounts of land presents some complications. Conservationists, for instance, have been worried about developers and enterprises gaining access to these forests because of the endangered species that live there. If the Xiaojin vineyard project is not carefully handled, species like the giant panda, red panda, golden snub-nosed monkey, and Thorold’s deer may become even more endangered. This is particularly important since companies like Jiuzhaigou plan to continue constructing vineyards in Wolong and Siguniang – which are also areas that are UNESCO-protected panda habitats.

Another problem is the social and political stability of where these vineyards are being built. Aba prefecture in particular has seen several Tibetan self-immolations and protests. Some hope that developing the wine industry and allowing the region to benefit from these new investments can help bring some stability to the regions – but it certainly won’t be enough to solve these long-standing, complex issues.

Finally, Chinese domestic wine in general has issues competing with higher-quality European imports. There have been a few exceptions however, like Helan Qing Xue, a vineyard which produced an award-winning wine in 2009, which beat out 506 Bordeaux wines at the Decanter World Wine Awards. Nonetheless most Chinese wines do not appeal to foreigners, and in many cases even Chinese prefer European wines because of the high-class status associated with drinking them.

Li Demei, one of the wine consultants from Helan Qing Xue vineyard, told The Telegraph about this problem. “People in China don’t care about local wine…. For them, Château Lafite is the top, top wine in the world. If we talk about my wine, they say how can you compare your wine with Château Lafite?”

Despite these issues, demand for wine in China is growing and domestic producers are trying to take advantage of this trend. In fact, China is one of the world’s top wine-consuming countries in the world, and consumption in China is expected to increase 54.25 percent between 2011 and 2015. Can Chinese wineries capitalize?

Elleka Watts is an editorial assistant at The Diplomat.

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