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Wine to China - Current export specific considerations

Release Date

18 November 2014

Do you want to export more wine to China? 
 
Recent austerity measures have caused a shakeup in the China Wine market. Overall wine consumption declined for the first time in 2013 after 10 years of uninterrupted growth and in particular Australian Wine Exports declined this year by about 12 per cent. This changing reality has seen Chinese distributors alter their business model to focus on meeting the needs of the emerging consumer, rather than relying on buyers linked to Government channels. The distributors' attention is now on segmenting the consumer market and supplying more flavoursome and better priced wines. 
 
China is fast transforming into a consumption-based economy and the disposable income of consumers is now higher than ever. The new Chinese wine consumer is tech savvy and can quickly research wine varieties, reviews and prices with their smart phones and make purchases accordingly. In 2013 China overtook the USA as the biggest e-commerce market in the world with over $300 billion of online sales over the year.
 
Many Australian wine exporters are unprepared for the ever-changing landscape and the challenges of China's unpredictable market. However, those better placed to adapt will be focussed on market segmentation and will be flexible with the elements of their export marketing mix, such as product, price, distribution and promotion for the specific targeted markets. The successful exporter will also have in mind a clear strategy with careful brand management, production of quality wine and continuous innovation.

Be Prepared
For exporters without a distributor in China, you will need to build the profile of your ideal customer to gain an understanding of how to approach the market. In China it will take time to find the ideal distributor as the necessary background checks and relationship building need to take place before you should proceed. It is worth noting that many importers this months InterWine exhibition at Guangzhou have complained that their wine sales dropped significantly and are trying to clear stocks. Perhaps the key may be to look at those who were not in the wine business before rather than those who have existing distribution channels. 
 
Whether initially visiting or making return visits to China, it is vital to have your company profile, PPT presentation, wine portfolio and price list ready. This will minimise the risk of mis-communication and increase the efficiency of the trip. Have an International Distribution Agreement prepared and use it to frame negotiations.  You may want key clauses from this summarized and translated into Mandarin onto one page in case a deal or Distribution Agreement is discussed. These aspects point to your reliability, preparation and credibility. Get these points right as you are competing against a global market place. 
 
Your unique selling point (USP) needs to be memorable and may include things like your ability to supply/design top quality labels and wine sourced from a variety of locations in Australia consolidated into one shipment. If you don’t have a winery or vineyard of your own, marketing can be challenging – you may want to consider how you can display the regionality of the wine varieties, the wine maker’s reputation and the source/traceability. Also, what do you do differently or more efficiently that the larger Australian Wine Exporters? Importers face ‘switching costs’ when they change suppliers, do you possess unique capabilities to overcome this barrier? 

Market Entry
Planning a visit and assessing the best approach for market entry? You don't necessarily need to focus all your attention on China's "Super-Cities". China has over a hundred cities with a poplation of over one million people! 2nd tier cities might be a better opportunity for many small to medium sized wine producers targeting China.

Don't rely purley on participating at trade events - you will almost always need additional effort as it is still very difficult to get a good buyer from an exhibition. Targeted and pre-arranged meetings is always the preferred solution. One recommendation is the July Austrade Pavilion at Guangzhou International Food Show. This exhibition could be combined with some targeted business matching in Guangzhou and other 2nd tier cities.

An alternative to the trade show model would be to investigate the NSW Business Chamber’s new program Export Growth China. Export Growth China (www.exportgrowth.com.au) offers your small business a unique combination of professional export services to overcome the hurdles in building a Chinese export business.
Inclusions:
  • Your product is displayed in our Shanghai Showroom for a minimum of 6 months
  • Mandarin product promotions
  • Pro-active Buyer Matching
  • Product Feedback Reporting

Also on offer is a range of optional consulting and negotiation services, all designed to assist you to export to China. Export Growth China is open to all members of any Chamber of Commerce across Australia. 
 
Download the brochure here
 
Or contact the Export Growth team on 1800 505 529 for more information.

 
General Checklist 
  1. Internal focus: Company Profile, PPT presentation, wine portfolio and price list; External Focus: understand the pricing, needs and distribution channels of your target market segment. 
  2. Plan in advance how you will follow up with key contacts in China after you have returned to Australia - Do you have a Chinese speaking employee or consultant handy to make follow up calls to complete potential deals? (Do you need assistance from Austrade/ABCS?).  
  3. To maximise success: Respond to export orders fast, China is fast paced.  
  4. Focus on brand building and working with distributors on unique marketing plans and make sure that they feel their needs are being met. 
  5. Demonstrate your quality, reliability and history and utilise word of mouth. 
  6. Do your research. Select your target market carefully and see who else is moving into that market or is already there.
  7. Talk to a local Chinese University students for product testing/feedback in Australia – could be more insightful than foreigners/expats based overseas.  
  8. Check the Export Growth China website.
 
Gary Dawes is a Tradestart advisor with Australian Business Consulting & Solutions.

Gary has been on multiple International Business trips to China with Austrade and ABCS which included substantial SME Client involvement and success - covering more than 10 cities since 2008. 

gary.dawes@australianbusiness.com.au
 
 

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