Catching a Ride on the Express Train - An Argentinian Promoting Wine and South American Culture in China

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Catching a Ride on the Express Train - An Argentinian Promoting Wine and South American Culture in China
has years of expertise in media relations particularly in international executive education institutions. Ying has worked with global and Chinese media organisations and, for several years, led the media relations efforts of CEIBS.

Ying Zhao

Publisher, WhichMBA.net Managing Editor, The China MBA Review

Ramiro Gomez Lopez, from Argentina’s Malbec grape region, came to China in 2010. He launched a high-end wine business in Guangzhou, southern China, with the help of some key local business partners and strong support from the Argentine consulate. His business structure: a warehouse in the Free Trade Zone, facilitating and properly registered local company.


In 2011, Ramiro imported his first container - 13,000 bottles, including red wines made from two grape varieties, Malbec and Cabernet Sauvignon. He sold the entire shipment within a few months. For the next five years, Ramiro's wine sales grew by 80% per year.


From 2016 though, as the wine market in China was becoming more mature, and China’s nationwide anti-corruption campaign had reduced demand for expensive liquor, overall market growth slowed. Nonetheless, Ramiro's wine sales still grew at the rate of 20% year on year. 2018 sales will be around 400,000 bottles.


The Wine Market in China
 
 Wine Tasting Party in Polo Club


China has a long tradition of liquor consumption, which tradition has long centered on what in China is called ‘yellow wine’ (huangjiu, 黄酒) and ‘white liquor’ (baijiu, 白酒) the traditional beverages. Yellow wine is fermented, from rice, and has an alcohol content usually somewhat higher than grape wine, while white liquor is distilled from sorghum or other grains, and is as strong or stronger as distilled spirits such as vodka or whiskey. As is common throughout the world, China’s drinking culture is perhaps as old as the culture itself. The bronze liquor gobletsone can see in the Shanghai Museum, dating from the Spring and Autumn period (BCE770 - 476) and the Warring States period (BCE475 - 221) demonstrate the point. The Eastern Han era warlord and man of letters, Cao Cao (CE155 - 220) is famous for a poem with the lines, “I lift my drink and sing a song, for who knows if life be short or long!  The poem is well known in China even today.


Grape wine, historically quite new to China, had virtually no market share here through the last decades of the 20th century, very slowly starting to gain market appreciation as the era of reform and opening up (since 1978) began.


From 2012 to 2017, total wine imports into China rose from 394 million liters to 746 million liters, with some slight downward movement in 2013 and 2014, immediately after the anti-corruption campaign was launched.


2012-2017 China Wine Imports by Volume and Value Figures

Year

Total Volume (Liter)

 Total Value(USD)

Average price per liter(USD)

2012

394,455,181

1,581,611,815

4

2013

376,841,194

1,555,638,547

4.13

2014

383,844,943

1,516,492,538

3.95

2015

553,573,891

2,031,670,743

3.67

2016

638,103,984

2,364,242,164

3.71

2017

745,828,891

2,788,828,540

3.74

China Customs Information Network, on November 18, 2018

http://www.haiguan.info/Complex/List.aspx?key=%u8461%u8404%u9152



  The volume of bottled wine imports rose 2011-2017
 [Table Entries]

 - 10,000,000 liters

 - Annual sales volume

 - Year-on-year change

China Customs Information Network, on November 18, 2018

http://www.haiguan.info/Complex/List.aspx?key=%u8461%u8404%u9152


Imports as a percentage of total wine consumption in China have grown dramatically, from 17.3% in 2011 to 36.3% in 2017. Since the retail price of an imported wine is generally higher than that of a domestic wine, the rapid increase in the percentage of imported wine vs total wine sold in China demonstrates that the Chinese wine consumer is becoming more sophisticated, and that price is less and less of a purchase barrier.


   

 Imported wine consumption ratio

China Industry Information Network, on November 12, 2018, http://www.chyxx.com/industry/201802/613884.html



Argentina as a Global Wine Exporter


Argentina is one of the largest wine producers in Latin America and the southern hemisphere, the world's fifth largest wine producer and the world's tenth largest wine exporter. In 2014, Argentina produced 1.52 billion liters of wine and exported 260 million liters of wine, worth US$736 million, more than double the US$318 million figure from 2006. However, these figures show that Argentina exports just 17% of its wine production, while neighboring Chile, where wine production is only 2/3 of Argentina's, exports more than twice as much as Argentina. ( China’s Ministry of Commerce, on November 15, 2018, http://ar.mofcom.gov.cn/article/ztdy/201603/20160301266272.shtml)


According to China's Ministry of Commerce, Argentina exports wine to 115 countries and regions, 42 of which import more than US$1 million in value per year. The United States, Canada and the United Kingdom are Argentina's top three export markets for bottled wine, with exports of $265 million, $75.82 million and $61.67 million, respectively, accounting for 35.98 percent, 10.3 percent and 8.38 percent of Argentina's total wine exports. China is Argentina's seventh largest export market for wine, receiving US$17 million worth in 2014, accounting for 2.41 percent of Argentina’s total wine exports, up 87 percent from 2010’s figure. So while the United States will likely remain Argentina's biggest export market for wine in the near future, the China market has huge potential.  (China’s Ministry of Commerce, on November 15, 2018, http://ar.mofcom.gov.cn/article/ztdy/201603/20160301266272.shtml)


Ramiro Gomez Lopez Deepens the China-Argentina Connection
 

 Ramiro Gomez Lopez in front of his warehouse in Guangzhou


Now that Argentinian wine is becoming more and more popular in China, that of course means that wine from Ramiro’s home region of Malbec is also gaining popularity, and Ramiro is contributing powerfully to that trend. He recently had some Malbec wines on display at an import fair in Yiwu, about 90 minutes west of Shanghai by high-speed train, a center for import/export business in China. Ramiro is also shipping an increasing volume of wine to various other provinces, for tasting parties, dealer gatherings and the like. Ramiro has become something of a wine ambassador, travelling around China to attend a variety of wine-related gatherings, sharing the taste and lifestyle experience of wine from Malbec with more and more Chinese people.


Ramiro also joined an MBA program in a famous business school in Shanghai, where he was an eager participant in student and alumni activities. He also used his new network from his academic experience to broaden his contacts with various chambers of commerce, which enhance his capability to educate more Chinese consumers about the fine taste and experience of wines from the Malbec region.


Together with his family members in Argentina and MBA peers in Shanghai, Ramiro developed a premier wine excursion to take members of China's increasingly affluent middle class to the Malbec region, where they visit the Cordoba vineyards to enjoy the romantic experience of wine tasting and sleeping under grape trellis, and also explore the lovely countryside and otherwise gain a deeper appreciation of the region. Ramiro has organized these excursions annually, which has brought him quite a lot Chinese Malbec wine lovers.


The excursion members not only visit vineyards in Argentina and feel the warmth of the region, they also gain first-hand local customs and business investment perspectives. So these members develop not only a higher regard for Ramiro’s brand, but also a deeper appreciation of the business culture in the region. Moreover, such ‘experience marketing’ is prized by MBA and EMBA students worldwide. Most of China’s business school alumni are not yet familiar with South America, let alone the region’s approach to agricultural business.


Ramiro’s business strategy is to be more than just a cultural ambassador and a wine importer. Rather than following the agency business model that’s been common for wine importers, Ramiro and his partners have pioneered new ways of bringing wine into China and building closer relationships with China's burgeoning middle class.


From Argentina to China and Vice Versa

  

The Argentine Hosts


According to the National Bureau of Statistics of Argentina released by China’s Ministry of Commerce, from January to June 2016, the bilateral trade volume between the two countries was US$7.8billion, and Argentina’s exports to China were 2.443 billion U.S. dollars, and imports from China were 5.312 billion U.S. dollars, up 4.2% year-on-year; the deficit with China was 2.88billion. China continues to maintain its position as Argentina's second largest trading partner. (http://www.mofcom.gov.cn/article/i/jyjl/l/201607/20160701369229.shtml)


Ramiro often reminds people in China that Latin America is rich in clean and natural resources. But Latin America is able to provide more than just natural resources - the continent boasts many well-educated high-tech personnel, scientists and technicians, who can interact with China. For example, Ramiro suggests that Argentina export more food products to China, meeting the fast-growing and evolving demand of the Chinese consumer. Argentina's food production capacity is quite sufficient to support export growth.


Ramiro Gomez Lopez participated into welcome reception of Argentine President China visit


The Malbec varietal originated in France. Ramiro's ancestors brought the vines to Argentina, and now Malbec is a famous varietal of this South American country. When the Argentine President and his wife visited China in the middle of 2017, Ramiro participated in the reception in Beijing. At the G20 Summit in Argentina in November 2018, the Chinese President hosted a Malbec wine party at the state banquet. And Ramiro also had the honor to be the cultural ambassador to attend the dinnerparty.


Ramiro’s efforts, and those of his colleagues, have grown the family business considerably, and now Ramiro spends far more time in China than in Argentina. But his family back home is strongly supportive of his work. He normally uses WeChat to keep in touch with business partners in mainland China, often sharing pictures of the beautiful pastoral vineyards of home.


Ramiro hopes that more Chinese people will drink the best Malbec wines, and also have a chance to visit his home region. There they can bask under the South America sunshine and experience the rich happiness of vineyard life.


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