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August 9, 2009

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Developing a taste for wine business

AS Hangzhou nudges its way up the rich list close to Shanghai and Beijing, its wealthy upper and middle classes are splurging on life's luxuries. Its markets for slick cars, high-end cosmetics and fashion accessories are emerging as some of the strongest in China.

And if the modest but highly successful Hangzhou developer Qian Zhifa has made the right judgment call, the spending trends of Zhejiang Province will extend to high-class imported wine. And in Qian's case, that means Australian wine.

Qian has become a wine merchant in his home city as a result of spending four years living in Melbourne where he learned the ropes about what is good and great Australian wine, knowledge he now applies from his downtown Yugu Road base in the high-rise Zhongtian Building that he developed and owns.

Here his Hangzhou Wine Center includes the middle-market Vineyard Cafe, a wine retail outlet, a custom-designed, temperature-controlled, 400-square-meter wine tasting room with state-of-the-art facilities, separate storage areas and a beer garden.

Qian, 55, does his own buying and focuses on five-star wineries as rated in Australian wine guides written by the country's leading experts James Halliday and Jeremy Oliver, their well-thumbed recent editions sitting at his left hand in a sparse, modestly furnished office.

So it is therefore no surprise that his stocks include Penfold's Grange Hermitage 2001-2003 (4,900-5,500 yuan/US$717-805), Henschke's Hill of Grace (5,000 yuan), Happs Cabernet Merlot 2004 (398 yuan) and Taylor Fergusson's Willbriggie Estate Botrytis Semillon 2002 (685 yuan).

He even carries stock from the small, limited release Yarra Valley vineyard Mount Mary for which he is the sole distributor on the Chinese mainland. The Quintet 2005 sells for 2,188 yuan which will gall devoted Australian fans of the product who can't get enough at home.

Qian's ambition is to be the biggest distributor for fine Australian wines, firstly for Zhejiang Province and then for the whole of China. He expects his business to grow 50 percent annually for the next 10 to 20 years. He will import 12 containers of Australian wine this year, each holding 1,250 cases, and next year will almost double the shipment to 20 containers.

The wine center currently stocks 100 different wine brands which he will increase to 200 next year but his thirst is almost unquenchable as he continues to seek more boutique five-star Australian wineries to buy from.

Qian is under no illusion that the Chinese market is sophisticated about quality wines but tries to develop its understanding with regular Saturday afternoon tasting sessions for selected customers where signs are displayed explaining Australian wine styles and regions.

Buyers can start in the lower price ranges with Qian's specially bottled Manor Grove house wines from South Australia's Langhorne Creek °?°?-- the 2004 cabernet sauvignon for 128 yuan or the 2004 shiraz for 138 yuan -- before moving progressively up the list to more expensive products. He also offers lower priced products such as Lazy Lizard 2005 Shiraz (98 yuan) and his Mancini 2006 house white (102 yuan).

Qian focuses on Australian wines because he likes the taste and says it is very suitable for Chinese consumers. He said they prefer red wine and, of the grape varieties, they like shiraz the best.

"Australian wine is better than French for the China market because the French is too bitter for Chinese tastes," he said through an interpreter.

However, he is concerned that Australian wineries don't understand the China market and the biggest issue is they are reluctant to cooperate with him on market promotion.

"They have a lack of confidence in the China market and are more short-sighted than French producers," he said.

"They prefer to have one-off deals rather than long-term co-operation with a marketing plan over a number of years."

He believes the Australian Wine and Brandy Corporation should exercise more control over the quality of export wines -- some of which he said are inferior products sold at expensive prices -- because they will eventually destroy the reputation of Australian wines.

Qian does all the wine buying and understands the quality and competitive prices of Australian tipples in comparison to labels from France, Italy and the United States. He hopes that his Melbourne-based son will eventually take over the business.

In preparation for growth in the China wine market -- despite a 48 percent tariff on imported products -- Qian recently hosted a conference of distributors from provinces throughout the country to build up a network for future dissemination of his purchases from Australia.

He has registered the trademark name Shiraz in Chinese in recognition of consumers' preference for the style.

When not buying wines, Qian's other business pursuits include the boutique Tian Lun Hotel on the popular Shuguang Road. He recently demolished the property to rebuild it for a September re-opening with a more international focus.

In past years he developed and built the West Lake Stadium and donated it to the Hangzhou Government.

He said that now he's getting older he's focusing more on wine. "It's a relaxing business so that's why I like it," he said.

Although the China wine market is developing very rapidly, he said he has accepted that Australian producers operate very slowly so he is moderating his activity within the two speeds.


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