Red Business: a tale of wine in China

In the northeast part of Sichuan province, there is a city you might have never heard of, Dazhou. In this city, just beside the Yangtze River, there is a luxury hotel, and in an afternoon of 2010, three thousand people gathered to eat, dance, and drink wine. The happy faces and the warmth of the people there are undeniable. The food, while exotic, it looks delicious, from simple chicken dishes to seafood. Everyone seems to enjoy the time. There is of course a host, a tall Chinese man, with a belly that gives away his drinking habit. He is so excited about this day. And can he not be, it is a special day. Today a special commission of 4 people from Russia, Mexico, and Egypt are coming to the hotel to represent his new wine company “Bon Voyage”.

“Welcome my friends, today is a special day! Today we introduce you to one of the best wines in the world” His words are soft-spoken and polite, he also smiles a lot. Everyone is cheering and getting ready to try for the first time the exotic flavours of a wine that comes from the other side of the world.

 “Raise your glass with me” They all do.

“Cheers” They all drink.

Music starts and people start to cheer, and I am standing there, I am part of the table where the foreign investors are, dressed in black I drink very little of that wine I don’t want to drink but the people next to me insist. I try to keep them away with a polite smile until I am finally left alone, and if there was a force of nature within me I reach to the bottle of red wine to read the label, and there I see it the words that made me understand what was happening. “Made in Chile” next to the flag of France. The label for the wine was fake.

You might be wondering, how did you end up there, Laura?

The answer is not as simple as one might think, but I will try to tell you how a student in China, from Mexico, without any kind of investments in Wine was pretending to be a foreign investor to a crowd of thousands. 

In 2009, things were very different in China, and practices like this were common at the time, and the goal of this company was to give an impression of being international and sophistication, and they were able to get away with it because the information from outside of China is controlled and there was a lot of information about foreign products that people didn’t have access to.

Companies will hire foreign students, of course, I got paid to be there, and to just show themselves as business investors and give credibility to the brand. This of course is just a marketing strategy that they would use a less sophisticated version of influencers getting paid to promote a brand.

This experience gave a lot of insight into how people in China do business, and some things are outdated but some remain as they have adapted to new tendencies. Here I want to share the most relevant points I learned from these experiences. 

1.           International Brands are appreciated. At the time, this wine was being promoted as being produced from Chile, and being imported into China, with a French name. Why was this? Chile is of course known for its quality of the wines, and the French name gave a sense of sophistication to it. The goal of this was to give a level of power to the brand. Even though in the last few years local Chinese brands are getting stronger in the local market, international brands are still well appreciated. It is not easy, but China should be considered as a target market for your brand.

2.           Business through Relationships. This is something very well known in China, I believe this is the case everywhere, but especially in China, you do business through building relationships. You should be friends with the people you work with because they will give you the space to promote your product, reduce the cost of the product you want to develop, or even speed up the process for your transactions. This wine event happened while having a dinner event with a lot of people, but some key people were especially being cared for and treated like VIPs. The environment was friendly and very personal. 

3.           Understanding Labels. This wine was not bad, and I am sure that adopting a local branding would be good as well but as good as posing as an international brand. How did I figure out it was not real? Labels were all in Spanish with the wrong translation and no information about the distributor in China. There are a lot of regulations in the country, especially now, to protect local and international brands. A genuine brand should usually have two types of labels: the label in their local language and the label in Chinese with the specifications of the distributor, there is also a very well-known blue S label for the quality control done by the government.

4.           You get what you paid for. China is not the cheapest factory in the world anymore, it was not when I first came to China, and it is not now. If you are looking for a very cheap price, you will get low quality. A good Chilean wine in China will cost you in a wholesale shop around 50 USD, the wine of my story was around 25 USD, this price was not consistent with the quality and the country of origin it was claiming to be. So if you are paying for something extremely cheap, the quality will not be high. This is not only in China but in any other country as well.

5.           Trust the Experts. If you want to develop business with China, you must navigate not only through their regulations but also through their culture, and even though they are very friendly people and hard workers, cultural differences might bring a lot of miscommunication. There are a lot of experts that you can trust and that offer affordable services. Invest in learning how to do business. This will help you to not only avoid future issues but more importantly, it will help to find the best way to solve any inconvenience. Plus, it will help you build relationships within the market.  

That experience was an extraordinary situation that never happened again, and I have seen that the business culture has evolved much more since then because there are more and more regulations within the country to prevent anything like this from happening, as well as a more social conscience. 

I was young and excited. I was also a student that wanted to make a few extra dollars, and I ended up learning much more about the culture, the business, the people that I could have in school. This not only allowed me to concentrate on key points in my career but also to develop the business as well as long-term friends that now I am grateful to have. 

Published by Laura Cortes - Business Coach

I help entrepreneurs to find, develop & create products in China | Business Consultant & Specialist

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