Whines/Gripes: The Wild East: redux

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I am reposting this recount after some interesting developments. Some justice? The moral high-ground can be a lonely wind swept disconcerting place. Ahem.

Background scene setting: This initial blog (my first ever) on the state of the Chinese (and more importantly) Shanghai wine market may have been more than a tad revealing 2 years ago. I was trying to make sense of it as I wrote. But, the gist has maintained its’ relevance. Interwoven in this log is part of a thread I was involved in at the Wine and Spirits Group at business networking site: Linked-In.

Just for laughs?: 80-90% of Lafite Rothschild Sold In China Is Fake

According to statistics for Bordeaux consumption, China is consuming more top Bordeaux wine than the the region produces, highlighting the prevalence of fake wine in the country. see here.

“All wine producers know that mate, the problem is that Chinese consumers need to be educated and this needs time, in 20 years they will be like in the USA, they will buy mainly Italian wines because they are the best as quality/price: no one can beat this.” Mario Alvisi

 In Shanghai, and China in general, the focus is on the very bottom or the very top of the market. That’s where all the action is. And it’s pretty cut throat.

I am sure the tales and reports of poor quality & handling of fake wines, or China being the place to offload crap or old wines, rip-offs, etc, will continue and maybe even get worse. I commonly come across examples of poor handling, poor knowledge and non existent service among most operators and their staff. It’s the Wild East!

Case under discussion: A local family partnership had set themselves up with an account at Linked-in hoping to be approached by wine dealers from all over the world. They were based in Pudong, Shanghai, and asking for wines, as they ‘represented’ one Wine Distributor in Jiangsu, China and were looking to add more wines to their inventory.

I met them summer 2011 and tentatively placed some of my products on their site in the hope of a mutual profit. I offered to supply their distributor with both wines and education.

For brevity: It turned out, they were well out of their league and vanished, as many do, within a short time. Vendors and marketers from all over the world were still writing to the ‘sister’, offering their wares, but sadly getting little response.

After repeated calls from members, I informed them of my dealings with the duo: part of a worrying, yet expected, trend where locals, who thought they might jump on the wine bandwagon and get rich, didn’t.

There is a perception that this (China) is the Holy Grail of markets. Consequently, there is whole host of importers trying to get into the wine market on the cheap, and make easy money. There is also a plethora of guys outside trying to get their wines into China.

Know this; it will be a hard slog. Chinese folks think French wine is the best. End of story. They had that message for nearly 25 years. French supermarkets got here and sewed up that market long ago and sell predominantly French wines at high prices in poor conditions. (Has that changed in 2 years?)

Supplier Ignorance: When one thinks of how the uninformed or disinterested might handle wines, think, at best, non-rotated product standing upright for far too long, on over-lit shelves near strong smells, draughts and or direct sunlight and overseen by workers with no product awareness. That’s very common indeed here in China.dodgy traders

At worst, think bulk ships bringing low quality wines to be dumped here at rock bottom prices (not worth paying), or dodgily blended into poorer quality bulk Chinese wine, labelled as Chilean or Chinese wine. It happens. People drink it. I won’t and consequently:

I feel in a minority here; wanting to sell only respectable, estate bottled wines at fair prices, ethically.

I will only partner foreign businesses who have ethics and western practices. All my wine suppliers are solid businesses with long-standing western style (and run) capabilities and credentials. My buying power and knowledge gets me the best best wines for the right price; not the best deals, regardless of quality.

Some suppliers have great inventory which attracted me to work with them, but my investigations of some potential suppliers illuminate dodgy trading practices. I wont deal with dodgy operators. The market is awash with completely unskilled amateur operators behaving like Victorian London Street hawkers.

Bankrupt Stock: I have now met a number of ill-educated vendors too, unaware that the wines they are selling at ‘Knock-down Prices’ are in fact out of date, substandard or bulk wines, most likely bought very cheaply as ‘shot’ stock because they have no provenance. I have even dealt with representatives who didn’t know who made the wines they sold: just the prices. That’s a big red flag.

 I saw on market stalls at respectable events throughout 2011 the same 1999 Australian Shiraz for ¥66. The product was rife with problems: dodgy labelling, a vendor who could not tell me which part of Australia it came from, and a profound lack of awareness that this was indeed way too old to drink left me in two minds. One the one hand, I can smile that I know what I am doing and so must easily rise to the top of the vendor league table. Like cream in milk. On the other, the nagging doubt that these people are tarnishing my industry, taking custom that I might serve better and making it harder to stay competitive by peddling rubbish to unsuspecting clients.

Some unscrupulous dealers are making money off the backs of the helpless, the hapless and the ignorant. It is a buyer beware situation.

dodgy dealers did dirty deals

Fake pricing: We sometimes see familiar wines, possibly even those in our portfolio advertised or marketed with an artificially high  price, ‘struck through’. A misleadingly inflated the price, then gives way to a massive reduction from say ¥150, to an sale price at ¥90. What a bargain! No. It is not. It’s the normal price. Furthermore, it is uncompromising misrepresentation: lying. Cheating, by most moral standards. And they are among us. Smiling as they try to, and succeed at, cheating you and me.

And then there’s the practise of individuals and businesses who lie about pricing to aim to trick consumers they are getting a good deal by slashing 80% off prices that should never have been set so high to begin with.

I confronted one such 20-something, French salesperson, working for a big Sino-French internet outfit here in Shanghai in 2011. I ordered from them to see whether they were up to scratch. She was making such ‘false’ claims; offering ‘huge’ discounts off over-inflated prices at a recent fair for westerners.

I had told her previously to stop sending me bogus email offers, which deliberately misrepresented the value of wines. You see, I knew what they cost, how margin is calculated and the ‘going market rates’.

 This outfit claimed, for example, that a certain Prosecco had a market price of ¥185. They ‘reduced’ it to ¥88 so you could have a 55% discount. I know what they paid for that wine.

They were actually selling it ¥3 less than me; once the discount was applied, which was a fair price. But making outrageous claims of an illusory discount was very disheartening. It emphasises the fact that greed (and therefore higher than necessary pricing strategies) exist here in China from established company’s looking to score big before anyone notices. I noticed, but whistle blowers aren’t often regarded terribly well, so I bit my lip, publicly.

At that time they also sold on their website, a French wine at ¥98, for which I charged ¥63. Again they claimed it should cost ¥117. It should not! It is a ¥60 to ¥80 wine all day long; not a penny more.

This short term, unscrupulous, greedy, unethical behaviour hampers our industry. It’s part of what makes many consumers uneasy about buying wine. How many businesses in the west could hope to survive very long by lying to their clientèle (French word, I believe). Consumer watchdogs, reviewers and the ease of access to information would bankrupt that tactic very quickly. They think they can get away with it here in Shanghai and China because there is so much fog. And they do tovaying degrees.

In the email to the sales representative, I had said she ‘ought to be ashamed of herself’. I questioned if her parents might concede there was an issue in whether they had ‘brought her up properly’. Maybe on reflection it wasn’t her decision to act thus; her company certainly still ran ridiculous claims every month in its special offers section for another 18 months before the business totally collapsed and vanished, leaving unpaid wages and outstanding bills with suppliers.

Yadda Yadda YodaTo add insult to injury, the rep actually ‘Cried foul’, becoming pretty defensive and angry when I bumped into her at the fair where she was initially quite flirty, until she recognised my logo sen previously in an email. Instantly she altered demeanour, sulked and told me to go away; proceeding to play the ‘victim’ for all around to witness. An elaborate drama smokescreen. She went to all the other vendors telling them I was a nasty bully being ‘mean’ to her. She was French. Methinks she doth protest too much.

Their website continued to makes such false claims until August 2012. They ran wine education courses, which I find quite rude, given that they were clearly lying about the market. If they lied about the value of their wines how could they stand before customers ‘educating’ them about wine. Really makes my blood boil that such crooks operate like this in the market I call my passion.

I ached to name and shame them when I originally wrote this Gripe, 2 years back; but I didn’t know how ‘connected’ they were, if you know what I mean. Dodgy friends too? Anyhow, they were yangjui.com and now, thank god, they are history.

Good luck to anyone wanting to break into this market (and there are thousands of you) There’s only one way to do it. Travel here. Live here. Understand here. Then see if you can make a go of it.

Finding genuine wine dealers who care for their product enough to ask where it came from is not the norm. Bar owners don’t seem to care much either, but that’s another story. There is some bad wine out there, folks. Sorry.

Tip: Look just above the bottom. There’s not so much competition for them which helps keep prices in check. Plus, it is above the dodgy risky zone of old crap that unscrupulous vendors want to dump in China. In the region between 60 ad 130 there are to be found, some very good wines. Between ¥150 and ¥350 there are the same staggeringly good wines as exist throughout the rest of the world.

The Wine Man

February 2012 (abridged and updated March 2013)

 

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