Chinese Interests in European Wines: Buying Bordeaux Estates
Because of China’s increasing demand for wine, the country’s wine industry has grown to be worth billions of dollars. To satisfy their need for fine wine and sense of affluence, wealthy individuals have rushed in to buy vineyards across the world. Chinese wine business aspirations have been imprinted on the world vineyard map, from Bordeaux’s famed wine area to Australia’s newest favorite wine destination[1].
Bordeaux
Bordeaux had launched a campaign to increase sales in Asia in response to the increasing demand for wine in China, pushed by millions of new wine connoisseurs. It seems to have worked. By 2015, China’s share of Bordeaux’s export sales had risen from less than 1% to over 30%, making it the region’s most significant wine market[2].
Wealthy Chinese have set their eyes on the vineyards and chateaux of Bordeaux. Bordeaux has a long tradition of producing some of France’s finest wines. Two excellent harvests in Bordeaux, 2009 and 2010, came in fast succession. A rise in Bordeaux’s earning potential was not the only benefit; a buying frenzy for Bordeaux vineyards was also created from this development[3].
It was a match made in heaven when affluent Chinese businesspeople met deal-hungry Bordelais, who had been continually chasing Chinese business. This is partly due to Bordelais’ persistent efforts to cultivate commercial relationships in China.
Over 150 Bordeaux homes have been purchased by Chinese investors, accounting for roughly 3% of Bordeaux’s total property ownership. Non-classified chateaux make up the bulk of the properties that were bought. There are around 8,000 vineyards and chateaux in the Bordeaux region[4].
The Corporate Buyouts
Chinese state-owned companies and private corporations have been scrambling to buy lesser-known Bordeaux vineyards to begin making wines for the Chinese mass market. The most extensive food and beverage company in China, COFCO, bought the Viaud Chateau in Lalande-de-Pomerol AOC in 2011 for USD 15.19 million. COFCO is also the owner of the Chinese winery GreatWall.
“China absorbs Bordeaux,” and other phrases like these were spoken by state-run media in their announcement. According to a Wine Spectator story, Bordeaux insiders saw the purchase as a declaration by the Chinese government that they had established themselves in Bordeaux[5].
Changyu Pioneer Wine Company, China’s most prominent and venerable winery, bought 90% of Chateau Mirefleurs in 2015. It was a Bordeaux Supérieur winery purchased for €3.33 million from Castel, a French wine company. While most other Chinese alcohol producers rushed to buy Chateau Loudenne in Haut-Medoc in the same year, Kweichow Moutai was the company that succeeded[6].
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The founder of Alibaba and China’s second-richest man, Jack Ma, recently participated in one of the highest profile Bordeaux auctions. It is believed that he is worth more than $23 billion. In 2016, he bought the Chateau de Sours in Entre-Deux-Mers and the Chateau Perenne in Blaye Cotes de Bordeaux, both of which were built in the 18th century.
A well-known Chinese actress and film director, Zhao Wei, acquired Chateau Monlot near Saint-Emilion for an undisclosed sum in 2011, making headlines both within and outside Bordeaux. Since then, there have been at least two other purchases in the Bordeaux area.
She also owns the 16-hectare Chateau La Vue, located at the foot of the Saint-Émilion hamlet, and the Chateau Patarabet, which she purchased in 2013. When she bought the 57-hectare Chateau Senailhac in 2015, she expanded her sphere of influence into the Entre-Deux-Mers area. In 2019, she bought the AOC Fronsac property Chateau La Croix de la Roche, which she had been eyeing for the last two years[7].
In a short amount of time the buying began to pick up speed. As a wine connoisseur, Chinese real estate tycoon, Pan Sutong recently purchased the Chateau Le Bon Pasteur, Chateau Rolland-Maillet, and Chateau Bertineau St. Vincent vineyards in Bordeaux, as well as the Sloan Estate in Napa Valley. Hong Kong billionaire Peter Kwok owns at least seven houses on Bordeaux’s Right Bank.
Did You Know: One of Christie’s linked companies specializing in Bordeaux vineyard sales now provide French, English and Chinese as language choices on their website.
The China in Bordeaux Fallout
Historic chateaux that come with vineyards have become a highly sought-after commodity for Chinese real estate speculators. Additionally, Christie’s has a dedicated China desk to handle the growing number of inquiries from Chinese buyers wishing to acquire trophy estates and vacation homes in the United States.
Some Bordeaux residents welcomed the massive Chinese shopping spree with open arms when many family heirs struggled to pay France’s onerous inheritance tax. The name modifications made by several Chinese-owned wine properties to names that sounded auspicious in Chinese have irritated some wine region traditionalists[8].
The fact that Chinese buyers have not been seen in Bordeaux after making purchases is even more concerning. The dearth of activity in the chateaux and vineyards has encouraged some to question the reasons for this purchasing frenzy.
The Haichang Group, founded in Dalian in Liaoning Province, recently went on a buying spree, spending more than $64 million on more than 20 Bordeaux wine estates. The bulk of the two million bottles manufactured each year is sold in China, where they are promoted and sold under sixty brands. On the other hand, in 2018, after four years of investigation, French authorities froze the assets of 10 wineries based on fraud and money laundering[9].
After six months of investigation, it was established that ten different chateaux had been implicated in a wide range of tax violations, including money laundering, forgeries, and other misdeeds.
However, Bordeaux’s wine-buying frenzy has waned somewhat in recent years. Because of the inability to manage, distribute, and use their resources effectively, a substantial amount of their investment shriveled away on the vines. Due to its closeness to China and general appeal, Australia has recently emerged as a new preferred investment location for Chinese investors[10].
THIS DAY IN WINE HISTORY
July 1, 2018: An investigation against the Haichang Group and its founder, Qu Naijie, was launched by French prosecutors in connection with the acquisition of 27 properties in only four years. Due to a range of tax violations, including the laundering of tax fraud proceeds, and the use of forgeries, the company was barred from purchasing any other European vineyard after the 6 month investigation[11].
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References:
[1] Hubert Prolongeau, “The End of the Chinese Dream in Bordeaux’s Wine Estates,” Le Monde.fr (Le Monde, May 2, 2022)
[2] “China’s Global ‘Colonization’ of Vineyards,” Vino Joy News, July 31, 2020
[3] “China’s Global ‘Colonization’ of Vineyards,” Vino Joy News, July 31, 2020
[4] Hubert Prolongeau, “The End of the Chinese Dream in Bordeaux’s Wine Estates,” Le Monde.fr (Le Monde, May 2, 2022)
[5] “China’s Global ‘Colonization’ of Vineyards,” Vino Joy News, July 31, 2020
[6] Hubert Prolongeau, “The End of the Chinese Dream in Bordeaux’s Wine Estates,” Le Monde.fr (Le Monde, May 2, 2022)
[7] “China’s Global ‘Colonization’ of Vineyards,” Vino Joy News, July 31, 2020
[8] Hubert Prolongeau, “The End of the Chinese Dream in Bordeaux’s Wine Estates,” Le Monde.fr (Le Monde, May 2, 2022)
[9] “China’s Global ‘Colonization’ of Vineyards,” Vino Joy News, July 31, 2020
[10] Hubert Prolongeau, “The End of the Chinese Dream in Bordeaux’s Wine Estates,” Le Monde.fr (Le Monde, May 2, 2022)
[11] “China’s Global ‘Colonization’ of Vineyards,” Vino Joy News, July 31, 2020
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