MW Topic of the Week: China and Paper 4

Hello!
This week, we're diving into Paper 4: the business of wine. A reminder – I'm studying along with you (as are  and ), so below are my notes and analysis as a thought-starter to this conversation, not the key to the castle Slight smile Two out of the last three years' exams have included a focused question on the Chinese market, and examiners have noted that a good understanding of that market would benefit any P4 question.
 
2017 focused on the potential and risks for exporting to China as an export manager: You are Export Director of an established large wine company producing in excess of one million nine litre cases (standard case 12 bottles/750ml). How would you seek to capitalise on the potential of the growing Chinese market for imported wine? What are the risks and how can they be managed?  
 
2019 meanwhile took more of a Chinese consumer point of view, and the impact consumer preference has on the channel: How do wine consumers in mainland China decide what wine to buy and what are the implications of their choices for producers and distributors?
 
Fundamental to both is an understanding of:
  • Strengths of the market
  • How distribution works in China (national/regional)
  • How consumers learn about – and most importantly buy – wine (here, an understanding of direct-to-consumer/DTC and digital sales matters immensely)
  • The impact of taxes and trade deals on the wine market (e.g. As of Aug 2019: 93% tax on American wines imported into China re: the US trade war versus free trade agreements with Australia and Chile)
How would you tackle this question and define your scope? Do you have any statistics to share? Any specific experiences you personally have had to bring up as an examples? Hard numbers always appreciated if they can be shared in a public forum.
 
Here are some resources my study groups have pulled together; others always appreciated!
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  • Not a dumb question! The Hong Kong-China situation is a fascinating one, and it's a huge driver for smuggling (and why border regions like Guangzhou are more difficult in terms of distribution). HK has 0% tax on wine (liquor is a different ballgame, at 100%), which is why it's such a strong wine market. 

    Read more from Debra Meiburg MW's 2018 analysis.

    Also interesting to read this report (2018) about how China is such a large export market for HK.

    Another quick note as to why I keep dating articles – this stuff is changing ALL OF THE TIME, so you have to have current statistics and numbers for this year's P4 exam. 

  • Thank you for sharing the info. Very helpful!