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  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!
Parents
  • Hi All! Newly a Stage 1 MW student as of last Monday, and hoping to join the conversation here weekly. Thank you , , and for bringing your studies public!!

    Very happy you chose this topic. On my entrance exam, I was given the 2017 question as an option (which I quickly ruled out, and opted for one on vine pests and diseases). I want to say, the question they asked me, though, was about a 500,000 case/year brand. Which leads me to one of my questions here. How should that portion of the question inform your response? How might a a 1 million vs half million case/year vs much smaller enterprise strategize differently when it comes to the Chinese market? How would that affect importation and distribution channels? DTC sales/target markets? With one million cases/year being high production, would you make any assumptions about your product itself? Would you presume you have lower priced wines that could reach a larger audience?

    Obviously completely new to the program here, and just getting my feet wet - but questions like these terrify me! Excited to see you breaking them down here.

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