two news pieces strucked me in the last week related to china.
the first from decanter magazine (12 dec 07 china set to move up in rankings of world wine consumers) and the second from the bbc (17 dec 07 china's economic muscle 'shrinks').
in the first piece, the good people of vinexpo informs us that the wine market in hong kong and china is about to grow 70% between 2006 and 2011. considering that the market is quite small to begin with, a 70% increase as impressive as it looks, does not necessarily mean that it will be a very large market.
in the second article the bbc reports that the chinese economy might not be as big as we thought. 40% smaller in fact. now, that is a large correction...
you may or may not beleive very much the statistics coming from the chinese government and i would not blame you, but you can not put aside so easily another piece of information that the article provides: ''china income (annual) averages $4,091 per person, while average income in the US is $41,000''. now, that is not a great deal of disposable income available...
of all the years i have spent in hong kong, i have come across so many companies that focus solely on the 1st piece of statistics, namely that the market advances at a incredibly fast clip and huge numbers can be acheived. these same companies forget, willingly or unwillingly the 2nd piece of information that most people in china do not have much money to spend on other goods than what is essential, namely lodging, food, transportation, and clothing. whatever is left is spent on little trinkets to make a very drab life a little bit more colorful.
of course, look at shanghai, shenzhen, beijing, guanghzou. all these cities have fantastic buildings, surging economies, fancy shops and restaurants, and a great many big spenders. however, these are flash and mirrors. these do not represent the mass. in china right now, 900 million people live on or below poverty levels while a tiny tiny part live on the same standards of we do in europe and america.
wealthy chinese today are interested in spending their cash on brands and whatever helps them make a statement. if you plan to market wine in china, be aware of that. without plenty of recognition & prestige, it is almost impossible to establish yourself profitably in china right now.
so, let's put things in perspective shall we and let's not get carried away with the first sets of statistics.
hong kong and macau are another story however. right now, hong kong is at a turning point. it's economy is booming, it's people are more and more demanding related to service standards, fashion, and tastes. restaurants, hotels, bars are mushrooming at a pace not seen ever. hong kong is definitely a true cosmopolitan city and now establishing itself as a foodie capital of the world. as for macau, already the largest gambling market in the world, all serious players from las vegas, melbourne, singapore are setting up shop in a big way. not happy with gambling revenues only, sands is leading the way to re-position macau as a famly & business destination by offering versatile venues catering to all. restaurants and bars are still lacking the world class appeal that hong kong has, but they are in their infancy and the potential is huge.
so, if you want to market your wines in china, i think the right strategy is to focus on hong kong and macau. both are seen as a window on the world and mainland chinese tourist come here in a huge number. if they get hooked on what they have seen in hong kong, the glitz and prestige of the hong kong high life will rub and they will demand it back home.
step by step.