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Chateau Lafite Rothschild (China) Essay

Situation in China:

China is one of the most important markets in the world, and with a growth of the Chinese economy in the past decades; it has encouraged international suppliercompaniess to enter the Chinese market.

Living standards as well as purchasing power parity have improved since the countries openness to a market-oriented economy. Due to this openness foreign companies have attracted the consumption of wine from the middle-class, generating an increase in the last years of wine sales. Wine consumption continues to grow at a rapid rate in the country.

The Chinese wine market is a complicated due to its numerous wine producers (local producers) and wine companies entering china to exploit the wine market. China as the most populated country in the world is a commercial paradise for all the enterprises wanting to expand to new markets. By the gain in market share by the introduction of new products to the Chinese market, foreign companies take advantage of a growing market.

In the last years the French wine companies have been exporting to china expecting to gain market share in the wine sector taking advantage of one of the world’s fastest growing economy. For French wine export companies, it is important to understand the market, due to the Chinese wine companies and local wine production and how they have been gaining ground in the wine market.

Due to the countries emerging economy and the growth in economical aspects the population in china have been entering a new era of consumption of foreign products, and due to this reasons most foreign companies have set up subsidiaries or the most common joint ventures with other Chinese companies to enter the country’s market and gain some ground on the major cities.

One of the most important and emerging sectors in the Chinese society are the luxurious products. After the purchasing power of the individuals, luxurious products have acquired more interest and represent an improvement in status of the Chinese population either local or international status. The wine sector represents an important sector for upcoming expenditures for the Chinese population, although the purchase of wine is more business oriented than for personal consumption. The preferred wines for this type of consumption are the high-end French wines (Bordeaux and Burgundy).

The market situation is very open nowadays due to the facility of the Chinese consumers o access wines imported from major foreign producing countries as well as local produced wines (France, Italy, USA, Chile and Australia).

To have great success in the Chinese wine market the companies have to apply a strong marketing promotion compared to the local mass promotions by Chinese producers. The foreign brands have to apply a strong marketing promotion, but due to lack of resources the advertisements from foreign companies has a limited reach.

To improve the image of foreign wine brands, foreign companies must intensify their promotions and advertisements, generate a consumer education by creating events, wine demonstrations and wine-food events, as well as lowering the prices to accommodate them to the population’s purchasing power (different levels of purchasing power).

STRENGHTS:

• Luxurious and high-end wine.

• Renown wine company over the world.

• French presence and popularity in the wine market. Bordeaux and Burgundy wines considered one of the best wines in the world.

WEAKNESES:

• Weak marketing.

• High product prices.

OPORTUNITIES:

• Fastest growing market in the world. 20% growth from 2006-2011 and with a forecasted growth of 54% for 2015.

• Most populated country in the world.

• Economy has been growing at over twice the world’s average, generating future markets for imported products.

• Wine market in china is expected to continue its growth, placing itself in 4th place in the world’s markets.

• Elevated purchasing power from the Chinese consumers. Accelerated increase in consumption.

THREATS:

• Corruption and smuggling from the neighboring countries.

• Chinese wine producers awakening. Chinese wine companies have gained the majority of market share in the country.

• Growth of china’s vineyards has surpassed the production from three countries combined (Australia, Chile and South Africa).


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