At the Growing Business Opportunities with China Swan Hill forum in March 2015, George Dajczer of Andrew Peace Wines shared some insights from his experiences in exporting wine to China. The four main points he highlighted were to expect a lower margin; understand that the Chinese may have a different sense of ‘quality’ to you; to not take things personally; and, above all, to be yourself.
After working with China since 2007, George stressed that you have to expect to make less margin and sell more when doing business in China. Chinese buyers are very shrewd and tough negotiators. In terms of quality, George commented that there often is less of a concern for the quality of the wine itself and more emphasis on its presentation, including packaging. The Chinese want the best, and ‘‘if it looks good, they will buy it”. For example, buyers will often ask for a gold foil on the label, or request that the wine be packaged in a pretty box or be contained in a larger bottle.
As in any business or market, there is a constant tension between quality and price. Packaging wine in China rather than Australia would cost half to two-thirds of the price to package it in Australia. However, wine packaged in China runs the risk of being seen as inferior to a product that has clearly originated in Australia.
Another lesson learnt at Andrew Peace Wines has been that businesses should not take things personally and that patience is indeed a virtue. For instance, if a Chinese partner does not reply to an item of correspondence such as an email, this should not be taken as an affront. Chinese partners may also appear to be abrupt and discourteous when interpreted through a Western sense of manners. Patience can also be required as there may be a knowledge gap between the two parties.
Concerning payment, Andrew Peace Wines payment terms are usually to receive a substantial deposit or 100% payment before the wine leaves to be packaged. While it may be tempting to celebrate a sale, it is only wise to “get excited when you see the money”. Most importantly, George is prepared to walk away from a deal if there is insufficient margin to cover the headaches that may arise from such a deal.
George recommends that, above all, it is imperative to “be yourself” when dealing with any customer, and the Chinese are no exception.