By Louise Curran

In this paper, written with Michael Thorpe of Curtin University in Australia, we explore the recent evolution of Chinese investment in the wine industries in the Bordeaux region of France and compare them with investments in the same sector in Western Australia (WA).

We found that investments are not as widespread as often implied by the media, although the speed of growth in Bordeaux has been impressive. Several difficulties with the investments, as well as potential synergies, were identified.

Varied situation in France and Australia
We chose to look at France and Australia as they were, respectively, the first and second wine exporters to the Chinese market in 2013. We looked at two regions with rather similar market positioning: both Bordeaux and WA focus on the higher end of the market and specialize in red wine. The phenomenon of Chinese investment in the sector is rather recent in both contexts, although Chinese investment in the wider Australian economy has a longer history. The objective of our study was to explore the extent of investment and highlight any difficulties experienced.

We found that the extent of Chinese investment in both regions was rather low, even if the number of investments in Bordeaux (about 80) was impressive, as was their very rapid growth. Still, less than 1% of Bordeaux vineyards are owned by Chinese investors and many of these vineyards are very small, thus the actual acreage covered by investments was low. The number of investments is even lower in WA (7 vineyards), but the large size of some acquisitions makes their coverage higher (6% of vineyard land area). Indeed the large size of Australian vineyards was a clear advantage for Chinese investors, who favoured large scale production structures which could better cater for the Chinese market.

Difficulties for investors, but also potential advantages

We found evidence of all of the classic difficulties faced by foreign investors which have been identified in other studies, but the most significant was their lack of familiarity with the local context. This was considered to be a particular problem in France, where there is little history of Chinese investment and no significant Chinese diaspora. The usual problems of understanding a foreign culture were compounded by the fact that most Chinese investors come from sectors – including jewelry, metals and petroleum – which were unrelated to wine, or even agro-food. The specificity of the wine sector thus caused them further difficulties. In Australia, we found much less evidence of such problems, mainly because the investors most often had existing business relationships in Australia prior to investing in wine and tended to make their investments in partnership with a local business person, rather than alone. Although most Chinese investors in Bordeaux did not invest together with local partners, they usually retained the existing management to continue the day to day running of the vineyard. There was recognition of the need to build on this local expertise, if their investment was to flourish.

The local institutions in both WA and Bordeaux recognized that there was need to provide support to Chinese investors in order to ensure the success of their endeavors. The Bordeaux Chamber of Commerce and Industry organizes regular seminars on Bordeaux and Hong Kong to ensure that investors are aware of the potential, but also the pitfalls, of such investment. The WA Department of Agriculture organized a similar seminar for Chinese investors interested in the whole agricultural sector in 2014.

Finally, Chinese investors in both regions brought two key advantages. The first was financial capacity. Many of the acquired vineyards were in a poor state of repair and in several cases significant sums have been invested in upgrading facilities and increasing productivity. The other key advantage was their knowledge of the home market and capacity to leverage their business networks to develop that market. China has become a key world market for wine, especially red wine in the last few years. Although exports have fallen from their peak, in 2014 their wine imports were worth $1,4bn. Especially for smaller, lower quality vineyards, the capacity of their Chinese owners to provide support for their evolution on this important market was a key factor in enabling their development.

The future – consolidation rather than expansion

In terms of the future, most people interviewed agreed that the peak in investments had passed and that we were entering a stage of consolidation. There have been far less investments in Bordeaux in 2015 than in 2014 and especially 2013-2. Partly this reflects the fact that the Chinese wine market is maturing and growth rates are now less attractive. Several of those interviewed pointed out that China is not, and indeed never has been, an ‘el Dorado’ for wine merchants, but is rather a challenging and difficult market. The recent fall in investments also an anti-corruption drive in China which has resulted in a significant fall in wine sales linked to gift giving (formerly a key motivation for high end wine sales) and official banqueting (which has been extensively reduced). There was also reported to be concern amongst wealthy individuals that high profile investments in luxury products like wine, could attract unwanted attention from the authorities.


Our research involved twenty interviews in the two regions studied with institutional agents, consultants and other service providers working with investors, as well as with local company personnel in three companies owned (wholly or in part) by Chinese investors and two Chinese investors, one based in China and one the manager of an Australian investment. The interviews took place over the period December 2013 to October 2014. We also used press reports to identify pertinent investments.

Managerial implications

Our research indicates that the most successful investors in the two contexts we studied were those that partnered with local business people. It seems that in cases like this, where there are large differences in the institutional and cultural environments between the home country and the country of investment, working together with a local business person provides an important bridge to reduce unfamiliarity. Investors who acquired vineyards without local partners more often experienced difficulties, although many retained local staff and took a rather ‘hands-off’ approach to the production side of the business, which seems prudent given that they frequently lacked knowledge of wine. The most important asset which Chinese investors brought was their expertise and linkages to their home market, so the potential for synergy was significant, provided that understanding and trust was present.

By Louise Curran, Chinese FDI in the French and Australian Wine Industries: Liabilities of Foreignness and Country of Origin Effects. Co-authored by Michael Thorpe, Economics Department, Curtin University Western Australia. Appeared in Frontiers of Business Research in China, Volume 9, issue 3 in 2015. This research was supported by a Research Fellowship awarded to Louise Curran by Curtin University in 2013.