DFJ Vinhos: Wines in China, A promising but difficult market

3) Describe the current attractiveness of China and the Chinese Wine Market. What trends
are occurring?
Before analyzing the industry attractiveness itself it is important to understand the Chinese
market as a whole. The student should initially use the Pest Analysis to make an overview of
the Chinese Macroeconomic environment. Additionally, with Porter 5 forces analysis he/she
should describe the Chinese wine market attractiveness itself. Lastly, the student is supposed
to elaborate a brief analysis about the occurring trends.
Macroeconomic Analysis – PEST
PEST ANALYSIS Facts/Trend Positive Negative
Political
-Dictatorship;
-Stable government?
-One-child policy
Growth population
rate: 0,47% (2009).
Economical -GDP growth rate
slowdown, but still
growing 7,8% in 2012;
-Rise of the minimum
wage by 13% in 2015;
-Imports are rising.
Social
-Middle class will triple
in the next 15 years
and had already
topped 300M people;
-Different consumption
habits;
-“Status” remains
extremely important;
-Personal relations
valued in business.
-Wiliness to receive
foreign investment;
-Coexistence of
communism and
capitalism
-Increase of domestic
consumption;
-Together with the
growth of the middle
class comes a new
consumption
mentality.
-New consumption
mentality;
-Personal relations in
case you have them
(big investment
needed).
-Dependence on the
government’s policies
(i.e.: Custom house tax
increase, due to
retaliation on a EU
policy.
-Even though the
growth trends show
that the economy is
stabilizing, is the
Chinese economy going
to suffer a bigger
slowdown due to the
international crisis?
- French wines social
status VS Lack of
“brand Portugal”
-Although middle class
is growing and some
mentalities changing,
cultural differences are
still big and vary
depending on the
region;
-Personal relations as a
41