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

Technological
-Imitation risk(fake
brands in the market;
-Low labor costs to
develop products.
barrier to enter in the
market, since is often
needed a Chinese
partner.
-Need to register the
brands and be aware of
fake ones destroying
the market with lower
prices.
Overall, when considering the Chinese market it is essential to bear in mind its complexity,
together with its advantages and drawbacks.
Being an emergent country, it is growing in an intensive pace simultaneously with the
enlargement and consolidation of the middle class. The aforementioned trends make China
one of the biggest consumption countries in the world, having the second largest GDP in the
world and a Middle class already bigger than the entire population of the US.
Moreover, the growing middle class and the recent economic conditions are changing the
Chinese consumption mentality, and a big part of the population is willing to try imported and
new types of products and flavors.
Firstly, there are the drawbacks of an emergent country, with a few uncertainties and negative
externalities. Culture barriers are also present, affecting the consumer perception, requiring a
constant adaptation. Additionally, personal relations are crucial in the Chinese market, which
implies a proper approach to the market.
Last but not least, and giving a closer glance into the wine sector trends, it has seen a sharp
augment in the wine consumption. However, besides being a promising market, it is highly
fragmented, with many distributers spread in the different regions of China and strong
competitors as well.
Industry Attractiveness – Porter 5 Forces Analysis [TN Exhibit 1]:
Threat of new entrants: Medium
There are many wine companies selling wine in China. From lower end wine mainly explored
by the Chinese themselves, which represent about 80% of the current consumption of wine, to
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