The New Barons of Bordeaux

Deep in the Bordeaux countryside, Chateau du Grand Moueys is a sprawling 170-hectare expanse of vineyards and forest. At its center, a neo-gothic castle with turrets and crenellated walls, bring to mind a medieval world of knights and romance.

Seated within the chateau’s genteelly dilapidated dining room, the estate’s new owner, 49-year-old Chinese entrepreneur Zhang Jin Shan, chomps forlornly, on a croissant and contemplates how to revive the vineyard.

Globalization has created new challenges for the French wine industry. Once secure in their supremacy, French vineyards now must compete with less expensive New World wines, at a time of declining demand from austerity-parched developed markets.

I ask Zhang how he’s been enjoying the local French food. “Hai xing,” he replies with a shrug, using a Chinese phrase that signifies faintest approval. “I’ve got used to it.”

Aline Moineau, the chateau’s longstanding manager, purses her lips tightly. Zhang doesn’t appear to notice and perks up talking about a luxurious 50-seat Chinese restaurant, the piece-de-resistance of the high-end hotel and spa that he plans for the premises.

I ask if a French restaurant would make more sense in a chateau? “No,” he answers emphatically. “In France there are many French restaurants, but very few Chinese ones. The guests in my hotel will mostly be Chinese, and the fact that they can find good food here will be attractive for them.”

“But perhaps they would want to try French food?” interjects Moineau. “Please, let Mr. Zhang talk with the journalist first, and ask your questions later,” snaps Sophie, the Chinese woman who serves as Zhang’s French interpreter.

The clash of culture is obvious, one that feeds into larger resentments across Europe at China’s rising clout and investments in the economically floundering continent. On the one hand, Europe welcomes Chinese riding to the rescue of distressed assets, but investors are focused on making profits. Inevitably Chinese consumers are influencing trends in taste, a development that’s not always to the liking of locals.

Chinese investments in Europe are still small but growing at a heightened pace. In 2011 the Chinese invested $10 billion in the crisis-hit region, triple the amount of a year earlier, according to a study by economic consultancy Rhodium Group and the Chinese bank CICC. Chinese investors have been buying car companies, solar-panel producers and chemical plants among other acquisitions, prompting the European Council on Foreign Relations, a think tank, to publish a report titled “The Scramble for Europe,” drawing parallels between the European colonization of Africa in the 19th century and China’s current activity in Europe.

While such declarations may be overblown, rocketing figures for wine consumption in the Chinese mainland, combined with the reputation enjoyed by Bordeaux wines have made owning a vineyard, or two, an increasingly attractive proposition.

China is not a traditional wine-drinking nation. Still, in 2011 it surpassed the United Kingdom to become the fifth largest consumer of wine by volume, according to the International Wine and Spirits Research group. The mainland’s wine market has experienced more than 20 percent growth every year since 2006, and around 20 percent of Bordeaux’s exports are now destined for China.

Purchases by Chinese in Bordeaux began in 2008, when a trading company from Qingdao bought Chateau Latour Laguens, a 30-hectare vineyard. By 2011, more prestigious estates like Chateau Laulan Ducos, classified as a Cru Bourgeois, began passing into Chinese hands. Another significant acquisition in 2011 was the €10 million deal whereby COFCO, a state-owned oil and food giant, became owner of Chateau Viaud.

During the Bordeaux en primeur tastings in 2011, when thousands of wine professionals from across the world travelled to the region to assess the year’s offerings, the estates offered vintage reports in three languages – French, English and Chinese. Bordeaux winemakers also recently published a recipe book pairing wines with Chinese dishes, suggesting, for example, a Saint-Emillon for pig’s feet.

When Zhang bought Chateau du Grand Moueys earlier this year, it had been languishing on the market for five years. The previous owners, the aristocratic Bomer family from Germany, had been hard pressed to find takers for the Chateau’s €12 million price tag. Although the final price is undisclosed, Zhang’s French staff say he paid a “fair price.”

Karine Lemaitre, Chateau du Grand Moueys’ oenologue in charge of wine production, is excited about the possibilities of Zhang’s investment. But although Lemaitre is eager to experiment, she recognizes the challenges of foreign ownership – the biggest being the inability to communicate directly with Zhang. The only French he can muster is a barely recognizable, if enthusiastic, “oui!” Much is lost in translation, the local staff complain about the linguistic abilities of his translator and, as a result, decisions are delayed.

Zhang may be a newcomer to the world of French wines, but is not new to beverages. As head of the Ningxiahong group, he’s China’s emperor of goji berry drinks. Goji, a small red berry, has a long history of medicinal uses in China. Ningxiahong produces 30 million bottles of goji alcohol annually.

Like many Chinese entrepreneurs of his generation, he’s a self-made man. He was born in 1963, a few years before the start of the Cultural Revolution, in an obscure town in one of China’s poorest provinces, Ningxia. His mother tilled the fields, while his father worked with the local railways. Zhang didn’t attend university. Instead, armed with a technical diploma he landed an accounting job with a state-owned enterprise in 1983. By 1996 he’d made the leap to running a baijiu factory and making the popular Chinese spirit. In 2000, he bought Ningxiahong, a company active in real estate, printing, catering and travel, in addition to the goji business.

Zhang has witnessed the opportunities that come with change. He’s dismissive about the wine produced at Chateau du Grand Moueys: The quality is mediocre, the packaging “low class.” A Paris-based designer has been pressed into service to redesign the bottles, adding red corks and gold lettering.

Lemaitre, the oenologue, notes that similar redesigns are underway at other estates owned by Chinese in the region: “There is some kind of bandwagon effect. Everyone wants a certain kind of packaging and has the same plans. Buy a vineyard with a nice chateau, divert all the wine produced to China, and set up a hotel on the estate.”

Chinese acquisitions of French vineyards have thus far been small or middling estates. The mighty Grand Cru, the most prestigious of wine classifications, has eluded investors from the mainland. To put the investments in perspective, only an estimated 20 estates out of about 9000 in Bordeaux are in Chinese hands.

But Zhang dreams big and has plans to acquire a Grand Cru label “like Chateau Lafite” within the next decade. “When I was a child, I couldn’t even dream of going to a city like Beijing,” he chuckles. He waves his hand at the chateau’s airy interiors. “All this,” he says, “It makes me feel like a prince.”

It’s not yet clear how profitable these Chinese investments will be, going forward. Regardless, red and gold bottling, luxury Chinese restaurants in the countryside, and millions of bottles of French wine consumed by Chinese people as they dig into a supper of chicken feet a la mode, are bound to transform the hallowed French landscape of Bordeaux as much as its trading fortunes.

(Pallavi Aiyar is an Indian journalist and author of the Vodafone-Crossword Award winning book Smoke and Mirrors: An Experience of China. She reports on Europe for the Business Standard, and her first novel, Chinese Whiskers, was published in 2011.Reprinted with permission from the Yale Center for the Study of Globalization)