By Dropping Duties, HK Paves The Way For Wine Imports To Increase Rapidly; Can The Mainland Be Far Behind?
Veteran China- and Hong Kong-watchers (and we at CLCB) have noted that the Greater China region has been one of the brightest spots for wine industry growth for a few years now. Although demand has been steadily growing in Hong Kong for quite some time, due to consumer tastes that widely favor Western wines, consumers in the Mainland have been a huge growth segment only recently. Throughout the region, China’s most devoted wine buffs have increasingly become a fixture at fine wine auctions, such as the one held in Hong Kong by Sotheby’s last month, in which 100% of the wines up for auction sold. But following the Hong Kong government’s decision to drop wine duties last year, global wine exporters have been able to develop an even bigger and more stable footprint in this critical port, paving the way for smoother access to the coveted Mainland market.
Recently, Hong Kong’s Finance Director John Tsang came to the US to court West Coast vintners, promoting Hong Kong as an export destination with attractive long-term potential, bringing the message, Hong Kong is open for the wine business.” As the Weekly Calistogan wrote on Tsang’s visit:
Tsang spoke about Hong Kong’s efforts to lure the fine wine trade to its shores, which began in February 2008 when Hong Kong’s government reduced the wine duty from 40 percent to zero. In the 10 months that followed, from March to December, global wine imports increased more than 80 percent, to the tune of $350 million, and U.S. wine exports to Hong Kong, an estimated 97 percent from California, doubled, to a value of $18 million.
Tsang made a convincing case that the Hong Kong Special Administrative Region Government is determined to make Hong Kong the regional wine trading and distribution hub.
• In the past year, Hong Kong has hosted 10 wine auctions, the first in more than a decade for Hong Kong. One of the sales, by U.S. auction house Acker Merrall & Condit, set a new Asian record by raising $8.2 million.
• The government signed Memoranda of Understanding with France, Spain and Australia, which support collaboration on wine promotion, tourism, investment, conventions and exhibitions.
• In the past year, Hong Kong has tailored its customs procedures, so that custom inspections of wine may be done at temperature- and humidity-controlled storage facilities, instead of on a dock, which is the point of entry.
• Hong Kong has a few state-of-the-art wine storage facilities and more are being built. The government also is working on something that’s not been done before — to establish standards for wine storage.
• Hong Kong has a low and simple tax system and a robust banking sector. Seventy of the world’s top 100 banks operate in Hong Kong and its stock market is the seventh largest in the world.
• Every year, Hong Kong hosts some 300 international events, which help connect overseas markets to Mainland China.
One of the 300 events included the inaugural Hong Kong International Wine & Spirits Fair, which was held in August. It drew 240 exhibitors from 25 countries and regions and about 8,800 visitors from all over the world.
One of the vintners attending the luncheon was Frank Gayaldo, who is the director of International Business Development for the Lodi Chamber of Commerce. He commented that he is a small grapegrower from Lodi who was in St. Helena on behalf of his father, who was working in the fields. Gayaldo said he attended the event and added it was “unbelievable.” He added, “What is going on in Hong Kong is a very big deal. It can save our way of life.”
The second wine and spirits fair will be held from Nov. 4-6 at the Hong Kong Convention and Exhibition Centre.
Tsang said, “Hong Kong is well placed to facilitate the growth of the wine market in our region. We are situated on the southeastern tip of China with modern infrastructure and world-class services. Decades of experience have also furnished us with the contacts and know-how to crack the Mainland market.”
Later on in the speech, he said, “Hong Kong’s location in the heart of east Asia, places the city within five hours flying time of half the world’s population. We are also on the doorstep of the world fastest-growing large economy — the Mainland of China.”
Tsang said his vision 10 years from now includes Hong Kong as a business-friendly city with established trading partners, many wine storage facilities, wine trading companies and many auctions, all within easy reach of a booming market, China’s 1.3 billion population. “You all can be part of that,” he said.
He added, “We will continue to establish Hong Kong as a wine trading and distribution center in Asia, opening up new markets for the wine industry here in Napa Valley and around the world.”
Tsang’s speech, which was titled “Hong Kong — Asia’s Wine and Gourmet Centre,” was sponsored by the San Francisco office of the Hong Kong Economic and Trade Office. The luncheon and speech was held at the Wine Spectator restaurant at the Culinary Institute of America at Greystone.