Really? That sounds familiar…
Yes, you might be thinking of the late good old Colin Welland, the man who scripted the Oscar-winning Chariots of Fire, who warned Hollywood back in 1982 that the film’s success would spark a torrent of new British film talent. The Chinese warning is a little more understated than that, but it’s already very much alive and kicking in the wines we are able to source, buy and put on our retail and restaurant wine lists. China has fast become one of the world’s biggest wine importing countries, with a thirst for new wines that will have an increasing impact on what is available to buy in other markets.
How do you mean?
Well just look at how Chile and Australia have upscaled their exports to China in recent years after they respectively struck free trade deals there. Wines that would normally have been destined for their more traditional markets in the UK and Europe are being swept up more and more by Chinese importers. Chile’s exports to China were 9.7m h/l in 2016 and expected to be over 12m h/l in 2018. China is now Australia’s biggest export market by value, up 24% in the last year to A$1.06bn, with volumes up 26% in the last 12 months.
But that’s just market dynamics, it’s not like the Chinese are setting up shop and looking to sell directly to us in the UK?
That’s where you are very wrong. Where the Chinese are very much looking to have a direct influence on our market is online. We might like to think we are ahead of the curve when it comes to new technology and what role it plays in our business and personal lives. But we’re very much in Betamax mode compared to what is happening in China.
How do you mean?
We might spend too much of our time on social media platforms such as Facebook, Twitter and Instagram. But when we do it is mainly to pass and share information about what we are all doing. In China, its social media platforms cover all aspects of their business and personal life. Platforms like WeChat are being used both to share funny videos and pictures of what you got up to at the weekend, but they are also fully functioning e-commerce, and retail sites that allow you to see things you like, buy them and get them delivered directly to where you are.
That’s all very nice for them, but what’s that got to do with us?
Well, wouldn’t it be nice to do the same here? Chances are in the next couple of years the same Chinese technology will be powering our smartphones and completely changing the way we behave, interact, and go about our daily working and personal lives.
Go on then, how?
The big Chinese online players are no longer just about sourcing and selling products and services to the Chinese, they are increasingly looking to spread their wings and get us to use their sites here in the UK, in the same way we might log on to Amazon. But that does not mean shipping products all the way from China. Alibaba, China’s biggest online, e-commerce player, with sub-brands, Tmall and Tbaobao, has stated its ultimate goal is to be able to ship anywhere in the world within 72 hours. This is all part of a global strategy to have 2 billion customers by 2036 and sales that would make it the fifth biggest economy by GDP, behind the US, China, Japan and the EU. It already wants its international business to account for 40% of its turnover within 10 years.
What’s it doing to achieve that?
It has already started building up an international network of largely automated distribution hubs that will each be able to supply up to 1,000 cities within three years. It now has five such hubs in Dubai, Hangzhou, Kuala Lumpur, Liege and Moscow, each kitted out with the latest in smart warehouses, fully automated assembly lines and self-driving robots. It is already shipping to 30 cities around the world within a five day delivery window. All of which is possible because it has built the world’s fastest cloud-based streaming processing platform that allows it to manage and analyse online transactions to a scale unimaginable before. Its servers, for example, are said to currently store 1,000 petabytes of data (one petabyte is one million gigabytes). It’s even set up its own cloud computing arm and has two data centres in the UK offering business its specialist data analytics, storage and machine learning services
My word, now I see what you mean?
Exactly. It’s time we all started to watch and learn what the major Chinese online giants are doing both at home and overseas. We have already discussed on Grapevine how Alibaba’s distribution network allows a Chinese customer anywhere in the country to buy a bottle direct from a vineyard say in France, Italy or Spain and have it shipped direct to their door within a few days. It’s simply using the same model to start shipping products from China to us.
So what does this mean for the average wine business in the UK?
If Alibaba is true to its word then there is no reason why you couldn’t be sourcing wine, not just to sell to the well-heeled middle classes in the UK, but the Chinese market too. Its distribution hubs are being designed to work both ways. Bring Chinese products to the world, and open up the world to Chinese consumers. Alibaba’s e-commerce platforms like Tmall are already being used by retailers and brands from all over the word (up 169% in 2017) to create their own ‘online shop’ and sell direct to China. So don’t say you weren’t warned.