From the Congressional Record:

AMERICAN WINE DELEGATION CONTRIBUTES TO IMPROVED UNITED STATES-CHINA TRADE

DIALOG -- HON. GEORGE P. RADANOVICH (Extension of Remarks - September 28, 1996)

[Page: E1776]

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HON. GEORGE P. RADANOVICH

in the House of Representatives

FRIDAY, SEPTEMBER 27, 1996

* Mr. RADANOVICH. Mr. Speaker, Government colleagues and friends in the

United States wine industry, earlier this year, at the invitation of

the People's Republic of China, the first official American delegation

of viticulturists and enologists since 1949 completed a 2-week

consultative tour of the Chinese wine industry.

* The trip, under the sponsorship of the People to People Citizen

Ambassador Program, has resulted in broadening the scope of business

and market contacts in China and in identifying new opportunities for

trade and joint venture activities.

* As I was consulted during the planning stages of this trip, I was able

to lend it my full support and would have joined the delegation had

scheduling permitted.

* The delegation report, I feel, will serve as a valuable source of

information for anyone in the United States business community who is

interested in doing business in China now or in the future.

* I wish to commend the delegation, led by Gordon Murchie, president of

the Vinifera Wine Growers Association, for its professionalism in

representing our country in this important factfinding and trade

relations trip.

* It gives me great pleasure in making excerpts of the delegation's trip

report a part of the Congressional Record:

China, a nation of 1.2 billion people, has a history of grape growing dating

back to the Han Dynasty (121-136 BC) and of grape winemaking dating from the

Tang Dynasty (618-907 AD). Vitis Vinifera wine production, however, is a

more recent 20th-century innovation.

While only about one-fifth of China's current grape harvest is made into

wine, the potential for wine production and consumption is enormous.

Importing and exporting wine is gaining the attention of the newly emerging

economic structures of China and foreign investors and partnerships. Both

Chinese government and private-sector wine interests are eager to welcome

and learn from American viticulture and enology techniques and

methodologies.

Thus, with an invitation from the Government of the People's Republic of

China and through the sponsorship of the Citizen Ambassador Program of

People to People International, our Viticulture and Enology Delegation of

one French and eleven American wine experts, representing all sectors of the

wine industry, visited China, April 14 to 27, 1996.

This was the first official U.S. wine Delegation to travel to China since

1949. A previous Viticulture and Enology Delegation was cancelled the day

before departure in June of 1989 due to the Tiananman Square incident.

* the mission of the Delegation was to meet with counterpart contacts at

all levels of the Chinese wine industry; exchange information; discuss

topics of mutual interest such as vineyard management, winemaking

technology, viticulture-enology research and training, sales and

marketing strategies, government regulatory oversight, foreign

investment and joint venture opportunities, import and export

potentials, and tariff rate issues; establish ongoing professional and

business relationships; and, generally, assess the status of

development and growth potential of the wine industry in the People's

Republic of China.

* The tip itinerary, which included site visits in Beijing, Tianjin,

Yantai and Shanghai, provided the Delegation an opportunity to make

contacts throughout the whole of the alcohol beverage industry in

China. It included meeting the leadership of the PRC Government's

oversight ministry, product control and distribution organizations,

research and educational facilities, import and export companies, and

visits to government, quasi-government, and joint venture wineries and

distilleries, and farm vineyard sites.

* As wine is truly an international language, the Delegation feels that

an overall objective of the Citizen Ambassador Program to make friends

and promote greater understanding among professional and concerned

individuals internationally, in this case between the wine communities

of the United States and the People's Republic of China, was in a good

measure achieved.

* The Delegation wishes to express its collective appreciation to all the

American and Chinese organizations and individuals which contributed to

the planning, arranging, conducting, hosting and support of what the

Delegation views as a successful professional exchange experience for

all concerned.

* Our thanks go to the Citizen Ambassador Program People to People

International, United States Congressman George P. Radanovich, His

Excellency Li Daoyu, Ambassador of the People's Republic of China in

Washington, D.C., the U.S. Embassy in Beijing, China National Council

of Light Industry, China National Research Institute of Food &

Fermentation Industries, China National Cereals, Oils & Foodstuffs

Import & Export Corp., the Tianjin, Yantai and Shanghai Foodstuffs

Import & Export Corporations, Shanghai Sugar, Cigarette & Wine Corp.,

Beijing Agriculture University, Shanghai Academy of Agricultural

Sciences, Beijing Pernod Ricard/Dragon Seal Winery, Tianjin Remy

Martin/Dynasty Winery, Yantai Chang Yu Winery, Shanghai Remy

Martin/Shenma Winery, Mr. Wang Kefa, Town Leader for Longkou vineyards

(Penglai), Mr. Scott R. Reynolds, Director, U.S. Agricultural Trade

Office, Shanghai, Mr. Peter Chang of Mandarin International Travel and

his colleagues (program arrangers), Mr. Jiang in Yantai, Mr. Yan in

Shanghai, and especially Mr. Zhao Ying Kong who was the Delegation's

guide and mentor throughout the entire trip.

* Finally, our special thanks go to Anita Murchie who recorded and

maintained additional notes on all Delegation meetings and site visits,

transcribed the hours of tapes, and typed and edited this 75-page

journal report. The full report is

available by contacting by VWGA, P.O. Box 10045, Alexandria, Virginia 22310.

The following is a general list of pluses, minuses, and other considerations

that any individual, winery, wine consortium or allied business interested

in doing business in China should take into consideration.

They are not intended to be conclusive, but to serve as a basic check list

to be used in developing any business strategy to establish trade,

investment, joint venture and/or production and marketing relations with the

People's Republic of China.

American Products have edge:

+Historical and cultural connections.

+Chinese view of U.S. on world stage is that it remains a major

international economic and political power.

-Continuing political contentions between the U.S. and the PRC.

-Established and growing foreign competition.

Market potential is there (1.2 billion population):

+Western products and styles have appeal.

+Youth and young business classes are change-minded and looking for a more

prosperous and comfortable life style.

+Whole nation is undergoing a building-construction boom, further promoting

change. More wage earning employment is increasing public desire for more

consumer gods.

-Established cultural identification with tastes of traditional products,

i.e., sweeter, heavy bodied, high alcohol content and flavored wines.

-Higher prices and limited availability of foreign products.

Lessening of PRC government's monopoly control of distribution systems of

major products, i.e., grains, oil, sugar and alcohol:

+Government entities are freer to establish direct business contacts with

foreign companies.

+Small private sector businesses are present everywhere, adding a stimulus

to the development of alternative distribution and marketing systems within

the country.

-Government bureaucracy, out of date regulations, paperwork, etc.

Business and trade considerations:

Patience and long-term commitment are necessary.

Include overseas Chinese connection in PRC business arrangement.

Joint venture connection with government or government connected

organization best for near future.

Establishment of dependable distribution and warehousing system is key.

Capital investment is offset by inexpensive labor costs.

Targeted advertising strategy is essential, building product identification

and product appeal.

Networking international hotels and restaurants.

Developing wine expos and other public wine education/appreciation events.

Current alcohol beverage market:

Distilled spirits traditional, brandies and cognacs are king.

Beer is being brewed locally in all cities. Beer popularity and consumption

is growing rapidly throughout the country.

Wine: Table grapes and vineyards for 6,000 yards. Wine grapes and wine for

2,000 years, but always in limited quantity. Rice, plum and other fruit

flavored, sweet and heavy-bodied wines are traditional and remain popular.

Late 1800s and early 1900s began foreign influence and production of

European styled dry wines. 1892 Chang Yu Winery was the establishment of the

first commercial plant in Yantai, China.

Bottom line: If there is money to be made by Chinese involved individuals

and/or businesses in marketing and selling an American product (wine),

success will eventually happen!

Plan and conduct a series of Chinese wine expos in several American cities

with large Chinese populations. Hold trade and public wine tasting events to

improve the marketing and sale of Chinese dry wines in the U.S.

Establish a cost sharing exchange program between the PRC and the U.S.

agricultural universities and institutions for viticulturists and

enologists--short term teaching, study and research grants.

Recommended American consultants for short working assignments with China's

alcohol beverage industry:

1. Alcohol beverage trade association consultant.

2. Alcohol beverage consultant on warehousing, distribution systems and

marketing strategies.

3. Consultant team from the U.S. Bureau of Alcohol, Tobacco & Firearms to

advise on: (a) Establishing national regulations and standards for the

Chinese alcohol beverage industry; (b) Label and formula approval; (c)

Compliance matters; (d) Laboratory research and testing procedures; and (e)

Product taxing and collection.

Increase incentive for foreign wine importation and joint venture activity

by further lowering the tariff on wine considerably below the present 70%

level. Increased sales of American dry wines in China will correspondingly

increase the popularity and sale of Chinese dry wines.

Gordon W. Murchie, Delegation Leader and President, Vinifera Wine Growers

Association, Alexandria, Virginia; Anita J. Murchie, Delegation Reporter,

VWGA; Albert A. and Donna M. Oliveira, Basport Vineyard, King City,

California; Tony K. Wolf, State Viticulturist, Virginia; Wilbert E.

Rojewski, President, Alasco Rubber & Plastics Corp., Belmont, California;

John R. Pramaggiore, Director of Fine Wines, Service Liquor Distributors,

Inc., Schenectady, New York; Tomas F. Rodriguez, President, La Provencale

Cellars, Reston, Virginia; Stephen D. Reiss , Buyers & Cellars Wine

Consultants, Aspen, Colorado; Anne V. and Roger W. Webb, Apponagansett Bay

Vineyard, South Dartmouth, Massachusetts; and Robert J. Boidron, Director,

E.N.T.A.V., France.