Chateau Beijing: Chinese buying up Bordeaux estates

You could hardly do better than Chateau du Grand Moueys if you were looking for a metaphor to demonstrate Chinese interests in European wines, luxury goods and travel.

It has a history that includes a Templar legend, vineyards in the heart of France's famed Bordeaux region and a new Chinese owner with plans to export the wine home and turn its palatial 18th century house into a luxury hotel for tourists from China.

The French estate's new owner, Jin Shan Zhang is part of a wave of Chinese interests across Europe seeking to satisfy domestic demand for the finer things in life: French wines, luxury travel, foreign cars and fashionable clothes.

In France, Britain, Italy, Germany and elsewhere across Europe Chinese tourists are being catered to in high-end shops selling them top labels in everything from couture to cutlery. Hotels, department stores and luxury boutiques have taken on Chinese-speaking staff and most of Europe's luxury firms have an Asian business strategy they are actively pursuing.

China has become the biggest importer of Bordeaux wines and consumption in the middle kingdom soared by 110 percent in 2011 alone, with no sign of quenching a seemingly insatiable thirst.

About 15 Chinese individuals or businesses have purchased wine-growing properties in Bordeaux and Chinese investors also want to develop luxury tourism in Bordeaux, which they think will be the next fad as Chinese wealth pours into Europe.

For Chinese people, the Bordeaux region is a paradise of wine, for the drink but also for the image of France, the landscapes and the chateaux, said Li Lijuan, the 28-year old Chinese woman in charge of managing the Grand Moueys property.

Owner Zhang made his fortune manufacturing fruit alcohol, owns several businesses including a travel agency and has an intimate understanding of the wine supply network back home.

We will export at least 80 percent of our production to China. We will increase our output of white wine, Chinese people love it because it's sugary, Li added.

She lives alone in the estate's massive neo-Gothic chateau which sits prominently in the midst of the vineyard and which in the summer of 2013, will be turned into a luxury hotel with French gardens, tennis courts, a golf course and a high-end Chinese restaurant.

Zhang told Decanter magazine last month that he hopes to welcome about 10,000 Chinese visitors a year to Grand Moueys from 2013, but will keep it open for other tourists as well.

We will retain the luxury French feel of the wine and the estate, and hope to marry this with Chinese culture, he was quoted by Decanter as saying.

COMING TO BURGUNDY

Out of the 11,000 chateaux sitting along the Garonne river in Bordeaux, between 15 and 20 have been sold to Chinese investors since 2008 and another 30 properties could soon change hands.

While this figure may still sound marginal, analysts in the sector say this trend will intensify, despite China being among the world's 10 largest domestic wine producers.

They come and supply themselves directly because their internal market is enormous, said Philippe Hermant, in charge of wine at Transcapital, a business which specializes in mergers and acquisitions in the food sector.

Hermant said the trend mirrors Chinese interests in Africa, where they are massively investing in the commodity sector.

Damien Mounet, in charge of buying and selling wine properties at SquareViti, a Credit Agricole subsidiary, said he believed the trend in Bordeaux was a harbinger of wider investments in the industry across the country.

One Chinese firm has just bought a chateau in the Burgundy region, Bordeaux's rival in eastern France.

Although interested in the Bordeaux's famous name, Chinese buyers have so far shied away from purchasing properties labeled grand crus -- the designation for classified vintage wines of the finest quality.

Chinese investors aim to buy intermediate wine qualities mostly for cost reasons. Such properties cost an average of 5 million euros ($6.6 million), against 20 times more for a grand cru, analysts say.

Grand crus cost around 800,000 euros per hectare, they don't understand that price, it's unthinkable for them, said a wine grower who has just sold his property near Libourne.

But while Chinese investors do not target the absolute top wine producers, they do want to buy impressive and beautiful buildings.

Among the thousands of wine properties for sale, many do not match the criteria for this new kind of investor.

The Latour-Laguens chateau in the Entre-deux-mers area, that sits on top of a hill between the Garonne and the Dordogne rivers, was the first chateau sold to a Chinese firm in 2008.

Jean-Baptiste Soula, oenologist at Chateau Latour-lagens, said the Medieval-style dungeon of the 18th century chateau was a key feature that made the purchase possible since buying a chateau without a chateau was unconceivable.

While wine properties are called chateaux, the buildings nestled amongst the vineyards are often not real castles, much to the dismay of those buyers less familiar with the landscape of the French wine industry.

Without those beautiful buildings, investments would have never happened here, Soula said. In this type of domain the building makes up around 50 percent of the price, he said.

Behind the thick layers of stones, wine storehouses made of stainless steel are brand new and the casks made out of the best quality oak wood bought from local craftsmen.

They have invested to produce the best wine they can but they have never asked me to adapt the wine for a Chinese taste, Soula said, adding work methods and staff had not been replaced.

LUXURY WINE TOURISM

One resident of the Capian village, close to a chateau which was recently sold to a Chinese group, said she welcomed the investment in the vineyards and the cultural heritage, which without the help of rich investors would fall into neglect.

People were gossiping because we weren't seeing anyone visiting, the resident said. In the end we all learnt about it (the sale) in the local daily, she added.

Chinese investors, such as the new owner of Chateau Grand Moueys, often want to tap into the surge of Chinese tourism and develop a high-end oenology tourism in the Bordeaux region.

We are at the start of a flow which is going to massively increase, said Pierre Goguet, head of the Bordeaux Industry and Commerce Chamber (CCI). Tourism from Asia to the Bordeaux region has jumped by 40 percent in 2011.

There is a real infrastructure issue, Goguet said. The most beautiful hotel in Bordeaux, which faces the Opera, is not luxurious enough, they don't like it at all, he said.

The luxury Chinese hotel chain Mandarin Oriental, which has just opened a palace in Paris, is mulling opening another one in the region, he said.

But investors are also trying to replicate that elegant French feeling for consumers at home who would like the wine, the food and the atmosphere without the long flight to Europe.

Close to the large seaside resort of Dalian in northern China, investors are constructing a village inspired by the home of the famous Saint-Emilion wine.

In this theme park, expected to open its doors in 2012, 20 million wine bottles will tingle taste buds and villas sold for about one million euros will overlook green slopes, covered in vines.

($1 = 0.7573 euros)