France Hopes To Grow Its Share Of China's Wine Market

Cars, jets and wine. These are just a few of the things France offers China as demand from the world’s second-largest economy becomes increasingly important for the European Union. And considering that China just recently became the world’s biggest market for red wine, there's a strong focus on selling what's in the cellars.

With China quickly becoming a net outbound investor -- Chinese President Xi Jinping is expected to sign a rescue deal for French carmaker PSA Peugeot Citroen when he stops in France on Tuesday as a part of his European tour, and he may also place a large order for Airbus jets, CNBC reported on Tuesday -- European companies are keen to receive some of the outflow of yuan, and French winemakers are queuing up to boost their already decent share.

Last year, China dethroned France and Italy as the world’s largest wine-consuming nation, and China's affinity for red wine rose by 136 percent in the past five years.

Even though 80 percent of the wine the Chinese consume is produced domestically, their taste for imported wine is growing rapidly and has multiplied sevenfold in the past five years, according to market tracking firm Vinexpo. French wine accounted for 50 percent of all China's wine imports last year.

Bilateral trade relations between China and the EU have improved recently. They were more difficult last year as both sides claimed the other was aggressively subsidizing and dumping its products. In fact, China recently ended a probe into the EU’s wine sector.

Now both are playing nice. Europe will lend technical expertise to China’s domestic winemakers, and in exchange the Chinese will help organize wine tastings for EU’s offerings throughout China, in order to improve knowledge and promote the appreciation of wine, CNBC reported.

In addition to consuming more French wine, about 60 wine-producing chateaux in France have been acquired by Chinese companies with an eye on sending more to China.

"In transaction terms, China is an important player in the Bordeaux region," said Thierry Charpentier, the director of the transaction department in Asia for PWC, a global financial services firm, according to CNBC. "The amounts [spent to acquire the chateaux] were relatively low, around 1 million to 3 million euros [$1.4 million to $4.1 million], but we're starting to see transactions that are more significant, around 10 to 30 million euros.”

But China is already the world’s biggest importer of Bordeaux wine, driving total exports of French wine to a record $7.7 billion last year. If France’s hope of wooing the Chinese is realized, that number is likely to grow manifold in the coming years.