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  China's wine frontier
(KERI SUTHERLAND)
05/17/2002
After a 40-hour journey and never having been out of the US, Sam Featherston arrived in China without speaking the language and armed only with a meagre understanding of the country, gleaned from an out-of-date encyclopedia.

Following an unsteady introduction to the petroleum fumes of the infamous drink baijiu (spirit) at a banquet, he began his internship at Montrose Food and Wines as the sole salesperson in a company of only six employees.

Eight years on and Featherston is now the Shanghai manager of the largest wine distribution company in China.

Now fluent in Chinese, Featherston possesses detailed insight into the business environment here.

Status symbol

"Shanghai is very open to Western culture," he says, "while Beijing is quite traditional in comparison."

Through experience, Featherston has learned three general rules for successful business in China: it is necessary "to have a good background, to use the back door, and to maintain good relationships."

He suggests that this tradition may be unfamiliar to some potential investors. Some foreign companies may be tentative about working in a country where customs often appear to clash with Western philosophy.

In Shanghai, Featherston believes the future for wine distribution is promising.

Compared to the US, in China the market share has vast potential, although in the past 12 months he has noticed a drop in competition from other foreign wine companies.

Due to hefty duties imposed by the government, oversupply in the market and a lack of knowledge of Western wine, international interest in wine distribution is dwindling.

In response, Featherston actively encourages new competition to visit Shanghai to investigate the real characteristics of the market.

"I often invite other companies from the West to come and experience what real business is like in China," he says.

His company has already begun to expand into other areas. Montrose has integrated the distribution of alternative beverages and food into their service.

Although the company mainly distributes to 5-star hotels, restaurants, nightclubs and business functions, Featherston believes that taste in Shanghai is progressing.

"Wine has become fashionable, a status symbol," he says, but adds that the city "still has a lot to learn".

Wine culture

Featherston recently discovered that "while most Chinese will choose a French dry red, it being the best known type of wine available in the market, most palates actually prefer a sweet white wine."

Research such as this encapsulates the company's focus on education. Featherston believes in the necessity of increasing consumer knowledge in order to aid the development of wine culture.

Montrose Food and Wine are constructing an interactive website and are planning the opening of a wine shop.

Activities will include wine tasting evenings and on-site computers where customers can access information about the products they are interested in.

Featherston points out that being able to differentiate between the quality and characteristics of wine will encourage brand loyalty and increase consumer satisfaction.

Featherston's initiative and interest in his field has guided the company's growth from a small distribution firm into a lucrative and influential business.

But he admits that there are persistent restraints on the opportunities for wine distribution to expand.

International wine culture in China is still in its early days and has not been encouraged by the volatility of the market.

Last year the scare in Europe over unsavoury additives being used in the production of wine rocked the stability of wine distribution.

Traces of bull's blood, wood shavings, anti-freeze and sulphides were found to be used by unscrupulous wine producers in Europe.

Featherston points out that Shanghai is protected by strict quality regulations, "but this news did affect the rest of China to a certain extent."

Because regulations are not as tight elsewhere in China as they are in Shanghai, Featherston notes that the quality of wine is often impaired.

"Some exporters, unable to offload low-standard wines onto Western markets, tend to sell these wines to the East at a cheaper price," he says.

As a result, the standard of wine distribution in the rest of China is poor.

Localization

Montrose Wine and Food have now begun to work closely with Chinese wine producers such as Lou Lan and the Great Wall Winery Group of China.

Relations with these companies will ensure education and growth, not only amongst consumers, but at all stages in industry, Featherston explains.

Having once been a fresh-faced graduate from Texas with no previous experience in wine distribution, Featherston has developed an in-depth knowledge of Chinese culture.

Due to the demands of his working day, he spends most of his spare time at home, although he is insistent that home is by no means dull.

"I live in one of the most interesting parts of the city, overlooking People's Square," he says.

He has managed to travel around China a great deal, "in particular to the satellite cities of Shanghai".

The nature of his work has also often taken him to wine producing countries in Europe.

At the moment the future is indefinite for Featherston, but he is enthusiastic about the potential for the wine industry in both Shanghai and the rest of China.

   
       
               
         
               
   
 

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