[Congressional Record Volume 142, Number 137 (Saturday, September 28, 1996)]
[Extensions of Remarks]
[Pages E1776-E1777]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 AMERICAN WINE DELEGATION CONTRIBUTES TO IMPROVED UNITED STATES-CHINA 
                              TRADE DIALOG

                                 ______
                                 

                       HON. GEORGE P. RADANOVICH

                             of california

                    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:

                      Wine Business and Diplomacy

       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.


                      doing wine business in china

       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.

[[Page E1777]]

       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!


 SUGGESTIONS FOR AN ONGOING DIALOG BETWEEN THE WINE INDUSTRIES OF THE 
            PEOPLE'S REPUBLIC OF CHINA AND THE UNITED STATES

       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.


                       MEMBERS OF THE DELEGATION

       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.

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