The Chinese Investors Snatching Up Bordeaux Vineyards

St Emilion grapes
St Emilion grapes
Nathalie Silbert

BORDEAUX - The sale of the Château de Gevrey-Chambertin at the end of August has revived the specter of France's vineyards being transferred en masse into the hands of Chinese billionaires. However, in the Bordeaux region itself, these new investors seem to be rather well received by professionals in the field.

Until August 22 of this year, no one in France had heard of Louis Ng Chi Sing. But when Ng, an extremely wealthy resident of Macao who runs casinos there, bought himself the Château de Gevrey-Chambertin in Burgundy, there was a hue and a cry. The Front National, a far-right party, even gave the news a political turn, saying the sale was "emblematic of the danger threatening French heritage."

The feverish opposition was predictable. By acquiring one of the most renowned vineyards in Burgundy, Louis Ng roused the fears of vineyard owners worried that they will not be able to keep their land in the family. The sale also revived the specter of French vineyards being turned over en masse to Chinese billionaires.

A journey through the Bordeaux region sheds a different light on this "threat." There, the arrival of Chinese money is no novelty. In the past three years, Chinese investors as different as financier Peter Kwok of Taiwan, actress Zhao Wei, and agro-industry businesses like the state-owned conglomerate Cofco have bought up vineyards in the region, the only part of France up until
now to attract so many foreign buyers - without provoking any backlash.

"We are happy to welcome these buyers who pay for their purchases in cash, invest, and create jobs," says Stéphane Defraine, president of an organization to protect and manage the Entre-Deux-Mers wine appellation. It is true that the cosmopolitan city of Bordeaux has long been accustomed to English, German, Belgian and American investors, among others, and to selling its wines abroad.

In recent years, China has become one of Bordeaux's major markets. For the Chinese, who are just discovering wine, Bordeaux is the wine of reference and bears all the prestige of 
France's classic grands crus. Mainland China has become the number one importer of Bordeaux wines, far ahead of Germany or the UK. The Chinese bought 70 million bottles of Bordeaux-- 82.5 million including Hong Kong-- between June 2001 and the end of May 2012, according to the CIVB, the Interprofessional Council of Bordeaux Wines. Hong Kong is currently the best
market in the world for the most expensive wines. In total, these sales brought in 650 million euros.

What “invasion?”

These Chinese commercial partners were even more welcome because their investments in the region rescued properties that were in serious difficulties or which were having inheritance problems, meaning they were not necessarily easy to sell. "There are a lot of vineyards for sale around here," explains Daniel Carmagnat, a real estate agent from Sainte-Foy-la-Longue.

Up until now, Chinese billionaires have mainly bought lands producing generic appellations or labels. The idea of an "invasion" of French vineyards by the Chinese makes local people smile, at least for now. They note that the Chinese
represent a tiny minority of the 8,000 listed vineyards.

Still, the Chinese are certainly making headway. According to the Aquitaine Atlantique Safer, a French government overseer of rural development, 11 domaines were sold in 2011, and 15 since the beginning of this year.

The Chinese who invest in French vineyards usually have similar goals. Patrice Klug, founding associate of MK Finance, which has sold four properties to Chinese investors, says, "They believe that investing in French real estate is a good diversification of their money. They are buying a little piece of French history and culture by becoming the owner of a vineyard, while at the same time it is a solid financial decision. To attract them, you have to show them a handsome building that they can show off in their country as an image of their social success." He remembers spending eight days traveling around the Bordeaux region with the daughter of the owner of the Longhai group, Daisy Cheng, as she is called in France. "She was thrilled by the turrets, the lake, and the legend that King Henri IV was arrested at the Château Latour-Laguens," he says.

Symbols of French luxury

The name is important too. It needs to sound French and, if possible, remind the listener of the grands crus, like the Château Latour-Laguens, which, since its sale, has been turned into a brand of stores, books, etc.

Once the vineyard has been bought, the idea is for the production to target the Chinese market. The Chinese know that they will attract consumers more with the symbols of French luxury.

The Château Grand Mouëys d'Au, in Capian in the Entre-Deux-Mers region, is surrounded by a lovely park and a vineyard of 60 hectares of Côtes de Bordeaux. Its new proprietor, the Ningxia Group, known in China for its wine flavored with Goji berries, would like to export to China half of the 350,000 bottles it produces every year.

Before its sale, the domaine, then held by the Bömers family, had been in trouble due to the loss of some of its larger clients in Germany. "The Chinese market will help us return to financial health," says Guy Durand Saint Omer, the general director hired by Jinshan Zhang, the head of the Ningxia Group.

It will be even more profitable because the conglomerate, like other Chinese companies, is able to rely on its own distribution network to sell its wine in the Chinese market. By bypassing middlemen and importers, it increases its profit
margin. And that can be considerable. In Beijing, a bottle of a minor Bordeaux that costs between 2.5 and 3 euros at the vineyard can be sold for between 15 to 40 euros.

Ambitious projects

The ambitions of Chinese investors go further. They arrive in Bordeaux with ambitious projects and the desire to improve their wine. Chinese movie star Zhao Wei, an actress who has sold 80 million box office tickets in her country, bought the Château Monlot from Bernard Rivals. The actress plans to spend five million euros more in improvements to the seven-hectare vineyard, which produces a Saint-Emilion grand cru. "To improve the quality of her wine, she has asked for help from Lydia and Claude Bourguignon, who are specialists in wine cellars, and from Jean-Claude Berrouet, the wine historian of Pétrus," says the former owner.

Moreover, "they often add eco-tourism projects to their investment," says Guy Chateau, general director of the Aquitaine region for the Crédit Agricole bank. Jinshan Zhang, for example, plans to fill the bedrooms of the Château du Grand Mouëys with paying Chinese guests. He also dreams of creating a golf course. Some wealthy Chinese are buying several vineyards in order to organize wine tours.

These investors are shrewd businessmen, often from Hong Kong or Singapore, which makes currency transfers easier. "They do not over-pay," Guy Chateau observes. Taking advantage of the low price of land in the Bordeaux region, which is at its 1990 level of around 15,000 euros per hectare, they have usually spent "only" a few million euros.

Wary and thorough, the Chinese surround themselves with people they trust, who speak excellent French, and they go through all the documents carefully. "They want to understand our social regulations and our tax system," explains Guillaume Rougier-Brierre, associate at Gide Loyrette, which negotiated the sale of the Château de Viaud to Cofco. "They go as far as to have the wine tasted by a third party to make sure they are not being cheated," adds Bernard Boireau, a Libourne notary who managed the sale of the Château Monlot.

Where next?

The Chinese buying fever could just be getting started. According to Safer, 15 dossiers are currently being considered by Chinese buyers. As an indicator of what is at stake for business, Diva Bordeaux, a wholesaler specializing in the best grand crus, was acquired this summer by Bright Food, an agribusiness heavyweight owned by the municipality of Shanghai. According to Jean-Pierre Rousseau, general director of Diva who sold his shares to the group, the sale gave Bright Food "history, an image, and also authenticity" in a Chinese market undermined by fraud, but which is also booming.

The developing Chinese middle class promises steady future growth for wine consumption. Bright Food owns 230 stores and 20 or so department stores in which salespeople receive training in the art of wine. Like Cofco, it hopes to ensure its supplies.

In the future, will the Chinese covet the prestigious grands crus that their billionaires are already snatching up? It is possible. But the prices will then be in the range of hundreds of millions of euros, and they will find rival buyers in
their path. Their appetite for vineyards could also go beyond the borders of the Bordeaux region. After Cognac, where a Chinese has just bought the insolvent Menuet brand, they could be interested next in the châteaux of Languedoc-Roussillon, which are still reasonably priced and whose wines are prized in China. The wines of Burgundy are still little known in China. They will not be a target except for certain numbers of aesthetes, ready to pay a high price. "The only way to succeed on the Chinese market is to sell large quantities," remarks David Balzan, general director of Cordier-Mestrezat, a major Bordeaux wholesaler. The Burgundy wine region is composed of wine appellations scattered across multiple properties, which are much smaller than the vineyards of the Bordeaux châteaux. Largely pre-empted by European buyers, it is too small to provision the huge Chinese market. In any case, the political turn of events since the acquisition of the Château de Gevrey-Chambertin has shown the Chinese how sensitive the subject can be. In 1988, Henri Nallet, François Mitterrand's agriculture minister, refused to allow the Japanese to invest in the domaine of Romanée Conti.

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Debt Trap: Why South Korean Economics Explains Squid Game

Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.

In the Netflix series, losers of the game face death

Yip Wing Sum


SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.

The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.

It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.

Seoul housing prices top London and New York

In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.

According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.

Average home loans are equivalent to 270% of annual income.

One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.

According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.

Playing the stock market

At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.

A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."

In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.

42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s

Simon Shin/SOPA Images/ZUMA

Game of survival

In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.

But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.

This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.

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