Getting into the wine storage fa by liwenting

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									6/09 MEININGER’S WBI




                       NEWS A
                       R U B R I K N A LY S I S



                       HONG KONG OPEN FOR BUSINESS
                                                  G
                                                         etting into the wine storage facility at         the push and their collective power is formidable.
                                                         Crown Cellars in Hong Kong is no easy feat.      The HKTDC, Invest Hong Kong and the Hong
                                                         The entrance, an innocuous looking door          Kong Tourism Board declared 2009 as Hong
                                                  set into a hill, is actually a heavy metal security     Kong’s year of food and wine, synchronising their
                                                  door. Greg Deeb, general manager of Crown Cel-          promotional strategies. The result was a series of
                                                  lars, tells a small group of journalists that as soon   joint ventures, including a weekend Wine and
                                                  as the door is open, they have only seconds to get      Dine festival that attracted around 70,000 visitors.
                                                  inside. If the door is open for too long, an alarm         As Yvonne Choi Ying-pik, permanent secretary
                                                  sounds that will bring down two rapid response          for commerce and economic development, told a
                                                  police teams. The journalists scurry in.                press conference, Hong Kong has “also introduced
                                                     The extreme security is understandable. Hong         a number of supportive measures in areas such as
                                                  Kong now stores around 17% of all the rare and          customs facilitation, forging closer cooperation
                                                  fine wine in the world, of which €100m worth, or        with our wine trading partners and counteracting
                                                  15-20%, is stored at Crown Cellars’ facilities. The     wine counterfeits,” she said. “To strengthen
                       Felicity Carter, an
                                                  light inside is provided by sodium vapour lamps,        enforcement capacity, the department has set up
                       Australian journalist,
                                                  because they give out no heat. Dehumidifiers            a specialised investigation team and has stepped
                       has contributed to
                                                  keep the humidity at 78.8%, while a Siemens             up cooperation with overseas enforcement agents,
                       The Age, The Sydney
                                                  control panel shows that the journalists’ body          to promote an exchange of intelligence on
                       Morning Herald and
                                                  warmth has raised the temperature by one degree.        faked wines.”
                       decanter.com, among
                                                  “We are the most fanatic wine cellar in the world,”        Miss Choi also outlined a certification scheme
                       other publications.
                                                  says Deeb.                                              for wine storage that is to come into effect by the
                       She is now
                                                     The high-tech care is understandable given the       end of 2009. “The Hong Kong Quality Assurance
                       Editor-in-Chief of
                                                  value of the wines here, which would be damaged         Agency is assisting the industry to develop this
                       Meininger’s Wine
                                                  if exposed to Hong Kong’s heat and humidity.            certification scheme. The agency recently visited
                       Business International.
                                                  Hong Kong isn’t, after all, a natural place for wine    wine storage facilities in Europe and the US, to
                                                  — except that if the Hong Kong government               refine the scheme to international standards and
                                                  achieves even a fraction of the ambitious               best practices.”
                                                  programme it’s set for itself, the world’s wine will       Not only that, but Hong Kong University Space
                       Dropping wine duty         soon be pouring in.                                     has just signed an agreement with the University
                                                                                                          of Bordeaux and will begin to offer Wine MBAs, to
                                                  Asia’s wine hub
                       was only the first                                                                 ensure that Hong Kong will have a ready supply
                                                      The Hong Kong Trade Development Council’s           of experts on hand to manage the wine business
                       step in turning Hong       Wine and Spirits Fair in November gave officials a      that’s expected to enter the city. And that’s only
                                                  platform to deliver a message to the international      the start of what’s being planned.
                       Kong into the wine         wine trade and they lined up to take advantage of
                                                                                                          Asia’s wine hub
                                                  it. Over and over, they made the same point: Hong
                       hub of Asia. The           Kong is at your service.                                   Hong Kong’s ambition is not to have wine pour-
                                                      This is not a casual offer. Many people would,      ing in for the benefits of its own citizens alone; at
                       government of Hong         by now, be aware that the Hong Kong government          present, the city drinks 3.3L a head which,
                                                  scrapped duty on wine in February 2008. It was          although it may rise to 5L in the next decade, is
                       Kong has studied           the first visible sign of their intention to turn       hardly enough to justify the investment in major
                                                  Hong Kong into the wine hub of Asia and it soon         wine infrastructure. But the government is aware
                       the issue carefully        attracted the attention of the auction houses. As       that the wine world sees China as the next major
                                                  officials are quick to say, Hong Kong has had 18        market — and Hong Kong wants a piece of the busi-
                       and is about to            major auctions in the past 18 months, and is now        ness. In return, they have a lot to offer. Hong Kong
                                                  tipped to overtake London as the world’s second         is the world’s major transportation hub, being one
                       offer a new suite of       wine auction centre, after New York. But what the       of the world’s busiest ports. It’s also close to China
                                                  Hong Kong Trade Development Council (HKTDC)             geographically, culturally and linguistically, and
                       services to attract        is also at pains to communicate is that the             can offer speedy custom clearance on the borders.
                                                  government is rolling out a comprehensive suite         This is no small matter, given how onerous China’s
                       the wine trade.            of services targeted at the entire wine trade.          wine import procedures are and how they can
                                                      A number of government agencies are behind          apparently change on a whim.



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                                                                                                                      H O N G K O N G

   “On the face of it, bringing product         effective trade body or other organisation.      has a background in logistics, says that
through Hong Kong adds cost,” says              But the Hong Kong Wine Centre has been           Hong Kong’s superb capabilities can help
Brendan O’Toole, the managing partner of        conceived precisely to tackle this problem       the wine trade get through China’s
Summergate Fine Wines, one of the major         head on.                                         labyrinthine customs and labelling proce-
distributors in China.                             The idea is that the Wine Centre will be a    dures. “We know the customs officers very
   What makes Hong Kong attractive, he          permanent wine exhibition, divided into          well and we can comply with everything,”
says, is that a Hong Kong agent could shield    zones. One zone, for example, might be for       says Wong. He says that the Hong Kong
a producer from the difficulties of import-     distributors with multi-national portfolios.     authorities are now so versed in what is
ing wine into China. The problem he sees,       Another might be the New Zealand zone, or        required to get wine into China, they are
however, is that Hong Kong is also expen-       the French zone, or the Indian zone. Each        actually training some of the Chinese
sive. While O’Toole says that this isn’t such   individual company will have its own space,      customs officers in the correct procedures
an issue for higher grades of wine, there’s     which will be about the size of a decent         for importing wine.
currently no cost benefit for commercial or     trade fair booth, and come fully equipped.          The potential fly in this ointment is, of
lower-priced wines entering Asia through        “We consider it’s more or less space for the     course, China itself. If China were ever to
Hong Kong, especially if the wine producers     winery to showcase ten of their wines,” says     take the wine trade seriously and start
already have distributors who can negotiate     Wong. “They will have glasses, storage,          providing storage and other services, there
customs issues for them.                        a cabinet, a working table, broadband,           would be little need for the world to beat a
   But HKTDC has thought of that, as well.      telephone... everything.”                        path to its door through Hong Kong. How-
                                                   Buyers, distributors and importers can        ever, that’s unlikely to happen, a number of
The Wine Centre
                                                stroll the Wine Centre, tasting wines they       commentators say, simply because nobody
   Anthony Wong rolls out architectural         might never otherwise see, the whole world       can imagine the Chinese government
drawings at the slightest provocation,          laid out in front of them. In this way, small    streamlining its bureaucracy any time soon.
discussing issues like square feet and booth    and medium sized businesses can get some            Just what does Hong Kong get out of all
size with great enthusiasm. Wong is the         level of access to the market.                   this activity? Having dropped the wine
general manager of what is going to be the         That’s phase one. In phase two, the Wine      duty, they’re not making money on the
Hong Kong Wine Centre, a major piece of         Centre will be a constant hub of activity,       wine that enters the city. Officials say they
wine infrastructure.                            with non-stop wine tastings, seminars,           want to burnish the image of Hong Kong,
    “We are going to develop the whole 13       corporate functions, and even fashion and        and food and wine is one way to do that.
floors,” he says, pointing at the drafts.       jewellery shows involving wine. “Every           More seriously, Hong Kong’s ports have laid
“Each storey is about 100,000 square feet,      night we will have wine tastings, wine           off staff and cancelled new construction
but in the first phase we will develop          school, talks…” says Wong.                       projects, as shipping volumes fall. Having
40,000 square feet.”                               The audience for all this activity will not   the world’s wine arriving on the wharves
   The Wine Centre is not going to be some      be the people who actually live in Hong          could only be a good thing.
tourist attraction, like London’s Vinopolis,    Kong. In fact, they will not have access to
                                                                                                 The future
but a place of business where small and         the Centre, except for special functions or
medium sized wineries from around the           promotions, because the Wine Centre                 So how effective were the HKTDC’s
world will want to come. Wong explains          doesn’t want to undermine local wine             efforts at the Wine and Spirit Fair? A look at
that when the government considered its         retailers. But tourists from other parts of      the stands suggested they had attracted
wine hub plans, they looked carefully at        Asia, particularly China, will be most           more minor and lesser-known labels than
everything Hong Kong could offer a global       welcome. “They will have special preferen-       big, well-known wines, though the fair has
industry: “In terms of logistics there are no   tial treatment,” says Wong. “We want to          doubled in size since last year. A quick
problems,” says Wong, ticking off the city’s    turn Hong Kong into a place where most of        straw poll of exhibitors also suggested that
strengths. “We’re an open city. Legal is OK.    the commercial wine into Asia will come. It      HKTDC needs to do more to qualify the buy-
Finance is OK. Language is no problem.”         will be consolidated and centralised here        ers it allows in — exhibitors complained of
   So far so good. But then the problem         and then traded throughout Asia. How to          buyers who seemed to know little about wine,
became clear – economies of scale.              make it happen? This Centre is one of the        looking for product at unfeasibly low costs.
Although big multinational brands may           driving forces.”                                    But these are, probably, teething prob-
dominate the supermarket aisles, a signifi-        Wong says the Wine Centre will also           lems. The government seems to have
cant portion of the world’s wine producers      offers a series of support services for wine     thought more clearly about the way the
are small players – people who don’t have       producers who want to import into China.         global trade works than many who have
large marketing, strategic and logistics        “If you bring your whole container here, we      been working in wine their whole lives. If
budgets, who will struggle to access the        can help you temporarily store it in some        even part of their rhetoric becomes reality,
global market. The same people will, unfor-     bonded warehouses across the border,             then it’s likely that the power brokers and
tunately, also struggle to pay for Hong Kong    where the cost is very minimal. Since it’s       style setters of the future will not come
hotel rooms, storage facilities and so on,      bonded, we don’t have to pay tax and we          from the USA or the UK, but from this very
unless they’re backed by an unusually           can easily move it back here.” Wong, who         dynamic city.                                I



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