Whose Terroir is it Anyway? Comparing Chinese FDI in the French and Australian Wine Sector

AAWE WORKING PAPER No. 168

30 Pages Posted: 12 Dec 2014

See all articles by Louise Curran

Louise Curran

Toulouse Business School

Michael Thorpe

Curtin University of Technology - Curtin Business School - Bentley Campus

Date Written: September 2, 2014

Abstract

This paper explores recent developments in outward Foreign Direct Investment (OFDI) from Chinese companies in the wine sector in the Bordeaux (France) and West Australia (WA) regions. The objective is to explore the extent of the phenomenon, which although widely mediatized, has not been the subject of academic scrutiny. As OFDI official figures provide little detail, we undertook primary research in the two regions, in addition to analysis of secondary trade data.

Results indicate that the level of Chinese OFDI is relatively low, although the number and speed of acquisitions, especially in Bordeaux, has attracted attention. The motivations of investors in both regions were: the exploitation of growth in the home market; security of supply; prestige and diversification of risk. In Bordeaux the ‘appellation’ was a clear motivation, as were the vineyards’ historic buildings. A final motivating factor was the wish to avoid the complex supply chains in Bordeaux, by bringing wine direct to the Chinese market. In Australia, cementing existing business relationships, as well as access to Australian residency were specific motivations. Both regions have a relatively open investment climate and no significant investment barriers were noted, although the potential exists, especially as evidence emerges of illegal funding of some investments. We conclude with some directions for future research.

Keywords: Western Australia; Bordeaux; Chinese FDI; Wine

JEL Classification: F21, F14

Suggested Citation

Curran, Louise and Thorpe, Michael, Whose Terroir is it Anyway? Comparing Chinese FDI in the French and Australian Wine Sector (September 2, 2014). AAWE WORKING PAPER No. 168, Available at SSRN: https://ssrn.com/abstract=2536885 or http://dx.doi.org/10.2139/ssrn.2536885

Louise Curran (Contact Author)

Toulouse Business School ( email )

20, bd Lascrosses - BP 7010
Toulouse Cedex 7, 31068
France

Michael Thorpe

Curtin University of Technology - Curtin Business School - Bentley Campus ( email )

GPO Box U1987
Perth WA 6845
Australia
+61 8 9266 3416 (Phone)
+61 8 9266 3026 (Fax)

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