“They more or less failed in the development of the wine business,” Philippe de Poyferre, managing director of Château Loudenne, told Bloomberg. “It didn’t make sense for them to continue with Loudenne,” concludes the boss of a place that once belonged to Chinese investors, deceived by the success of names like Jack Ma or actor Zhao Wei, who also own properties in the Bordeaux region.
However, a confluence of factors such as the decrease in the amount of short-term investments, as well as capital flows, have made it difficult for those who want to produce wine in the French region to succeed. Moreover, the pandemic and the culture wars with French workers have been the final straw in this process.
After being among the top investors in this market for a decade, cash flow from China is rapidly disappearing. For example, when Vineyards-Bordeaux, a subsidiary of Christie’s real estate, sold 13 properties last year, there was no interest from Chinese investors. The pullback is emblematic, given that Asian entrepreneurs have also pulled back from international expansions in various sectors ranging from luxury to insurance, Bloomberg reports. In recent years, scrutiny of major acquisitions by groups such as HNA Airlines and Fosun has intensified from Beijing.
This wave of acquisitions for wine production began in 2011, after the COFCO Group, a large Chinese state-owned agricultural company, purchased Château de Viaud as part of an international expansion promoted at the time by the government of the country. The move has inspired other entrepreneurs, with the Chinese accounting for around 80% of 30 vineyard purchases in Bordeaux in recent years.
Over the past decade, Chinese investors have bought about 170 “castles”, or about 2% of existing properties in the region. The decline began in 2019, with the tightening of capital controls, which to date has worsened.