Hong Kong could be biggest market for Ningxia wine, says HK former leader

Hong Kong could be the biggest market for China’s Ningxia region, benefitting from the city’s unique position as a wine trading hub and an open economy, says Hong Kong’s former leader Leung Chun Ying, who now serves on China’s powerful political advisory body.

Leung Chun Ying, former chief executive of Hong Kong and current vice chairman of China’s national CPPCC, a powerful political advisory body

The idea to utilise Hong Kong’s free market, sound infrastructure and branding ability to turn the city into the biggest market for wines produced from China’s premier wine region Ningxia took shape when a business delegation led by former Hong Kong chief executive and current vice chairman of CPPCC, Leung Chun Ying, visited the northwestern province last week.

This also marks the beginning of a new bilateral relationship between Hong Kong and mainland China.

Previously much was talked about Hong Kong’s role as a gateway to the vast Chinese market, but now the role has reversed, and it appears the central and local Ningxia government are eager to use Hong Kong as a springboard to launch Chinese products abroad from popular vegetable ‘choy sum’ to wine, giving it the much needed cachet and credibility.

Emphasising that Ningxia wines can use Hong Kong to open up its export market, Leung Chun Ying told dbHK in Ningxia: “As an global trading hub, Hong Kong can offer a lot to Ningxia such as distribution and trading.

“For instance, Hong Kong is the biggest market for Japanese foods, but not all the Japanese foods exported to Hong Kong are consumed in Hong Kong, but are resold elsewhere. We talk about offshore trade a lot, and this is a case. This is also why Hong Kong’s trading value can be three or four times of its GDP.”

“Therefore, I dare to ask one question, not necessarily a goal at this stage. Since we are the biggest market for Japanese foods. Maybe one day we can be the biggest market for Ningxia-produced products including wine.”

He added that Hong Kong’s wine trade has seen “warp-speed growth” since the city eliminated wine tax in 2008.

Hong Kong is already a key export market for Ningxia, and in 2016, the city ranked as the second biggest export market for Ningxia.

Additionally, the former chief executive noted wine industry is not just limited to agriculture, but stressed its ability to link secondary and service sectors with wine-related tourism, intellectual property rights and trading.

Zhang Yanzhi, founder of one of Mainland China’s biggest wine importers, Easy Cellar, is now heading up what Ningxia calls the “most modern Chinese winery”, Xige Estate near Helan Moutain East Foothills. The winery’s production is expected to be 13 million bottles a year.

This was resonated by Ningxia’s top official Shi Taifeng, Communist Party secretary of Ningxia Hui Autonomous Region. Talking to the Hong Kong delegation consisting of entrepreneurs and media, Shi spoke with confidence that working with Hong Kong wine distributors is the “best choice” for Ningxia wine.

“Who should we work with? We need to work with wine merchants and people who know how to sell wine. Collaborating with our Hong Kong compatriots is the best choice,” he stated. “Hong Kong consumers are selective about wine. But if they believe Ningxia wines are great – what an incredible vindication it is! In this regard, we will unite people in Ningxia who know how to make great wines with people in Hong Kong who know how to sell wines. This is our aim, and we have the confidence to do it.”

Also highlighting Hong Kong’s role for China’s signature infrastructure policy, ‘Belt and Road initiative’, the Chinese official believes more opportunities will arise to deepen collaboration between the two parties.

Ningxia more than any other wine producing regions in China enjoys strong government backing and it rose to prominence after a few small boutique wineries won international wine awards. First established in 1984, it was only in recent years that the local government started to invest in Ningxia’s wine industry, and has since pronounced ambitions to turn it into a “pillar industry”. Its turnover in 2018 amounted to RMB 23 billion (US$3.4 billion), around 6% of Ningxia’s overall GDP (RMB 370 billion).

It’s generally agreed among winery owners and merchants that with Hong Kong-Ningxia collaboration, volume sales are not necessarily the goal, more importance is given to branding and giving visibility to Ningxia wines to foreign visitors and tourists in Hong Kong.

Wang Fang, founder of Ningxia’s leading winery Kanaan, cited examples of how her wines being listed on restaurants and hotels in Hong Kong boosted their visibility globally, when speaking to the wine delegation in Ningxia. Having been imported by Summergate Fine Wine and Spirits to Hong Kong, her wines are now exported to the UK, Australia and among other countries.

However, newly built Xige Estate, a modern winery sprawling over 20,000 mu (1333 ha) in Ningxia, has the ambition to sell more than US$1 billion bottles of wines. The RMB 300 million (US$44.6 million) winery was founded by Zhang Yanzhi, founder of wine importing company Easy Cellar known for distributing Petrus and Penfolds Max series in mainland China.

Whether Hong Kong will be able to materialise Ningxia’s greatest wine dream is yet to be seen.