An Israeli winery is set to build an $8 million facility in central China, hoping to take a piece of what has become one of the largest wine markets in the world. The winegrower, Hayotzer, has signed a preliminary agreement with the Pen Dun Group to build the joint project.
Hayotzer, which is owned by Arza, one of Israel’s largest wineries, will hold a 20-25 percent stake and will advise on winemaking and viticulture of the proposed venture. China is currently the world’s fourth largest wine consumer, and is set to surpass France and the United Kingdom by 2020, making them second only to the United States.
“They welcomed me like I was a Jewish Nobel Prize winner,” Guy Edri, the CEO of Hayotzer told The Media Line. “They are very enthusiastic about Jews and Jewish creativity. They say that Jewish culture is very close to Chinese culture and both are thousands of years old. They also see the kosher symbol as a mark of quality.”
China is already buying a lot of Israeli wine. When Edri met Chinese importers at a recent wine fair in China, they placed an order for 40,000 bottles. That’s the kind of market Israel, with its total population of just eight million, can only dream about.
“China is a nirvana for Israeli winemakers – it’s one of the biggest wine markets in the world,” Adam Montefiore, a wine writer for the Jerusalem Post told The Media Line. “’We joke that if we can sell wine to just one village in China, we can all retire. The Chinese have great respect for Israel’s history and its technology.”
But he said, the Chinese bureaucracy can make it difficult for new companies to succeed. And oenophiles might cringe if they saw their product being mixed with Sprite to appeal to the Chinese, who like sweet drinks.
“Drinking wine is more about status than actually liking wine,” Montefiore said.
The plan for the winery is only the latest agreement between Israel and China. This week Israel’s finance minister, Moshe Kahlon, was in Beijing for the signing of a $300 million trade agreement for “clean-tech” Israeli companies, meaning environmental-friendly energy and agricultural technology. In a statement, Israel’s foreign ministry said that the new deal, “allows the two sides to expand bilateral economic activity into other environmental-friendly technologies, including advanced agriculture technologies and smart and green energy technologies, which the Chinese government wants to implement using Israeli experience and expertise.”
China is hungry for Israeli technology and Israeli companies are happy to provide it. Press reports say that more than 1,000 Israeli companies have set up shop in China, and large delegations of Chinese businessmen visit Israel every year. China has also recently bought a controlling interest in Tnuva, an iconic Israeli food company, and Ahava Dead Sea products.
“We are looking for investment opportunities in Israel and we will help them in development and marketing,” Liu Hao Peng, of New Alliance, a Shanghai based investment fund told The Media Line. “We aim to help them settle down in China and to manufacture their product in China.”
China is Israel’s third largest trading partner after the US and the European Union. Israel’s exports to China were more than $3.2 billion last year, up from just $300 million a few years ago. In recent years, China has invested more than $15 billion in Israeli technology companies.
Israel and China established diplomatic relations in 1992, and recently marked 25 years of close ties. As criticism of Israel’s actions in the West Bank has grown in Europe, and calls to boycott Israeli products have grown, China offers an alternative market where the Palestinian issue is not seen as crucial.