Château Latour-Laguens was the multimillion-euro flagship in a bold new era of Chinese-owned winemaking only a few years ago. The winery — located 30 miles southwest of Bordeaux — is now dilapidated, abandoned, and being sold for a small portion of its original price.
As China loses its love for imported wine, hundreds of Chinese-owned vineyards are sold at knockdown prices. For many investors based in Beijing and Shanghai, the prospect of making a significant profit has turned sour. Several causes are driving the sell-off. Tighter capital controls make it harder for the Chinese to spend money overseas, and a domestic crackdown on corruption has reduced demand for pricey presents.
Nine châteaux near Bordeaux — valued at around EUR 35.5 million — were seized by France in May from a Chinese entrepreneur who had been found guilty of misappropriating Chinese state funds and money laundering.
Most importantly, it has been late discovered that a large number of patrons merely dislike the wine. It turns out that the Chinese dinner table just does not suit heavy, tannin-rich red wines.
China was one of the world’s most intriguing and rapidly expanding wine markets at the time. Prestigious bottles of French Bordeaux have become the newest status symbol for China’s wealthy elite, who offer them as luxury gifts and display them in their homes like trophies, in tandem with the skyrocketing demand for French luxury goods like Dior, Hermès, and Louis Vuitton.
Although foreign ownership has long been common in Bordeaux’s wine-growing region, the influx of Chinese investors was astounding; in a matter of years, they acquired over 200 vineyards to satisfy what was expected to be an insatiable demand for French wine back home.
Ten years later, many properties are for sale for a small portion of what they initially cost.
When the Chinese real estate company Longhai Investment Group purchased Château Latour-Laguens in 2008, it made headlines as one of the first vineyards to be bought in the Entre-Deux-Mers wine area. Le Figaro stated that the Chinese buyers paid EUR 2 million for the entire lot at the time, even though the original transaction price was not formally revealed. Now that the vines are gone, it is being offered for EUR 150,000.
This was different from how it was meant to go.
China’s wine consumption skyrocketed by 142% between 2007 and 2011. China and Hong Kong became the world’s biggest consumers of red wine, with a preference for French Bordeaux. By the end of 2013, they had surpassed France and Italy. Chinese investors eager to take advantage of a fresh business opportunity purchased vineyards and renamed them Gold Rabbit or Imperial Rabbit.
To the surprise of the locals, bottles of red wine that would typically retail for EUR 3 or EUR 4 in France were being marked up to EUR 20 to EUR 30. The wines were intended for consumers back in China, with ridiculous profit margins.
However, the enthusiasm was too soon. In 2012, wine consumption in China reached a peak. China’s president, Xi Jinping, began an austerity campaign in 2013 that slashed back on extravagant, conspicuous state spending almost immediately after many Chinese millionaires signed ownership documents. The action came after a series of corruption incidents, which frequently involved costly presents or bribery, such as a high-end purse or a pricey bottle of red wine.
Chinese investors suffered another setback in 2017 when Beijing imposed new capital controls that restricted the flow of funds outside of China. Ms Li Lijuan, a Chinese estate agent for Vineyards-Bordeaux, stated, “It was catastrophic for business.” She received four to five daily inquiries from affluent Chinese investors who wanted to participate in the Bordeaux wine boom.
“I keep a dossier, and since I started working in 2013, I have counted about 300 potential Chinese buyers who wanted to buy a domain,” said Ms Li.
According to the International Organization of Vine and Wine, China’s wine consumption has continuously declined since 2012, with an average annual loss of 2 million hectoliters since 2018. In 2023, the nation’s wine consumption fell 25% from the previous year due to an ever-dwindling economy.
Jérôme Baudouin, the principal editor of the wine publication La Revue du Vin, had long anticipated this tendency. For starters, he notes that wine cannot compete with the typical Chinese meal, which frequently consists of both savoury and sweet foods, such as fish, meat, and vegetables, all served simultaneously at the centre of the table.
According to him, bottles are gathered for display purposes but are not drunk, which may account for a significant disparity between wine sales and consumption in China. “For me, it was a mirage. People were wrong on both sides,” he said. “Producers in Bordeaux thought a new market was opening up for them, like the US and UK, and this would last. It was the same for the Chinese who came over to Bordeaux. They thought making wine and making them a lot of money would be easy.”
Workers on the estates and in the vineyards were caught in the middle, and many of them complained about unpaid wages, conflicting work cultures, and absentee owners. At Château de Pic in 2020, Hélène Pauly and her five coworkers were not paid by their Chinese employers for about five months. The administrative manager of the estate, Ms Pauly, had to withdraw money from her savings and apply for overdraft protection. Her other coworkers were compelled to use food banks and obtain bank loans. Ultimately, the Bordeaux tribunal sided with the workers and ordered back pay after she led a fight against her boss, Xu Min.
“There was never any sincerity or honesty in their explanations, and it was like this all the time,” Ms Pauly told The Telegraph. She talked of working in a problematic atmosphere where she was micromanaged from China and had ridiculous requests made by bosses who needed to learn more about how a vineyard operates, such as harvesting in June rather than September.
When she was at her lowest, Ms. Pauly started to fear for her safety. “I didn’t know how far they could go…they knew my address, my habits, they could easily have done something to send me a message.” She retired early as a result of the draining experience. “Some Chinese proprietors simply vanish.” According to Corinne Lantheaume, a union representative for the local CFDT Gironde who assisted Ms. Pauly’s case, the largest challenge is dealing with absentee proprietors in China.
“There are Chinese owners who just completely disappear,” she said. “Our problem is that when there is an issue at some point in France, we don’t know who to contact because everything is in China. If we succeed, the new owner who buys the property pays the back salary on their behalf.”
According to Ms. Lantheaume, Chinese companies also tend to mistrust French employees. Rather, they recruit Chinese workers with little to no background in the wine industry or vineyards.
“There’s a great mistrust of French employees. And it becomes complicated when you don’t trust people who know the work.”
However, Ms. Lantheaume quickly notes that Peter Kwok, a Hong Kong businessman who owns Maison Vignobles K and is highly regarded by his employees and fellow winemakers, is one of the most admirable employers in the area. Additionally, labour issues at châteaux owned by French people are familiar.
Meanwhile, Ms Li asserts that mistrust can reciprocate, whether earned or not. She describes how she once saw a Chinese employer circumvent the issue of frozen funds by paying his employees in cash. To her dismay, however, the absence of a paper trail enabled the pair to falsely accuse their employer of not paying them in court.
According to Ms Li, wealthy Chinese individuals who reside outside China in Malaysia, Singapore, and Thailand have expressed interest in the news of Chinese investors attempting to sell their chateaux in recent weeks.
“At this moment, I’m getting about four to five people contacting me weekly.”
