In China, 84.64% of wine-related companies report annual sales below US$ 0.69 million.
Out of close to 10,000 wine related businesses still operating in mainland China today, close to 85% are operating on annual revenues less than RMB 5 million (US$0.69 million), highlighting the highly fragmented nature of the market.
According to Qichacha, one of the country’s largest corporate information databases, 62.55% of wine companies have a registered capital of less than RMB 1 million (US$137,428). Furthermore, an astonishing 84.64% of these companies report annual sales revenues below RMB 5 million (US$0.69 million).
Given this landscape, how can wineries effectively leverage these local firms in China to optimize their business operations?
Small and Micro Businesses Dominated Landscape
Vino Joy News identified 9,948 operating companies by searching the keyword “wine” in the “wholesale and retail” category on Qichacha. Notably, 65.22% of these companies (6,488) had a registered capital of less than RMB 1 million (US$137,428). In stark contrast, only 168 companies had a registered capital exceeding RMB 50 million (US$ 6.88 million), accounting for just 1.68% of the total.
Registered capital refers to the amount of capital subscribed by shareholders or founders and declared to the authorities at the time of registration. Under China’s Company Law, registered capital must be paid within a specified period, serving as a reflection of a company’s financial capacity. However, registered capital does not correlate to actual sales revenue.
The prevalence of wine-related companies with registered capital below RMB 1 million indicates that small-scale enterprises dominate China’s wine industry from production to distribution.
When narrowing down the search, we found that 8,420 wine-related companies are in the “small-scale taxpayers,” indicating that their annual VAT taxable sales did not exceed RMB 5 million. This further illustrated the current state of the wine industry, which is saturated with small businesses with limited capital and resources, struggling to scale in a market that has sharply contracted in recent years.
Zhang Haixiao, head of Vin Maison—a subsidiary of Ninecoast Network Technology Co. Ltd. Shanghai, one of China’s Top 50 Wine Importers—pointed out the fragmented nature of China’s wine industry as revealed by the company landscape.
“In China, the barrier to selling wine is quite low; anyone can establish a company to do so. We see a proliferation of small workshops and individual businesses,” Zhang said, “Many people start their own companies after quitting their jobs, and some even launch businesses secretly while still employed. This situation is very prevalent.”
In a previous interview with Dan Siebers, co-partner at Wajiu China (part of the Wajiu Group), likened China’s small-scale, owner-operated wine importers to “piranhas.” He noted that the cultural emphasis on entrepreneurship has led many former employees of wine companies and individuals with overseas wine industry experience to establish their own businesses in China.
“I call these small-scale, owner-operated importers ‘piranhas.’ Individually, they may seem insignificant, but collectively, they are a force to be reckoned with,” Siebers said, “Though each small-scale importer may seem insignificant, their combined impact surpasses that of the top few importers.”
Advantages of Small Businesses: How Wineries Can Benefit
Claire Xu, the commercial representative for Italy’s EPI group in China, echoed this view. “To my knowledge, some wine brands in China have multiple distributors, with sales volumes from small regional importers even surpassing those of large retailers,” Xu stated. EPI owns the famed Biondi Santi in Italy, as well as Champagne Piper Heidsieck and Charles Heidsieck.
Xu noted that one of the primary advantages of small businesses is their focus. “Due to their smaller scale, small importers often handle only 3 to 4 brands, with some dedicating themselves to a single brand. In contrast to large retailers that carry multiple brands, partnering with smaller importers is more likely to attract their attention,” she explained.
Another advantage highlighted by Xu is their deeper penetration into lower-tier markets. “While large retailers have a presence in multiple cities nationwide, their sales approach is often too broad—like scattering pepper powder—making it difficult for their products to reach markets below second-tier cities,” she continued. “In contrast, some small retailers are rooted in a single city and have the channel capabilities to penetrate markets down to the county level.”
To succeed in China’s fragmented wine market, wineries must adopt tailored strategies. Regarding cooperation with small and micro importers, Xu suggested that wineries consider their scale: for wineries with an annual sales volume of fewer than 200,000 bottles, appointing a small importer as the exclusive agent in China can be advantageous to ensure better attention and exclusivity. However, such partnerships must be governed by clear agreements to avoid conflicts of interest.
Larger wineries, on the other hand, might benefit from allocating specific product lines or regional distribution rights to smaller importers. This allows them to tap into the unique strengths of these operators while maintaining broader control over their market presence.
However, the landscape of small wine importers in China is also evolving. Traditional practices of leveraging price opacity to inflate margins are diminishing due to increased competition and transparency.
Regarding this, Gu Yuping, the China representative for Germany’s leading sparkling wine producer Henkell Freixenet Group, reminded the importers: “Today’s competitive small and micro enterprises require not only strong channel capabilities but also a high level of professionalism. Relying solely on wining and dining to sell wine is a thing of the past.”
“In addition, as price comparison becomes easier and costs decrease, small and micro enterprises have an advantage: their operating costs remain very low,” Gu added. This trend is also a critical consideration for wineries in China when selecting importers and assessing the steady and sustainable sales of their products.
