In 1996, Chinese premier Li Peng surprised his audience at the National People’s Congress by toasting the Ninth Five-Year Plan with red wine: “Drinking fruit wines is helpful to our health, does not waste grain, and is good for social ethics,” he announced. For China’s rapidly growing underclass, this gesture signaled a commitment to rein in the fraud and waste epitomized by party banquets, where officials were known to drink each other under the table with bottles of Moutai Flying Fairy and other spirits derived from grain. For the elites in question, it was an unmistakable signal that business as usual required a new currency. Within a few years, they were using bottles of Château Lafite Rothschild to gain favor and ease transactions.
As Suzanne Mustacich relates in Thirsty Dragon: China’s Lust for Bordeaux and the Threat to the World’s Best Wines, representatives from
Bordeaux, France’s largest wine-growing region, saw Li’s endorsement as an
invitation to “conquer” the Chinese wine market. It was a goal that they believed
themselves uniquely positioned to accomplish. Bordeaux’s wines—such as Château
Haut-Brion, Château Latour, and Château Cos d’Estournel—communicated luxury,
and Bordeaux’s official classification system, which dates back to Napoleon, was
easy to sell as a lengthy gift catalog “ratified by pomp and history.” Although
Bordeaux’s 1855 Classification rules created for the Exposition Universelle de
Paris in that year were never meant to be permanent, the rankings they generated
were considered so successful that only a few changes have been made in the
century and a half since. In Mustacich’s words, what began as a price list for
visiting tourists became a “calling card” and “an immutable promotional tool”
for businessmen seeking to introduce Bordeaux wines into new markets.
Although the Chinese market was just a fraction of a percent of the country’s population, châteaux and their middlemen moved huge quantities of product by offering entrepreneurs a very clear hierarchy of the finest wines already ratified as international status symbols. The precise rankings of each wine could be easily mapped onto the numerous positions within the Chinese bureaucracy, allowing gift-givers to save face by offering the appropriate wine at each level of officialdom. At the time, few Chinese had a taste for wine, but the social liquidity of a First Growth like Lafite—which in China is widely considered the best—was rated sublime. One real estate developer was inspired to commemorate a bottle of the château’s 1982 vintage in verse as both “the greatest treasure” and “the moment of death”—“the appreciation of which is greater than the desire to taste it.”
As well as importing wines and their prestige, China is also building its own formidable wine industry. According to industry analysts, within five years, China will bottle more wine and devote more land to vineyards than any other country. For instance, the government of Ningxia Hui Autonomous Region announced its plans to construct 50 new châteaux and a regional classification system modeled on Bordeaux in November 2013. To qualify for a listing, a château must not only meet industrial production quotas but build a four-star restaurant and hotel for guests. The vineyards are to be staffed by ethnic Hui, the Muslim farmers and herders the government has arranged to relocate or “move out” of rural poverty. “In fact, this is incorrect,” Grape Flower Industry Development Bureau director Cao Kailong tells Mustacich. “We have plans to develop one thousand châteaux.”
As Bordeaux gained outsized sway in luxury sales in China, it awakened the behemoth Mustacich alludes to her in title. From this point, her book hews to a familiar narrative whereby China’s state-owned conglomerates and assorted tycoons assemble to “absorb foreign expertise” and capitalize on the enthusiasm for French reds. “Wine education” camps begin to sprout up where elite buyers can train their tastes. The Chinese wine grower Dynasty builds a replica of Versailles complete with a copy of I.M. Pei’s glass pyramidal entrance to the Louvre as part of a wine tourism venture. “This was a humble decision,” the company’s chairman explained somewhat ironically after the castle opened in November 2010. “Because we believe and we know that all wine actually originates from Europe and is very much related to the culture of Europe.” Less than a year later in the northern industrial city of Dalian, a tycoon named Qu Naijie held a press conference to announce that his company, Haichang (“Sea Fortune”), which had lately diversified from oil shipping into theme parks and real estate, would build a 5,000 acre luxury development with vineyards called Château de Bordeaux.
By this stage, China’s state-owned food conglomerates had begun selling foreign wines and were visibly chafing at the supply restrictions imposed by Bordeaux’s traditional middlemen, known as négociants. For as long as Bordeaux has been making wine, the négociants have competed for allocations from various châteaux on an exchange called the Place de Bordeaux. They then sell the wine at a profit to the personal networks of clients they have developed internationally—a process that frees the châteaux from the commercial aspect of their business. About 90 percent of the négociants’ business—which covers 75 percent of all wine produced in Bordeaux—goes through just 25 firms, which also control the most exclusive allocations from Lafite and other châteaux with high brand recognition.
But in 2010, no one négociant controlled enough supply to fill the huge demands of a Chinese conglomerate; and for these conglomerates, the prospect of courting numerous négociants just to buy their allocations at a premium on the châteaux’s price was unattractive. The elite châteaux obliged the conglomerates by cutting a handful of backroom deals to provide them with direct allocations. In the same year, Chinese buyers arrived in Bordeaux seeking to acquire the French growers’ exclusive property. Qu Naijie, the head of the Dalian venture, bought up the crumbling château and trademarks of a company named Chenu-Lafitte, in what was viewed as an attempt to piggyback on the more successful “Lafite” brand. (“Lafitte” and “Lafite” are rendered the same in Chinese). Using public funds earmarked for the acquisition of foreign technology, he discreetly purchased an additional 26 châteaux over the next few years.
As a wine correspondent in Bordeaux for the past decade, Mustacich has compiled an impressive amount of research on the product’s global flow, recording comments from both tight-lipped châteaux owners and Chinese businessmen. But she spends the most time with the négociants, who are caught between the two parties and are increasingly squeezed. It seems fair to say the book unfolds mainly from their point of view. Outnumbered by the Chinese, they emerge in her telling as a class of underdogs, a dying breed just trying “to earn their keep.” When the négociants discover that Château Latour has decided to cut them out of the process by selling to the Chinese directly, readers are encouraged to adopt the middleman’s outrage: “While the good citizens of the Place [de Bordeaux] had been busy hustling Latour’s wines all over the planet, the château had been selling behind their back,” Mustacich writes, in a crass attempt “to pocket all of the available profit.”
In Mustacich’s telling, the châteaux are also wronged when they don’t end up getting their straightforward “conquest” in China. She offers the example of the Gonet family, which discovers that their brand has been squatted when they attempt to register their company—specializing in chardonnay champagnes—in China. The Gonets quickly try to cut a deal with the squatter and regain control of their brand. (“China was the hottest market on the planet,” Mustacich explains. “If you weren’t selling in China, you were no one.”) What they receive instead is a series of ever higher counter-offers, eventually reaching $300,000. “When he heard the news,” Mustacich reports, “Charles-Henri was reduced to inarticulate anger.”
The book’s promotional materials promise a “fierce” tale of “business skullduggery,” “with the Bordelais and the Chinese following different and often incompatible sets of rules.” But just like the Chinese depicted here, there is little culture or tradition the Bordelais won’t sacrifice if it covers their bottom line. When one Chinese industrial giant tires of its efforts to eliminate the négociants and instead opens its wallet to buy a prestigious firm—with the goal of mining its connections and then dealing with the châteaux directly—it finds a company that can hardly wait to sell out: “As [Jean-Pierre] Rousseau weighed his options,” Mustacich writes,
he acknowledged that selling to the Chinese might shock the Bordelais aristocracy. But he also thought that this might be where, unconsciously, they’d always been heading.… It was inevitable that the Chinese would acquire an established négociant firm. He just happened to be in a position to profit from the event.
Another brand-squatter, Li Daozhi, not only secures Chinese rights to French mega-producer Castel’s brand, but succeeds in building a wine-producing company to defend himself from continued litigation. But he only graduates from “wily adversary” and “two-bit villain” to a legitimate entity when he agrees in November 2011 to foot the bill for Wine Future Hong Kong, a wine festival welcoming Robert Parker, “the world’s most powerful wine critic,” according to The Wall Street Journal, whose nose and palate are insured for $1 million. Grinning widely in photos “with Robert Parker’s arm draped over his shoulders as though they were old buddies,” Li Daozhi knew that he had finally “arrived” as a member of the French wine-growing elite.
“At its heart,” Mustacich writes, “Bordeaux was pragmatic, not political.” As she herself relates, that pragmatic attitude has a checkered history. Well before Li Peng’s announcement and the expansion of the domestic wine market, French liquor companies had formed joint ventures with Chinese companies trying to grow local wines they could sell to Chinese immigrants living in the West. In 1980, Rémy Martin Cognac encouraged its partner “Shen Zhou,” or “The Divine Land of China,” to rename itself “Dynasty”—not after Chinese history, but after the popular American television show which had spawned a successful line of sequined gowns, power suits, fragrances, and other luxury products. After some early success growing in China, the group hit a snag when its supply of grapes in Tianjin ran low. The French winemaker inspected vineyards at nearby farms and quickly found a good source of grapes:
When the Chinese manager took [Pierre] Delair to visit Tuanhe, the Frenchman wasn’t surprised to see the workers in uniforms and the police at the reception. That was how peasants dressed and every day life was heavily monitored. He needed official permission just to drive from Tianjin to the winery. What he did notice right away was that the grapes were ripe—the best he’d seen yet in China, and he told the Tianjin manager he wanted them.
The workers, of course, were prisoners; Tuanhe Farm is a death camp. Rémy Martin officials admitted to using grapes from the camp between 1982 and 1985, and again in 1990. While subcontracting to laborers working 15-hour days and making ten dollars a year “may have been revolting,” Mustacich allows, “it was not illegal, unless the wine was exported to the United States or a handful of other countries.” A director at Rémy Martin tells Mustacich that company officials were ignorant of the conditions at Tuanhe and other camps and said that the company had ended its relationship with the suppliers when they found out. The inquiry stops there.
The core of The Thirsty Dragon is its sixth chapter, where Mustacich follows the knight-errantry of Nick Bartman, a private investigator with experience in “the underworld of twenty-five different countries” who sets himself the impossible task of holding China’s counterfeiters to account. A chance run-in with fake wine label producers in Hong Kong convinces Bartman that if he poses as a corrupt Western investor, he’ll be able to “reel in the fraudsters” at the top of the Chinese supply chain, orchestrate a raid, and “knock a serious hole in the counterfeit wine trade.” With the help of a coalition of French vintners and the Chinese central government, he thinks, he can make it “so difficult, expensive, and dangerous to fake Bordeaux that the counterfeiters would move on to easier targets.” Shutting down a business in China would set the capstone on a career spent defending infringements on the trademarks of international brand owners in Southeast Asia. “Throughout all these experiences,” Bartman tells Mustacich, “my body compass was forever pointing to China, the de facto center of counterfeits.”
Back in 1996, Li Peng and the National People’s Congress had set ambitious goals for increased production of wine and grapes. In order to keep their jobs, managers and officials in state-owned businesses and regional governments had to meet those quotas, often through questionable means. Companies like Dynasty and Great Wall began a rush on cheap foreign wines from Australia and Chile and repackaged them as Chinese to please their superiors. Newer, more profitable counterfeiting enterprises followed suit, and the business owners forged similarly close relationships with local government officials. Around 1998, headache-inducing chemical cocktails containing as little as 20 percent of fermented grape juice began to be sold as wine on supermarket shelves. Soon it was not just Chinese but French wine being faked. The suppliers created fake labels and pretended to distribution relationships with French châteaux.
After a preliminary investigation, Bartman outlined the path he wanted to take to build his case. From previous research, he knew that in large countries where transportation infrastructure was still developing, counterfeiters “tended to cluster together.” In China, that cluster appeared to be in the northern province of Shandong, where a quick visit to Yantai uncovered the use of counterfeit labels at some of the city’s dozens of wineries and bottling plants. (Shandong is also the inspiration for Liquorland, the setting of Mo Yan’s 1992 novel, The Republic of Wine, which explores government corruption and excess.) On a separate visit to Shenzhen, he was able to secure copies of labels and shipping documents from a trader who claimed to be selling French wine. The trader had no Bordeaux on hand in his warehouse, but carried a suspiciously large stock of Chilean wine. Bartman tracked the address listed on the trader’s documents to Languedoc, where a négociant confirmed a much smaller shipment to Shenzhen than the one listed on the document, which he said had been arranged when he was approached by a Chinese broker living in France. “The pieces of the puzzle were falling into place,” Mustacich narrates.
Eventually, in 2010, the Bordeaux Wine Council (CIVB) agreed to pay for Bartman to continue his investigation, but initially authorized him to do nothing more than buy suspicious-looking wine at retail shops. Although frustrated by the restriction, Bartman collected enough bottles to deduce a trend among southern traders away from repackaging Chilean wine as Chinese and toward using fake French labels on Chinese wine. In 2011, he received authorization to investigate the southern traders; and in 2012, he was given orders to look into fake-label printers in Shenzhen. When he discovers that labels are routinely hidden in northbound trucks among other, legal goods, and that the same trucks return southbound with bottles of wine, he feels that he’s come upon his “big break.” But when he delivers the information to the council, he gets axed. “Facing decisions about an investigation whose objectives it didn’t completely grasp,” Mustacich writes, “the CIVB leadership grew nervous and indecisive.”
Bartman is given one last chance several months later, with full clearance to investigate bottlers in Shandong. Impersonating an investor, he quickly books a meeting with Zhang Quang Ming, head of Shandong Yantai Eagle Wine Company. Stepping into Zhang’s lobby, he is immediately impressed:
At the entrance was a guest drop on a ramp, with a classy canopy overhead, and the door slid open automatically as Bartman walked in. In the reception area he noticed the photographs of French vineyards adorning the walls and the antique winemaking equipment set up to look like a mini museum. There was a sweeping staircase that led to Zhang’s office. Bartman and his operatives climbed the stairs in anticipation.
Upstairs, they meet Zhang, seated in an office that “had space for fifty workers but held just four enormous sofas and a coffee table decorated with wine books.” A long conversation commences, after which Zhang agrees to give Bartman a tour of the grounds. You can almost hear Bartman’s mouth water as Zhang tells him about his son, Zhang Taiyang, who studied in Bordeaux, flattered his way into important châteaux, and then offered to export their wines to China, thereby obtaining authentic shipping documents. Zhang Taiyang, who had lately returned to China to start his own illicit business in Qingdao and drive a white Porsche Cayenne, would also be willing to meet, his father intimated. Bartman could not believe his luck.
In December 2012, Bartman coordinated a raid on Yantai Eagle and several other Shandong companies. With both French and Chinese central government officials to back him, he was initially optimistic about the sweep, despite his failure to convince police to also go after the warehouses, label-printing shops, shipping companies, and other targets in France. The Zhangs were arrested and evidence of the counterfeiting operation was packed off for analysis in France. Then Bartman received word: Three crucial bottles of wine had been destroyed in transit. The tests that CIVB ran on the remaining liquids were translated into a confusing mix of “descriptive laboratory terms, numbers, and percentages” written in French that were perfectly useless as exhibits in a Chinese trial. The Zhangs were released on the strength of their connections, and they continue to peddle counterfeit wines.
Bartman’s investigation takes him through some of the seamiest parts of China’s economy. But as I read Mustacich’s descriptions of underpaid truck drivers moving product from China’s eastern seaboard across coal-choked provinces and into second- and third-tier city supermarkets, I didn’t feel so much a sense of growing wonder at the scale of the conspiracy, but a settling mental torpor. Watching Heidelberg printing machines “churning out reels of poor-quality counterfeit labels” in backroom apartments, I felt the ways that life is precarious for China’s poor. Bordeaux’s business in China is substantial, but domestic production still constitutes about 70 percent of a multibillion dollar market. Whether the wine is counterfeit or not, someone must squeeze the grapes. The separate way this industry affects the lives of those people is effaced in Bartman’s quest to protect elite French companies.
“China challenges the rules of the game,” Mustacich writes in ending her book. “But the game will still be played.” But I rather share her conviction, written elsewhere, that China’s market is “too big and too dysfunctional to police itself.”