At the Château des Chapelains, bought in 2014, owner Zhang Rong is “hanging on”. This “winemaker like any other”, who initially came to collect grape varieties for a family vineyard in Gansu (north-west of the country), “labels her bottles”, in the Bordeaux and Sainte-Foy Côte de Bordeaux appellations, testifies an employee. On its 48 hectares, it produces 300,000 bottles of different vintages, some of them medalists, remaining “faithful” to the teachings of the former owner, whose customers and restaurants it has “kept”. “We have to work hard because the situation has never been so difficult”, she confides.
“50 châteaux for sale”: Why the Bordeaux Vineyards no Longer Make Chinese Investors Dream
It’s the end of El Dorado for Chinese investors in Bordeaux. After more than a decade of frenetic takeovers, many are looking to resell their châteaux while others persist despite the crisis, for the “love of wine”
With its square lattice tower flanked by turrets, Château Latour Laguens, located in a valley in Entre-Deux-Mers, was in 2008 one of the first wine properties bought by a Chinese company in the first AOC vineyard in France, where there were more than 200.
Photographed in the middle of 30 hectares of vines, classified as AOC Bordeaux and Bordeaux Supérieur, the young heiress of the Longhai International group and owner of the place, Daisy Haiyan Cheng, was teeming with projects at the time layout for the new medieval building: tasting room, shop and luxurious guest rooms.
READ ALSO: Bordeaux wines: the disenchantment of Chinese investors
Today, Château Latour, marked by humidity and simply populated by a brood of bats, is for sale at auction. Starting price, without the vines: 150,000 euros. Other Chinese-flagged properties have changed hands in recent years.
Funds blocked in China
Mid-may, justice thus confiscated nine castles acquired in the early 2010s by Chinese tycoon Naijie Qu, boss of the Haichang group, after his conviction for money laundering, embezzlement of Chinese public funds and misuse of corporate assets.
In August 2022, the Golden Rabbit, Imperial Rabbit, Great Antelope and Tibetan Antelope castles, renamed by their ex-owner Chi Keung Tong, boss of the Hong Kong group SGV Wines – causing an outcry in Bordeaux’s Landerneau – have regained their original name after their resales to French investors.
“Some buyers came to buy a French art of living with a beautiful building but without worrying about the good financial health of the estates and future investments”
“The Chinese can no longer invest abroad because their funds are blocked in China” since Beijing drastically strengthened capital controls, explains Li Lijuan, real estate agent and Asian market specialist at Vineyards-Bordeaux. Currently, around “50 castles are for sale”, she assures. Not to mention the owners who are “waiting for a more favorable moment”, due to a lack of buyers in the midst of the Bordeaux overproduction crisis.
In a sluggish real estate market, “there are great opportunities”: properties have been sold “less than half the purchase price”, indicates the intermediary, known as a singer in China. “Some buyers came to buy a French art of living with a beautiful building, much cheaper than an apartment in Hong Kong or Shanghai but without worrying about the good financial health of the estates and future investments”, explains -she.
Immediate profitability expected
To the “misunderstanding”, Safer also adds a “poor estimate of production costs” – higher than those of a family farm – and an “overestimation of the capacity to market” their bottles, more expensive to produce than Bordeaux imported.
“Their model was to buy entry-level properties in the hope of immediate profitability, with the idea of doing a pirouette by producing a wine for less than 5 euros to resell it for 20, 40 euros, or even 100 euros in their distribution network”, underlines Benoît Léchenault, director of Agrifrance, a subsidiary of BNP Paribas specializing in prestigious rural land assets.
PHILIPPE LOPEZ /AFP
Since Covid-19, Bordeaux has attracted less in a country that has become a producer and where consumption is falling (-25% in 2023 according to the OIV, the International Wine Organization). Hail, mildew and other climatic hazards also discourage these recent buyers, whereas in viticulture it takes between two and three years before a first accounting year.
“Europeans think in terms of generations, the Chinese think of a five-year deadline at the end of which it is normal to resell”, analyzes Hugo Tian, Hong Kong financier and owner of Château Fauchey (AOC Cadillac Côtes de Bordeaux). “For the Chinese, trade is short time”, summarizes Li Lijuan, who also notes “different corporate cultures” with “incessant changes of direction”.
A technical director says he has only met his former boss “once in four years”. He says he suffered “unmanageable demands” “unsuitable for the vine cycle” in this castle in Entre-Deux-Mers, managed like “a shoe box company”.
Some are resisting
But other investors are taking root. The Chinese billionaire and founder of the e-commerce group Alibaba, Jack Ma spent lavishly to restructure Sours Castle (Entre-Deux-Mers).
Peter Kwok, Hong Kong businessman born in Vietnam, at the head of seven Bordeaux castles, including a Saint-Émilion grand cru classé, invests “long-term” by restructuring vines and building “sleeping beauties”. “He wants to leave a positive mark because he is fundamentally in love with France, its wine and its culture”, adds Jean-Christophe Meyrou, general director of Vignobles K who are considering buying new properties.
Hugo Tian also “still holds the helm”. “Optimistic in the medium and long term”, he is now banking on the sharper palate of a “young generation” of Chinese consumers “looking for natural or organic wines rather than prestigious vintages”. “In a few years, new Chinese investors will return, more rational and reasonable”, he predicts.
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