International Market Opportunities Report: Southern Peninsula Wines

Running head: SOUTHERN PENINSULA WINES 1
INTERNATIONAL MARKET OPPORTUNITIES REPORT: SOUTHERN PENINSULA
WINES
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SOUTHERN PENINSULA WINES 2
Political, Corruption Risk, and Financial Stability Factors for China
China has in the last couple of years undergone some major economic slowdown and
volatility in the financial market. Most of the aspects have been brought about by the growth in
public investment, extreme export dependency, and a structural problem which is deep-rooted,
which has resulted to the inefficiency of the government in terms of policies and regulations. The
aspects have led to increased debts at different levels which have posed risks in the country’s
long-term expansion.
China’s centralized power is based on the Communist Party of China. Since 2012,
president Xi Jinping has ruled the country and has dealt with various issues which have
drastically stagnated the country’s performance. At its financial front, the country is at a
moderation risk in regards to the largely state-owned financial institution. China has witnessed a
slow momentum in the partial liberalization, which has slowed down the economy’s long-term
sustainability pace. Corruption in the country is another notifying factor which is present in a
large government segment and sectors of businesses. In public and private sectors, corruption
offers a legal framework which is comprehensive in order to criminalize various practices which
are corrupt including money laundering and gifts, facilitation payments, and passive and active
bribery.
Legal and Regulatory Requirements and Trade Barriers for China
The overall regulatory outline for China remains complex and arbitrary, with licensing
requirements which are complete possibly costing three times more than the average level of
annual income. The government has set wine production standards which the exporters
crosschecked and confirmed in lieu to have increased wine production quality. The imported

SOUTHERN PENINSULA WINES 3
wine has been levied a total tax of 14% including a consumption tax of 10 percent and a VAT of
17 percent (Morrison, 2008).
Risk Associated with International Business Cycles
In terms of conditions of the economy that may impact the markets of China which
Southern Peninsula Wines considers a potential market, it has been found out that Beijing’s
economic growth has decreased due to restrictions from heavy and manufacturing industries. The
business cycle is in the midst of a transition from a manufacturing-based low-cost economy to an
economy which is highly focused on goods and value-added services.
Marketing Opportunities
Key Market Trends in Wine Industry
Recent market trends indicate that the demand for fine wine from Australia has risen in
China. The Export Report has indicated that the Australian wine export to China’s mainland has
by June 2016 increased by 50 percent to $419 million in just two months (Anderson & Wittwer,
2013).