Zhou Hongjiang, a representative of China’s National People’s Congress and chairman of Yantai Changyu Group Co., Ltd, said recently that he brought a proposal on wine consumption tax reduction and revitalization of the Chinese wine industry to the two sessions of the National People’s Congress this year, calling once again for the reduction of consumption tax on wine products to revitalize China’s wine industry and improve the competitiveness of Chinese wine enterprises.
Reducing the consumption tax on wine products and revitalizing China’s wine industry
Data from China’s National Bureau of Statistics (NBS) shows that from January to December 2020, wine producers above the national scale completed a total winemaking output of 413,300 kiloliters, down 6.00% year-on-year. There are 130 wine enterprises above the scale included in the scope of the National Bureau of Statistics, including 40 loss-making enterprises, with an enterprise loss of 30.77%. from January to December, wine enterprises above the scale completed a cumulative sales revenue of 10.021 billion yuan, down 29.82% compared with the same period of the previous year; a cumulative total profit of 259 million yuan, down 74.48% compared with the same period of the previous year. The accumulated loss of loss enterprises was 443 million yuan, an increase of 176.55% compared with the same period of the previous year.
As a representative of China’s National People’s Congress, Zhou Hongjiang has repeatedly called on the state to encourage and support the development of China’s wine industry in terms of policy, and called for a reduction or exemption of consumption tax on Chinese wine products. He said that last year, under the influence of the new crown pneumonia epidemic, China’s wine industry declined greatly, with weak competitiveness and few profitable enterprises. Therefore, he once again called on the relevant state departments to give more policy support to the wine industry and promote the healthy development of China’s wine industry.
“The healthy development of the Chinese wine industry is of great significance for driving agricultural development and driving farmers out of poverty and getting rich.” Zhou Hongjiang said that the wine industry is actually a deep processing industry of agricultural products, the front end of the industry is the planting of grapes, and the planting of grapes does not require good land, often fertile land planted grapes are not suitable for winemaking, more need for hills such as barren land. In recent years, China’s western Ningxia, Xinjiang and other regions of the grape planting to drive local farmers out of poverty has played a very big role in promoting poverty alleviation, if the wine industry does a good job, will pull local farmers to get rich, and even drive the development of machinery, packaging and other related industries.
In addition, in terms of alcohol consumption structure, in Zhou Hongjiang’s view, although China is a large consumer of liquor, the proportion of high alcohol consumption is relatively high, but with the development of the times and the gradual rise of young consumers, China’s national health level and consumption level is also improving, alcohol consumption from distilled spirits to fermented spirits, from grain wine to fruit wine is a major trend.
With the continuous expansion of China’s wine market, China has become a coveted consumer market for the world’s wine-producing countries. In recent years, due to the continuous reduction of imported wine tariffs, imported wines have obvious advantages in terms of price, and their market share in China has increased year by year, rising from 32% in 2015 to about 60% in 2020, while the development trend of China’s domestic wine industry is relatively sluggish.
In addition to the impact of the epidemic, consumer confidence and other factors, the high tax burden of Chinese wine companies is also one of the reasons affecting the development of China’s domestic wine industry. Zhou Hongjiang believes that wine is an internationally competitive product, China’s tariff on imported wine has been reduced from 63% before joining the WTO to 14% now, and for some countries is zero tariff. At the same time, the EU classifies wine as an agricultural product and enjoys agricultural subsidies and tax policies, while China manages wine according to industrial products, so there is no subsidy and support in the grape planting process, and a 13% VAT is levied according to industrial product standards, plus a 10% consumption tax, resulting in a higher comprehensive tax burden for enterprises.
Promoting the digital transformation of marketing and leading Changyu to upgrade its marketing level
“Last year’s epidemic brought us a great deal of reflection. Although Changyu has been doing digitalization for many years, it mainly revolves around management, production and procurement links, and is still slightly inadequate in marketing digitalization. So last year we resolved to basically build and complete the architecture of digital transformation.” Zhou Hongjiang said that in 2020, the company will make every effort to promote the digital transformation of the company’s marketing, through the creation of the “Changyu Quality Life+” membership program, the “Changyu Wine Official Flagship Store” smart retail city and strengthening the application of blockchain technology and other digital means to lead the company’s marketing level upgrade. The company is leading the upgrade of its marketing through the creation of the “Changyu Quality Life+” membership program and the “Changyu Wine Official Flagship Store” smart retail city, as well as the application of blockchain technology.
It is understood that in terms of consumer interaction, Changyu has created the “Changyu Quality Life+” mini-program to communicate with target groups through digital means. In the “Changyu Quality Life+” app, users can freely learn about wine and brandy culture, participate in fun games, and jump to the “Changyu Wine Official Flagship Store” app to place orders for products, which is a good way to enhance the user experience. This is a great way to enhance consumers’ user experience.
In addition, Changyu has helped distributors transform their online business model under the new situation through the Smart Retail Mall. “Our Smart Retail Mall is open to dealers, distributors and retail terminals across China, and is currently being built and promoted, said Zhou Hongjiang.
In order to let Chinese consumers buy and drink with confidence and trust Changyu wine, Changyu also took the lead in introducing blockchain technology in the wine industry together with Tencent. In addition to solving the problem of product anti-counterfeiting, consumers can scan the bottle on the superior code to view the relevant information of various products of Changyu on the chain, and the project has also received strong support from the industry information department of Shandong Province.
“In the digital era, after our traditional industry has built this structure is actually only the first step. With the future development, how can we make better use of digitalization and establish a close interactive relationship with consumers, I should say we are still on the way.” Zhou Hongjiang said.
Creating multi-category products to meet consumer demand
In the past year, the development of China’s wine industry has suffered a difficult year due to multiple influences such as the epidemic and the state of the economy. According to the performance statistics released by listed companies in the wine industry, in the first three quarters of 2020, ST Weilong reported a net loss of 164 million yuan, with profits down 830% year-on-year; Mogao reported a net loss of 6.84 million yuan, with profits down 147% year-on-year; ST Zhongpu reported a net loss of 37.05 million yuan, with The net loss of ST Zhongpu was RMB 37.05 million, down 2747.8% year-on-year; the net loss of ST Tonglu was RMB 18.51 million, down 693% year-on-year…The only one of the 14 listed wine companies with profits above one million yuan is Changyu. In this context, Changyu is seeking opportunities in crisis, practicing internal strength, actively developing the home wine drinking market while creating more wine products suitable for the Chinese population, so that more consumers fall in love with Chinese wine.
“In the middle and low-end products, we will continue to research and launch palatable products that suit the Chinese palate, so that consumers can accept wine more easily, such as no longer being associated with acidity and astringency; for the middle and high-end products, such as Changyu Cabernet and Château, we will improve the quality competitiveness according to international standards; in the high-end brandy, we will continue to play our competitive advantage in the future; Wineries acquired by the foreign enterprise should also be down to earth to do a good job of brand leadership.” Zhou Hongjiang said.
Zhou Hongjiang said that China’s wine industry wants to develop better, not by one or a few enterprises, but needs everyone to form a synergy in consumer guidance, publicity and other aspects. He also called on consumers to have cultural confidence, as Chinese wine companies improve their competitiveness, Chinese domestic wine products are as competitive as other products, consumers should have more confidence in domestic wine.
The year 2021 is the beginning of the 14th Five-Year Plan of China and the start of a new journey to build a modern socialist country. After an extraordinary 2020, standing on a new starting point, how to take a good new journey is crucial. Zhou Hongjiang said that during the 14th Five-Year Plan period, Changyu has set a clear goal to deliver a better answer to society and investors, to make the company more competitive in the international arena, and to make the wine and brandy products better, bigger and stronger.
Source: Xinhua News Agency New Media