The Economist - USA (2019-09-28)

62 Business The EconomistSeptember 28th 2019

S

ea breezes, blue skies and sun-soaked

vines: springing to the reader’s mind

may not be the northern Chinese province

of Shandong, an industrial heartland of

shipbuilders and oil refineries. Yet it

pumps out two-fifths of China’s wine, too.

Yes, much of it is state-produced and

lousy—but there are a few glowing excep-

tions. Among the 63 wineries of the Penglai

valley is that of Château Lafite Rothschild, a

world-famous Bordeaux beloved of rich

Chinese. On September 19th it uncorked its

first local bottles.

Scepticism abounded when its owner,

Domaines Barons de Rothschild, put down

roots a decade ago. (A branch of the Roth-

schilds owns shares in The Economist’s par-

ent company.) “Lafite in lala land?” won-

dered Grape Wall of China, a wine site.

Midsummer monsoons drench the region,

a no-no for sophisticated growers.

Lafite confounded the naysayers, as a

tough reporting trip undertaken by this

correspondent, for a tasting and tour with

the Rothschilds at la propriété, confirmed.

Priced at 2,388 yuan ($335) a bottle, the Do-

maine de Long Dai 2017 was rated as “out-

standing” by James Suckling, a wine critic

who says that Lafite has built “what must

be the best winery in China”. It contains ca-

bernet sauvignon, cabernet franc and mar-

selan. The range of soils and microclimates

across 360 hillside terraces makes it one of

Lafite’s “haute-couture” vineyards, says

Olivier Trégoat, who oversees its planta-

tions outside Bordeaux.

Saskia de Rothschild, who runs the fam-

ily’s wine business, says that they are

“planting for a century”. It lost its local

partner, citic, an investment giant that,

under state direction, has pruned what Mr

Trégoat calls its “exotic divisions”. Lafite

flew 250,000 vine stocks over from France

and planted them on 30 hectares. It says

that it has acquired land-usage rights for 50

years.

The vintners of Moët Hennessy Louis

Vuitton, another French producer,

launched “Ao Yun” two years ago for a

splashy 2,800 yuan, produced on their

Yunnanese terroir. They export most of it.

But Lafite wants to sell four-fifths of its

30,000 bottles domestically. Ms de Roth-

schild points to “rising pride” in home-

grown produce. Lafite is among the most

faked wines in China, so the capsules on its

Long Dai bottles conceal chips to allow

buyers to authenticate a bottle using their

smartphones.

A local foothold may also help sustain a

label that no longer sends Chinese into

bacchanalian frenzies. Imports of Bor-

deaux last year fell 31% by volume com-

pared to 2017. Australian wines are now

neck-and-neck with French ones for the

first time. At a bar in Shanghai, a lifestyle

blogger says between sips of Australian

shiraz that as more Chinese travel overseas

they have come to love plenty of other for-

eign wines. At a nearby table, businessmen

quaff Bordeaux—though none is tempted

to buy chinois Lafite.

Will rivals follow it? Aurélien Valance of

Château Margaux says charitably that the

idea is “interesting”, but that Margaux

wants to “maintain integrity” by producing

in France. Chinese collectors tend to open

and enjoy their bottles, he adds, so their

cellars are still fairly empty. As Lafite

knows, plenty are jostling to fill them.^7

PENGLAI

Château Lafite cracks open its first

Chinese vintage

Fine wine in China

In the vinguard

Cépage de Shandong

T

he gleaming campus of BeiGene, a

biotechnology company in Beijing, has

all the trappings of a well-heeled research

laboratory. They include screening ma-

chines to test the 500,000 compounds in

BeiGene’s library, its animal-testing quar-

ters with 10,000 creatures—and Wu Xiao-

bin, who last year left a job as Pfizer’s head

for China to run the Chinese firm’s domes-

tic operations. Signs of expansion are all

around—especially for research on cut-

ting-edge treatments that include gene and

cell therapies. The number of scientists

working on such drugs has almost doubled

since last year; more are being hired. Fresh

lab space has replaced old offices.

BeiGene, founded in 2010, is emblemat-

ic of China’s fast-changing pharmaceuti-

cals industry—in more ways than one. On

September 5th a New York asset manager

alleged that it had inflated its sales fig-

ures—a sign of distrust of an industry with

a historically well-earned reputation for

shoddy quality and shady business prac-

tices. The company, which is listed on

America’s Nasdaq stock exchange, denies

wrongdoing. Investors seem to believe it:

its share price has recouped half of the 17%

drop precipitated by the accusations.

Markets’ optimism is doubtless fuelled

by the huge promise of China’s pharmaceu-

tical industry. In 2016 the country became

the world’s second-biggest drug market. In

2018 sales reached $137bn, doubling in just

six years. They are projected to be worth

half of America’s by 2030, up from a quarter

now. Much of this will come not from for-

eign drugmakers but domestic ones. At the

same time, Chinese firms, which have his-

torically produced copycat drugs for do-

mestic use, will increasingly sell innova-

tive treatments for everyone, like those

BEIJING AND SHANGHAI

China’s pharmaceuticals industry is growing up

Chinese drugmakers

A rising star

1