Case Studies of Australian Businesses in China
BRL Hardy is a leading Australian wine company and one of the world's ten largest wine groups; it holds over 20 per cent of the Australian premium wine market and exports to over 60 countries. In mid 2002, BRL Hardy signed a distribution alliance with China's leading premium wine producer, Dragon Seal Wines. Dragon Seal Wines will import the Hardys product for distribution through its extensive 20-city network in China. China's growing incomes, large hotel and expatriate markets and WTO accession all proved attractive in establishing this venture.
In doing business in China, BRL Hardy identifies two key challenges – choice of partner and getting paid. If starting from scratch in choosing a partner, BRL Hardy recommends extensive research on the company, its background, its personnel and its relevant experience; in Dragon Seal Wines, BRL Hardy found a partner with similar skills and experience and strong understanding of the wine business and related marketing and logistics issues. Although BRL Hardy has not itself experienced payment problems, they emphasise the need to quickly establish sound and clear payment arrangements to avoid risks; in the initial stages of a new venture, upfront payment or letters of credit are recommended.
Source: BRL Hardy, 2002.
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