Success bubbles over for fine wine venture
Hard work and determination has paid off for Don St Pierre Jnr, an American whose Shanghai-based wine-importing business started sluggishly but has grown to have US$40 million in sales last year.
And the growth in demand for his ASC Fine Wines shows no signs of slowing. With sales up 74 per cent during the first four months of this year, Mr St Pierre is looking at further expansion.
As China grows wealthier and more international, drinking wine is now seen as a sign of sophistication on the mainland.
It has resulted in growth figures for ASC that are the envy of other importers in the country, let alone the rest of the world. In 2001, the company shifted US$5 million worth of cases, a figure that doubled within two years and, yet again by 2005, when turnover was US$27 million.
Last year, ASC sold 2 million bottles of wine from some 80 winemakers spread among 13 countries to hotels, restaurants and supermarkets, plus a growing number of individual and corporate clients.
It looks rosy now for ASC. But a decade ago, when wine drinking was still a minority pastime, Mr St Pierre had to struggle with marketing the stuff, not to mention grapple with the state bureaucrats that were automatically suspicious of a private foreign company bringing in alcoholic beverages.
It helped that he had a mountain of experience at his side. Mr St Pierre founded ASC with his father, Don St Pierre, a legend in China business, and Gernot Langes-Swarovski, of the famed Austrian crystal company. The elder St Pierre, who is ASC chairman, oversaw what was the largest Sino-US joint venture in the 1980s, a breakthrough enterprise immortalised in the book Beijing Jeep, by Jim Mann.
'The infrastructure was a major challenge,' says Mr St Pierre Jnr, managing partner of the company. 'We had to set up our own sales and distribution channel. We had to build everything from scratch - there were no companies to poach staff from and no industries to draw from.'
Now, he said, he is getting job applications from experienced people in Hong Kong and Singapore who want to join a company riding a wave of good times.
A decade ago, there was the risk of being closed down, for real or imaginary infringements of opaque Chinese laws; an anonymous call from a business rival, or a disgruntled former employee, could lead to attention from bureaucrats.
As Mr St Pierre wryly points out, foreign companies tended to be guilty until proven innocent. 'You were operating in a grey area, and had to be willing to be flexible,' he says. 'China joining the WTO has made the issues much clearer for foreigners and what they are allowed to do.'
One important detail that has sunk many ventures opening up in the mainland is the slow payment of bills, a situation Mr St Pierre says is gradually changing, especially in Shanghai.
As the company's fortunes improve, it can afford to simply refuse supplying wines to tardy payers, or debt defaulters.
Not dealing with ASC would leave hotel and restaurant managers with significant gaps on their wine lists, given that the company holds the distribution rights to a menu of 800 different wines, including from major French, Australian and American labels.
As well as supplying wine in major mainland cities and an increasing number of secondary cities, ASC also puts on wine education courses to help improve overall knowledge in the industry and has a sideline in supplying glasses and other wine-related equipment.
Mr St Pierre is hugely optimistic about the future of the industry - with rosy sales expected, especially during next year's Olympic Games, which should provide plenty of excuses for mainlanders to pop a champagne cork or two.
He professes to be unconcerned about other wine companies greedily eyeing the mainland market with its tantalising figure of 1.3 billion people, the majority of whom have never tasted a drop of grape wine.
'My advice to people doing business in China is that you must be prepared to spend double what you planned to spend,' he said. 'There are frustrations and challenges. You have to be ready to get involved in every last detail of the business.'
Due to surging wages and rent, anyone setting up now would need significantly more than the US$2 million it took to initially launch ASC, topped off by another US$3 million pumped in during the first few years of operations.
'We expect and welcome competition,' says Mr St Pierre. 'We are trying to be the best in the world, not just in China. We have set very high goals for ourselves.'