WHEN wine lover the late Michael Parry made plans to set up a boutique winery in Qingdao, local authorities first offered him a city centre site in an industrial zone. Back in 1984, vineyards were categorised as grape alcohol factories, and the civic leaders of Qingdao did not see any reason why Parry's grapes should be any different. He eventually persuaded the authorities to allow him a site in the foothills of Mount Laoshan. Apart from its viticulture attractions, the fact it was an hour's drive from the city freed him from bureaucratic interference. ''You see, they don't have the cars to get out this far too often,'' he joked. Times have changed. The winery, now under the control of international wines and spirits merchants Hiram Walker, is producing good Rieslings and Chardonnays and, thanks to economic reforms, government officials have plenty of cars to reach the vineyard. What's more they do not tend to interfere when they get there. Huadong Winery, like the famous brewery, has become one of the city's attractions. Last year it produced 100,000 cases of wine, 40 per cent for export. ''It is a question of whether to commercialise it, or stick to its premium status,'' said Hiram Walker business development director Mr Gabriel Tam. Until now, Huadong has concentrated on quality rather than quantity. A connection with Petaluma means Chinese winemakers receive training in Australia and Petaluma experts help with the harvest at Huadong. Huadong Winery produces 15,000 cases from a 13.7 hectare showcase vineyard at Laoshan. Another 69 ha in the region are planted with imported varietals. Mr Tam arranged for Hiram Walker to take a 40 per cent stake in the winery after Parry ran into financial difficulties in 1989. Tsingtao Winery, an arm of local government, owns the remainder.