Ep. 340 Natalie Wang (Part 2)

Italian wine podcast. Chinchin with Italian wine people. This is Italian wine podcast. I'm Stevie Kim, filling in for Monty Walden. The real, real host of Italian wine podcast. I'm I'm the fake. Podcast host. And this is the second part, the conversation with, Natalie Wang, with, talking about the China's wine market. So welcome back, everybody. This is part two. So let's start with, let's start with where we left off about social media in, China. What is the main difference quickly between, Chinese social media and western social media as we know it? Well, I mean, they first of all, I think you mentioned we mentioned talk about it in the first part as well. West Coast of Bolivia, I did put Instagram, Google, everything else was blocked, all blocked in China, and The huge difference is that, the Chinese media is basically engineered and designed in a way for Chinese speakers. I mean, that's one obvious difference. And the penetration of it it's just so widely penetrated in the market and widely used. And it's not just a single singular app for messaging or a singular app for video, or a singular app for, you know, putting out social media content combined everything. It's really an ecosystem. I think that's the biggest, difference I've seen, from, western comparing, western social media, and, Chinese social media. So, Natalie, you know, I was, very interested in in this one slide that you showed during, a recent webinar that you did. About e commerce. And maybe we can also share that with, listeners. The one it's it's all in Chinese, where you mentioned, you know, taobao, there are, like, three levels of e commerce right, our taobao JD, Pingduoduo, dang dang, Swining, one store. This is all translated from land just now. Then then the second level is the T Mobile VIP Alibaba. And the platform only for Shishuan, nineteen nineteen, etcetera. And then, of course, the highly specialized dedicated to wine is wine world. Yes, my wine, way too. Can you just break that up for us, quickly. Yeah. Yeah. For sure. Because in China, you know, e commerce so developed. I think, you know, that I think the last a number I checked. It was, around seven hundred ten million online shoppers in China. So just to put it in perspective, that's roughly the population of Europe combined. So imagine that amount, you know, that number of, people using online. And then, of course, there's several different tiers and categories of e commerce as well. The ones that we mentioned, you know, like t mo j d dot com, those are ecommerce platforms that sell everything. Anything, you know, from electronics, food, grocery, anything you can imagine. You can find it. So that's like something equivalent to, let's say, you know, Amazon, eBay. Yeah. Absolutely. Yeah. Right. Yeah. That's basically equivalent of Amazon. And then underneath that tier, you have drinks, specialized e commerce platforms, like, Ejo, Ejo, one nine one nine. Right? After these are all sorts of, you know, alcoholic, beverages, bijou, the Chinese spirit, to beer, to wine, to hangzhou, Chinese yellow wine, or to softer drinks. They cover the whole range for drinks. And, as I recall, nineteen nineteen, it's an interesting story because they started out with the brick and mortar retail shops. Yeah. You know, I and I remember I met, the founders and, you know, they at the time, they only had a thousand, but I don't know what what what the status is now. In fact, some of the huge brands were, popular are because they were able to get through these retail shops. Oh, yeah. Absolutely. I think, one nine one nine pioneer this model for a lot of drinks retailer to combine offline shops and online shops. And they're very successful in that aspect, and they're the first ones I'm contrary to a lot of drinks retailers. They're also the first ones to start from lower tier cities. Their home base till today is still in Chengdu, which is the first tier city like Shanghai or Beijing. They started out in Chengdu expanded gradually to second tier, third tier, and then come back to first tier cities like Shanghai and Beijing. So their strategy is completely different, which is probably why I made it made them quite successful. So, I mean, there are so many main players. Right? Like, where do where do you start? Like, if if, Italian wine producers wanted to sell their wine. It threw all this spectrum of, e commerce platforms. What, like, where do they start? Where is the starting point for them? I think for them, first thing they need to do is to ask their Chinese partners. What are the available platforms their Chinese partner is on? So stop When you mean Chinese partners, do you mean their importers? No. Their distributors? What do you mean? Like, you know, basically, if, yeah, you're right. So when I say Chinese partner, is there importer or distributor in China? So talk to them and ask them what kind of what are the platforms they are on? Because for a Italian winery, for instance, to open a wine shop in Mobile. That's basically impossible because you have to have a Chinese business registration, mobile number bank account tied to it. It's quite complicated. It's not impossible, but it's just very complicated. So if your importer in China already has its own platform or opened a flagship store in taobao or JD dot com, work with them to sell that and to, you know, promote your wines there and also ask your importer what's the price range? People are comfortable paying. What's the best, you know, what what are the items that's moving fast? Online. So start from there to understand what customers are looking for and what customers are eventually ended up paying for and then promote that sort of price category. Wines, I think. Right. And not to mention the obvious. It's it's the elephant in the room, but, you know, you have to speak Chinese. Right? You have to be and that's it seems like it's it's so obvious you know, in your face kind of fact, but I mean, you, I mean, you have to speak Chinese. You're absolutely right. I think, you know, for me, you know, I've got too deep into this, and I forgot about those, you know, obvious things, but you're absolutely right. You have to speak Chinese or hire someone who speak Chinese or understand Chinese and, you know, get your basic information, wine, or a bio, and everything else translated into Chinese. So that your importers, distributors can use and open a WeChat account, because eventually people are looking at your WeChat as your name card, and to see what's, what's your brand story, what are your what are the things you're offering on WeChat as well. Yeah. I think WeChat also, you know, he's coming to it's it's, you know, I think, Lori in its all sense because now with the social distancing, you don't want to because, you know, the time is there, always like, you know, Abracci, like, you know, hugging kisses and, and with WeChat, you don't even have to touch anybody ever again or handshake. Right? So I think it's it's really this, the the, the Yeah. Of the times. For the pandemic. Yeah. Listen. So, I mean, I I I'm assuming that during COVID, selling direct to consumer has increased, right, in terms of wine sales. What kind have you got any inkling as to what kind of wines performing better or worse or price points, any of that? Yeah, I don't I mean, we don't have, like, official data on this, but, my impression is that, you know, wines, lower end wines tend to do well in China. What are what are the lower end price points? I think around one hundred are in And that translates into For the twelve US dollars. Yeah. Okay. And that tends to do well. And also because, you know, during the pandemic, it's the climate component as well. So people are very positive about spending no one is really urging, like, before COVID, like before COVID. The people are more cautious about what they're something on and how they're I'm in the money as well. So I don't want I don't I don't mean to put you on a spot, but, like, if it's twelve dollars to the consumer, what is that Acsella? Like, have you got any idea? Land, do you have you got any idea? Should be three three point US dollars. So Lance says, who's who's sitting right next to me, three to four US dollars. Yeah. Wow. So it's it's still, you know, that is very inexpensive. Yeah. It is very inexpensive. I mean, the wine sold in China. If you go to JD dot com or do more, take a look at the wine session, and you'll see a lot of the wines, the parts are very cheap. Yeah, I think that's one thing people don't tend to understand. I even did a story, like, you know, just a couple days ago about What is what is what is this the story? So the story was really about, you know, because now in China, there's a massive campaign to urge Chinese to drink Chinese wine. So and when I was doing the story and I was looked back, to a report published by China's drinks organization, I think in twenty eleven, and it says roughly about eighty percent of Chinese wine sold in China are priced below one hundred RMB, which is twelve dollars, and roughly thirty eight percent of those wines, the price is between twenty RMB and fifty R and D. That's like what, you know, five less than five US dollars. You know, you know, but I'm complete before having the Chinese consumers drink Chinese wine because You know, I often hear from at least from my side Italian wine producers. You know, they they're kind of they they're always, they feel, threatened by this fact, but I always tell them you know, look at America. You know, Americans did not drink wine until they started drinking their own wine. And still today, perhaps it's it's it's not clear to them that sixty percent of the wine consumption in America are still American wines. Yes. And then once they become more familiar and they get exposed to wine in general, when there is a wine, knowledge Then they can try different things like imported wines and different price points. Pretty different. Because I I I completely welcome the fact that, you know, we they are in China. They are encouraging Chinese wine consumption. I think that is absolutely going to be good for everybody in terms of wine market. Yeah. I think it is a good thing. You know, especially in China, so big, and you are seeing more, quality driven wines from Ninsha or from Shandong coming out of the market. I think it's a good thing to elevate the quality of the wines so that consumers can buy and drink Chinese wine. One thing that worries this when it's teamed with nationalism or xenophobia, like Right. Right. Right. That's one thing that worries me, but it is something we're definitely seeing happening right now. So we'll see where it leads us It's it's interesting time for everybody right now. So we'll see where, you know, I mean, who knows what's gonna happen two thousand twenty one if we ever get to that. Right? So, listen, let's go back to talking a little bit about live streaming. Yep. Yep. Like, what like, how does these live streaming take place through which platform? And do you have any, other than Penfels, of course? Can you give us a quick overview as to what live streaming platforms they are? And if there are any, brands who were particularly successful. And I know they use also. This is a twofold question. In China, the Chinese are the only ones who talk about k o l. What does that mean? What does that stand for? Yeah. Definitely. I think live streaming is, like, I mean, e commerce and steroids. It just suddenly exploded. I mean, it came onto the scene roughly two or three years ago, but during the pandemic, it's just, you know, act like a, catalyst for live streaming. Everyone that I know in the wine trade in China is suddenly using live streaming to sell wines because, you know, with the lockdown and, quarantine measures in place, And the popular platforms for live streaming is still, linked to e commerce, like tmall and JD dot com, two of the biggest e commerce platforms in China that account for roughly eighty percent of the market share. So you have, online influencers or this KOL key opinion leaders like Right. But we just call them influencers. Right? Yeah. Influencers, basically. Like But they are key opinion leaders. Yeah. Like Liachi, I don't know if you heard about him. He's known as the lipstick king Right. He's the kid who was so, like, squillions of lipsticks, right, in one nano second. Yeah. That's the one. So he's the one who got famous in China like three years ago because he was so good at selling lipsticks. And, you know, he sold I if I remember correctly, he sold roughly fifteen thousand lipsticks within five minutes. No. No. It's just I mean, that's still. But he sells other stuff, not just lip sick. Right? Absolutely. He branched out to basically selling anything, like home appliance, frying pan, any does he sell any wine? Oh, yeah. That too. And, He worked with, great war and great war, the Chinese state owned winery, the second biggest winery in China, actually. He worked with him, in January, actually, just this year before Chinese spring festival, and he managed to sell twenty thousand cases of wine within thirty seconds. Wow. That's that's pretty impressive for especially China. Who are the KOLs kind of like specialized in wine? Oh, specialized. Lady penguin. Terry Shoe? Yeah. I think those are the two KOLs influencers that I can think of on specialized in wine, the others sort of, they do a little bit of everything. Yeah. The lady penguin is the one that sort of stands out. She's quite, yeah, she's quite, influential. So listen, like, how does the, in to engage a KOL, who pays for them? A wineries, I think. So so the wineries pay, it's like hiring an influencer. It's just the influencer marketing. Yeah. We influence your marketing. Think about, I mean, if you're in the US, you're a brand owner, luxury brand owner, you want to have Kim Kardashian or some celebrities come over to you. There's certain rate cards, and then you pay them. You sort out the details. I know some wine associations worked with them and a few wineries they did as well. I mean, I think I think Lady penguin is quite successful with her own brands, but Can they actually also in your opinion? Are they capable of selling other brands? It's a little bit challenging. I think lady penguin is known for wine and other alcoholic beverages for her to branch out to other things. I don't know. It's a big question, Mark. What I mean, I think that's just in general, right, not just in China, but what is the conversion rate of these influences, especially for wine? Right? So it's, I think anyone who comes up with that study will be a will be a best seller for, for one market. So listen, I know, you're not nostradamus, unless you have a secret. But what in your opinion, what does future hold for China? What what will be the new norm, quote unquote, for the wine business in China? Off to the lockdown being eased a bit. Wow. I think, you know, online shopping is definitely gonna stay. Because, I think a lot of people even during the lockdown, the amazing thing about the pandemic is, you know, it changed a lot of people's shopping habits. I think I read some papers a couple of days ago. I a lot of first time shoppers were converted into the virtual world during the lockdown, just in the first month, in February. So that's quite amazing. A lot of the frequent, allied shoppers already, you know, increased their frequency, shopping online. So I think that's gonna stay. Of course, there are some people after the lockdown measures were lifted, and they know we're gonna say, well, I'm gonna go back to break a motor shopping, which is fine. But then certainly, there's gonna be a certain group of people who got used to online shopping. I know that, well, this is not too bad. I'm gonna stick with online shopping. So I think we're gonna see more of that. So, you know, you know, I think both of us and many people, in the wine world, we used to travel quite a bit. Yeah. Now that, you know, the It has it will definitely affect tourism as well as wine tourism. You know, after the collapse of tourist economy, it will definitely affect the hospitality, right, hotels, restaurants, and all the different services related to this business, which is very important for the wine business. I mean, in America alone, there are forty million people without a job right now. Yeah. Yeah. So once the travel ban is lifted or partially lifted, what is the, what do you think is the efficacy? How does the contact tracing app work for you? Right now. Do you have that in Hong Kong and in China? Well, how can you can you travel easily in and out? At the moment in Hong Kong, we actually don't have that. But I think in China, they already developed a contact tracing app. If it's screen, and you can travel to different places. That means your virus is free. But if it's red, you should have to go into quarantine. But unfortunately, at moment, in Hong Kong, we can't still can't go anywhere. And, the border is closed. At least until July. International travels, it's still banned until September. So we'll have to wait and see. Like I said, I think, social distancing is gonna persist. On unless we find, workable and viable vaccine solution for the whole population. Otherwise, still, people are gonna be very cautious at dining out, going out as well. So, if you can give us kind of, you know, as we approach, you know, this, the new kind of post COVID era, hopefully. I don't want to really jinx ourselves, but If you can recommend, like, three things or, like, key takeaways, what would that be for, dedicated to the Italian wine producers as we approach the second half of two thousand twenty. Mhmm. And this is my last question for you. Yeah. Yeah. Yeah. Yeah. I think, if they don't know anything about finding social media right now, and I will highly recommend them to get themselves acquainted with the, like, apps like WeChat and start to play with it just to understand how it works. And also, build work with your importers and distributors to build up your online presence. If you already have an online presence, expand your online presence. I mean, this is the best time to do that as everyone is going digital. And also, you know, I think China because it is the first country to be hit by the coronavirus, and, it is definitely among the first. Second. Yeah. And it definitely Not that it's a competition. Yeah. Yeah. Not that it's a competition. But what I'm saying is, you know, because it's head to first, and it's gonna be among the first to recover as well. And certainly, we're seeing that right now in China. So fingers crossed, hopefully, it will be like that. And mark down a few key trade fairs that they want to attend in the second half of the year. So plan for that already, because I think the fairs that are happening mostly are in November, like, wine to Asia, organized by in Italy, of course, and in Proai. Yeah. So mark down those fares you want to, attend to draw out, Chinese buyers because by them, people already depleted all the old stocks And they're all in the position to purchase and buy for next, year and the upcoming Chinese New Year. So that's the best time to do business in China. So that's something to keep in mind as well. So do you think, like, I mean, have you been to I knew I I said it was the last questions, but one last last question, you're now in Hong Kong. Have you kind of resumed your normal life? Like, are you going to the restaurants? Are you wearing Yeah. Yeah. Yeah. Your home call. I mean, it's completely, I think we're out of woods, but still the government is very cautious, just this month, just this week, starting from today, Audrey, so I'm very excited. Everyone is allowed to have good gatherings indoors and outdoor activities. Number is increased to fifty. Restaurants are allowed to operate a full capacity And, everything just loosened up starting from today. So that's a very good thing. And, things are getting back to normal. In fact, I just read an article from South Shauna Morning Post today this morning, and it says, restaurants are now hard to make bookings because everything is for everything is packed. That's fantastic. That's fantastic new. Really good news. It's a little bit slower here, but in Italy, because I've I I've I went to a, like, a real restaurant, couple of restaurants last week for the first time. I've been mostly ordering in, from delivery, but let's cross fingers and naturally listen. Thank you so much for this. And, I think, I would highly recommend again everybody to go vino dash joy dot com website, because it's loaded loaded with the latest update in China's wine market. So, Natalie, I know you're a busy lady. Thank you so much. And listen, I hope to get you here for wanting to wine in, in the fall in November. Oh, yeah. Definitely love to. Okay. I mean, if we can't get you physically because, you know, for some reason, at least, you know, we'll do, a like, virtual conferencing, a webinar or something. Okay? We love to. Okay. Alrighty. Ciao. Ciao. Good Simila. Bye, everybody. Bye bye. Listen to the Italian wine podcast wherever you get your podcasts. We're on SoundCloud, Apple Podcasts, HimalIFM, and more. Don't forget to subscribe and rate the show. If you enjoy listening, please consider donating through Italian wine podcast dot com. Any amount helps cover equipment, production, and publication costs. Until next time.