Exchange promotes liquor as investment
Updated: 2012-09-10 08:07
By Zhao Kai in Guiyang, Guizhou(China Daily)
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The Guizhou Liquor Exchange, a new platform for trading liquor, formally opened on Sept 6 in Guiyang, signifying the further development of the province's alcoholic products as luxury commodities for investment.
The opening of the exchange was one of a series of events for the second China (Guizhou) International Alcoholic Beverage Expo.
The establishment of the platform, the first in Guizhou and the second in the country, means finished liquor and base liquor can be traded through financing like stock shares and funds.
There are at least 10 liquor-trading platforms in China, which were mostly set up in 2011. In September 2011, China's first liquor exchange for baijiu, a type of clear Chinese liquor, was founded in Sichuan.
While the exchange in Sichuan mostly deals with a variety of baijiu characterized by its strong fragrance, the Guizhou Liquor Exchange deals with so-called sauce fragrance baijiu, said Chen Lei, chairman of the Guizhou Liquor Exchange
"Despite the fact that Guizhou's liquor is widely known, we don't have such a big share of the country's overall market," Chen said.
In 2010, the sales volume of Moutai, the province's most well-known brand, reached 14 billion yuan ($220.68 million), accounting for about 80 percent of the liquor sales value of Guizhou province. However the industry needs more than just Moutai, Chen said.
"We are lucky to have Moutai, the clear Chinese spirit that is also the national liquor of China, but other brands also need to seize the opportunity and expand their business in order to boost the whole industry," Chen said.
Effective marketing is considered vital to the business, which is why the liquor-exchange platform was established. What sets it apart from other platforms in Beijing and Shanghai is that the Guizhou exchange is the first to implement financing and electronic commerce, Chen said.
"The particularity of baijiu makes it valuable for collecting and storage just like some fine wines, the quality of which improves with age," said Han Xuesong, deputy general manager of the Guizhou liquor exchange.
"People are willing to put their money into quality liquor as an investment, but they need a platform to monitor price changes just like that of futures trading."
Han said bringing financing into liquor trading allows buyers to track the market of listed companies and know when to buy in or sell out. In addition, the exchange offers a business-to-customer electronic commerce platform, which will make it convenient for dealers to track their investment.
"We are also the first liquor exchange in China that has extensive cooperation with financial institutions, such as banks, trusts and securities," Han said.
"Various types of liquor-related financial products will be jointly developed and brought to our investors."
Guizhou's Vice-Governor Meng Qiliang said the liquor exchange brings innovative financing to the liquor industry, creating a bridge to connect investors with the province's alcoholic beverage industry. The surge of external investment will help boost the development of the industry.
"Accelerating the development of the liquor industry has been a major task for the government of Guizhou," Meng said.
"The liquor exchange is an ideal way to expand our influence and attract attention from the outside world."
Chen said several foreign wine companies have already shown great interest in the liquor exchange and are willing to cooperate with local distilleries.
"A lot of them are from Spain or France, both of which are countries famous in the wine industry. The synergy between wine and baijiu will generate a magical chemistry," Chen said.
"It will grant local companies a great opportunity to foray into overseas markets and make the industry much more globalized." After a few months of pilot operations, the liquor exchange completed its first deal in August. More than 1,600 buyers succeeded in buying 62,500 jars of liquor worth 50 million yuan.
"The liquor exchange will form a luxury consumer market for Guizhou liquor and a financial market for investment in the province's liquor industry. Our goal is for the transaction volume of the exchange to reach 100 billion yuan by the end of 2020," Meng said.
zhaokai@chinadaily.com.cn
(China Daily 09/10/2012 page18)