China's Corrupt Officials Aren't Very Good At Acquiring French Vineyards With State Funds

    Chinese state-owned enterprises have likely been buying up Bordeaux châteaux with unauthorized funds for pleasure rather than business, according to experts.
    Jing Daily
    Jing DailyAuthor
      Published   in Macro

    Chinese media reports that Haichang-owned Château Cugat has been listed for sale this month after a report on corrupt Chinese vineyard acquisitions by state-owned enterprises.

    As China’s anti-corruption campaign rages on, a new government report by China’s National Audit Office finds that state-owned enterprises (SOEs) have been using up unauthorized funds to buy up French vineyards—but not very good ones.

    For the government agency’s annual report released last Thursday, it revealed over 300 examples of corrupt uses of state funds by SOEs. Some of the more noteworthy examples included a trip to Las Vegas by government geologists claiming to be on a trip to the United States to study shale gas and official trip to Antarctica that had stop-offs in Chile and France that took up half the allotted days.

    One of the largest luxury-related examples of misuse of funds was the revelation that two Dalian-based companies spent a total of RMB268 million (US$43 million) earmarked for “technology” investments to purchase 14 French wineries.

    The biggest perpetrator was petrochemical company Haichang, which is the biggest Chinese owner of Bordeaux châteaux. The company owns more than 10 vineyards including Millaud Montlabert, Branda, and Chenu Lafittel. According to Chinese news source 21cbh, Haichang's wine ambitions were vast, with plans to own around 25 Bordeaux wineries in total. The report seems to have thwarted these dreams, however: several of the SOE’s wineries have been listed for sale this month, including Château Baby, Château Cugat, and Château Grand Branet. Decanter China finds that the company’s Château L’Enclos was also advertised for sale online. Dalian-based Rui Yang Group was the other company listed in the report for making similar illegal acquisitions of wineries including Château Les Brettes in Saint-Émilion and French wine export company Brillar Negoce.

    According to experts, these extravagant purchases were pretty poor investment choices when it comes to finding wine that can sell. Decanter China reports:

    “I never understood the logic of these transactions,” Alexander Hall, director of Vineyard Intelligence, told on the Haichang purchases. “There didn't seem to be any strategy behind the acquisitions and the properties themselves were for the most part obscure brands with little obvious rationale from a viticultural or commercial perspective. The only common thread was that most of the properties had impressive chateaux.”

    “This (pattern of purchases) contrasts with other Chinese acquisitions,” said Hall, “such as De Viaud, Loudenne, de la Riviere [and] Lagarosse, which, although perhaps not first tier Bordeaux estates, are nevertheless recognized names within their respective appellations.”

    The main purpose for the purchases, like the Las Vegas, France, and Chili trips, appears to be pleasure rather than business. In an interview with AFP, CUNY political science professor Xia Ming said that the purpose for these investments amounted to nothing more than “numerous excuses for overseas sightseeing.”

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