Chinese-Owned Vineyards in France Seized on Suspicion of Tax Fraud
China’s love for French-grown wine has gotten it into trouble.
Haichang Group, a petroleum trading company based in Dalian, a port city in northeastern China’s Liaoning Province, owns 24 wine estates in the Bordeaux area, one of France’s premier wine-growing regions, making the group one of the biggest Chinese investors in wineries in the region.
Ten of Haichang’s 24 vineyards were recently seized by French authorities on suspicion of tax fraud, according to a report by AFP on June 29.
“For 10 chateaux, we discovered a certain number of tax crimes: laundering of the proceeds of tax fraud, forgery, use of forgery, etc.,” a police source told AFP.
The seizure was the result of a French investigation that began four years ago after Chinese media reported that Haichang had misused government money to purchase the vineyards.
According to Radio France Internationale (RFI), the original investigation targeted all 24 chateaux, which Haichang had purchased for $64 million total. Investigators found a $35 million loan from the Paris branch of China’s Industrial and Commercial Bank (ICBC), one of the big four state-owned banks in China, that was issued based on fake notary statements.
In June 2014, China’s National Audit Office said in a report that Haichang and another Dalian-based company, Ruiyang Investment Management, had misused 268 million yuan (about $40.3 million) of government funding to buy vineyards in France—money that was actually earmarked for them to acquire high-tech companies overseas.
According to a July 2013 article on Chinese news portal Sina, Château Chenu Lafitte, Château Branda, and Château de Grand Branet are among the wineries owned by Haichang.
Since 2008, Asian investors have been buying up vineyards in France due to growing demand in their respective markets. The growing Chinese middle class has taken a liking for French flavor, while wealthy Chinese consume expensive French wines as a status symbol. In 2014, China became the world’s biggest market for red wine, according to the International Wine and Spirit Research.
According to a May 4 article by AFP, 140 chateaux in Bordeaux out of about 7,000 vineyards in the region have been bought up by Asian investors, many of them Chinese.
Zhao Wei, a Chinese movie star, and her husband, Huang Youlong, a real-estate magnate, purchased St. Emilion Chateau Monlot for about $5.4 million in November 2011, according to the Wine Spectator magazine.
In February 2011, China National Cereals, Oils and Foodstuffs (COFCO), a state-run food processing company, bought the Bordeaux vineyard Chateau Viaud for 10 million euros (about 11.6 million), according to wine magazine Decanter.
Zhang Jinshan, president of Ningxia Hong Chinese Wolfberry Industrial Group, which spent 10 million euros to buy the Entre-deux-Mers estate Chateau Grand Moueys in 2012, explained why so many Chinese companies are now investing in Bordeaux wines, in an interview with the state-run news site Chinese Economic Net.
“In China, red wine from Bordeaux has a good reputation,” said Zhang. “We hope to improve the quality of China-made red wine with Bordeaux’s wine-making technique.”
Ningxia Hong Chinese Wolfberry Industrial Group sells its own domestically produced brands of wines and brandy, alongside wines from Chateau Grand Moueys.
The growing number of foreign investors has concerned French President Emmanuel Macron. In February, after a Chinese fund announced that it would buy about 6,600 acres of wheat farms in France, Macron vowed that he would stop foreign investors from buying up French farms, according to The Telegraph.
“For me, French agricultural lands are strategic investments upon which our sovereignty depends, so we can’t allow hundreds of hectares of land to be bought by foreign powers without us knowing the aims of these purchases,” Macron said.