Vertical coordination in the Chinese grape market

Linda Bitsch · Shuo Li · Jon Henrich Hanf

4 citations0/0 files storedJournal of Agribusiness in Developing and Emerging Economies

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Wine Industry and Tourism Agricultural economics and policies Agriculture and Agroindustry Studies

Abstract

Purpose Regarding the global development of the wine industry, China has gained a notable share in terms of wine consumption, and its domestic wine production has increased steadily since 2000. The wine production process requires close coordination between growers and processors to avoid disruption and instability in the supply chain of the wine grapes. However, vertical coordination in the Chinese wine regions has received little attention. Based on the existing theoretical background on vertical coordination, this study aims to detect the evolution processes of vertical coordination in the Chinese grape market. Design/methodology/approach Exploratory qualitative research fits with the aim of this study. From December 2018 to January 2019, interviews with grape growers and wine processors of various Chinese wine-producing areas took place. After transcribing all recorded files into text, a qualitative data analysis following the approach of Mayring (2015) was used to analyse and interpret the data. Findings The models of vertical coordination in the grape supply in China vary between the producer's requirements on grape quality/quantity and the arrangements of grape supply chains, which are diverse depending on regional strategies of the local government. Research limitations/implications However, in this research, the authors did not get into details on the organization of the contractual coordination, and due to the limited access to grape growers, the relationship between farmers and processors cannot be analysed in detail. With a better understanding of the coordination relationship and enhanced contract enforcement, the vineyard management and grape supply chain management can be better performed, inducing a steady industrial development. Originality/value Regarding the global development of the wine industry, China has gained a notable share in terms of wine consumption, and its domestic wine production has increased steadily since 2000. However, vertical coordination in the Chinese wine regions has received little attention. The study provides a first insight into the grape market structures, as very little is known.

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References

2007Globalization, privatization, and vertical coordination in food value chains in developing and transition countries 1998Up- and downstream restructuring, foreign direct investment, and hold-up problems in agricultural transition 2009Vertical integration in the wine industry: a transaction costs analysis on the Rioja DOCa 2005A Micro-econometric Analysis of Grape Supply Contracts in Australia 2018How Much Wine Is Really Produced and Consumed in China, Hong Kong, and Japan?2014Coordination of the California Winegrape Supply Chain 2017Coordination of Winegrape Supply Chains in Emerging Markets 2011Winery Integration Strategies in the Mid-South and Mid-Atlantic States

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