“French wine will continue to dominate”

The head of the Wine Society says the French tipple dominates the wine market in Macau and in Mainland China, and that won’t change in the near future. Filipe Cunha Santos says the Chinese are enjoying more and more French wines, in particular Bordeaux, largely due to its reputation.
In a far-ranging interview with Business Daily embracing a wide range of topics, Santos - also head of the Portuguese-Chinese Chamber of Commerce and Industry – said that their lobbying role within the government now mostly addresses the thorny issue of imported labour. Companies are increasingly concerned about the government’s policy regarding the importation of workers and if Portuguese companies once enjoyed historical advantages that is now a thing of the past.

What was the outcome of the second edition of the Macau Wine and Dine Festival in Macau?

For the last two or three years, Macau visitors have been increasing and there’s a lot of interest in food and wine in Macau, so we looked at the event in Hong Kong, which is basically a big event organised by the Hong Kong Trade Development Council - the Wine and Dine Festival. We looked at that model and tried to see if we could also do something here.
Last year, we did the first one with the support of The Venetian and, of course, there were a lot of subsidies from the government. We had good support from Macau Economic Services, MGTO and IPIM, and last year we did it within the Carnival events. It was our first year, and it was fine. We made a few mistakes that should be corrected, so this year we had more experience.
The timing was actually better this year - we were lucky with the weather and also we had more experience in terms of visitors and all the support we had. The only problem was that we were a bit too late agreeing the dates with The Venetian because we wanted to become an independent festival. Actually, we detached ourselves from the Carnival. We also enjoyed a lot of support from the distributors, in terms of wine and food.
What we want to do for the third edition is to start agreeing the dates with The Venetian well in advance, so that we can talk with the big institutions like the French, Italians and Spanish wines, besides the Macau Portuguese, in order that they have a bit more support as we do in Hong Kong.
This year was actually good because we doubled the number of visitors to more than 20,000. We also had an increase in exhibitors - we had 36 exhibitors. And Saturday was a fantastic day - all the exhibitors were very happy because they sold a lot of wine, there was a lot of interest in food and wine . . . and this year we achieved our objectives.

Is the cooperation with The Venetian to be continued?

Yes, although we need to agree the dates at an early stage, in order to have an even better promotion near the big institutions, not only the local wine distributors but larger country institutions and some of the Hong Kong distributors as well.
Is the fact that you’re now associated with a big gaming operator responsible for the increase in the number of visitors? Yes. The space is good - one of the best in Macau because there’re a lot of tourists and pedestrians passing by that area. It attracts a lot of attention.

Do gaming operators now have a big role in promoting the wine business in Macau?

Sure. Of course the casinos, as in Las Vegas, started by focusing on gaming but more and more they’re starting to have better entertainment elements like food and wine.
More and more visitors from the Mainland are actually experts. If in the beginning they were not experts in wine, nowadays they are actually demanding better quality.
Of course, as we all know, visitors from Mainland China love French wine. There is a role in promoting the wine so in the Macau Wine and Dine Festival we actually had the South African Consulate represented, and we want to have more of these government institutions. There’s always an interest by all these institutions to promote in Macau because they want to penetrate the Chinese market.

Is the wine market growing as a whole in Macau or do you see only specific wines, like the French ones, growing?

I was actually looking at a document yesterday regarding the price of 2009 and 2010 Bordeaux wines, the latest vintage. Prices increased almost 140 percent from 2009 to 2010 - almost entirely due to the Chinese market. It’s interesting because before Bordeaux wines were bought by the US and now the US is probably not buying anymore; only the Chinese are.

What’s changed?

The Chinese are increasingly interested in French wines and in particular they think it’s also a status, a good investment. In some interviews about this, Bordeaux producers said they were happy but they were also a bit nervous because you never know if there will be a directive from the government to cancel the importation of French wines.
There’s a marketing job to be done and the Australians are doing a good job; Portugal is limited in resources so it will be difficult to grab the whole Chinese market but we can target niche markets like Shenzhen, Guangzhou and Shanghai.

Due to Macau’s historical legacy, Portuguese wines should be on the front shelf in this penetration of the Chinese market. Is it just due to bad marketing strategy?

The first reason arises from marketing resources, which are quite scarce. Producers from Portugal are looking more at China but their traditional markets are Brazil, Angola, the U.S., Northern Europe, so they invest less here and they trust their partner distributors here to do most of the job. Of course, the distributors here, except for some multinationals, don’t have resources to go into big markets like China, and only some Macanese trading companies import Portuguese wines.
A few multinational companies focus only on wines and they’re doing well but they have a very small portfolio of Portuguese wines.

Do gaming operators’ fine dining restaurants offer a good selection of wines from different countries other than France, like Portugal?

There are exceptions. MGM are particularly Portuguese wine-friendly and they have a very nice selection. The Four Seasons also has a very good selection of Portuguese wines. Sometimes, it’s also a question of management. If they have some sort of partnership with the Portuguese, through their management and F&B department, then they follow the trend, which is historical here. The VIP operators are all French.
For example, big companies like Galaxy have a very limited portfolio of Portuguese wines, maybe because there’s not enough salesforce, not enough penetration marketing to promote Portuguese wines in the big casinos. Of course, there are a few casinos that have Portuguese wines, while others are more focused on market demand, which probably includes the Chilean, Australian, New Zealand whites, etc.

As the Chinese acquire more knowledge about wine, do you believe that French wines might lose some of their cachet?

No, I don’t think so. What we’ll probably see is that because Bordeaux wines are so expensive the Chinese will probably start to buy Burgundy wines. But I haven’t spotted any trend to buy Spanish, Italian or even Australian wines, despite their marketing efforts.

You’re also the head of the Portuguese-Chinese Chamber of Commerce and Industry. What do you believe is the role of this organisation in promoting trade?

The role here is not so much on trade. We have Portuguese companies that have been doing business here for a long time - companies with Portuguese roots but almost Macau companies. We have big companies like banks - BCM, BES, BCP - that are our members, and we have many engineering companies, not so much on the construction side as on engineering supervision projects. We also have individuals, like lawyers and architects. But the role of the Chamber is not to promote trade - it’s more to lobby the Macau government to support the interests of the associates.

Have you been successful in this goal?

Relatively. We can see there are now some difficulties importing qualified labour from Portugal. Some of the companies basically say they were working in big projects for the government but are still refused permission to import engineers and qualified staff to Macau. So there’s a contradiction here . . .
Most of the associates complain about this and we’re trying to lobby government about this. Of course, we cannot say it’s only the Portuguese that are being discriminated against. The associates cannot understand the criteria of the Macau government.

Do you see any will from the government to become more flexible in its importation of labour policy?

We’ve discussed that and it’s a little bit difficult. The higher authorities say there’s no problem but when, in fact, it comes to approval then somehow there are rejections.
We’re not sure if this is a policy at a high level or if it’s some criteria in middle government management. We don’t understand what the major problem is.

Despite the labour problems common to Portuguese and foreign companies, do you see Portuguese companies increasing or decreasing their presence/strength in Macau?

I can see that the Central Government is supporting Macau as a Portuguese-based platform for the Portuguese Speaking Countries and in theory that should help and we’re trying to do some connection with Portuguese companies. There are a lot of requests to do business here but it’s not easy to support them; they have to invest, it’s not our role to do the trading.
It’s difficult to see if the Portuguese companies are doing more here. Of course, our economy is not doing well, so companies in Portugal would like to diversify and they’ll be more interested in the China and Macau market but again the resources are not very well supported by the Portuguese government. It’s going to be tough for them to come here. The Portuguese companies that are here already continue to grow.

Do you see potentially good areas for Portuguese business?

Technology and engineering areas have a good scope here, provided there are good conditions from the Macau government. We have our associates in the engineering field that want to grow but the Macau government has to give them the right conditions in terms of labour.

You’re also one of the founders of the Macau European Chamber of Commerce. Why the creation of this organism?

The Portuguese Chamber is one of the oldest in Macau, and we’re always in touch with the other European chambers. The Portuguese Chamber is the only one that has in the past belonged to the Hong Kong European Chamber of Commerce. Also, there was a trend by Hong Kong companies to come to Macau because Macau is becoming an important trading city, although internally the status of the Hong Kong European Chamber of Commerce has been very difficult and there has been some debate about its expansion into Macau. There was pressure from the chambers here, smaller than the ones created in Hong Kong, to associate and have more visibility.

European companies compete among themselves. Is it easy to gather them in one Chamber?

That’s why the Hong Kong European Chamber of Commerce did not expand to Macau. There were contradictions - not for Portugal, but other countries were competing in several areas.
Anyway, when we joined the Hong Kong European Chamber of Commerce there was not too much activity there, and then the Europeans launched EUBIP [European Union Business Information Programme], which was quite successful. The Hong Kong Chamber of Commerce assigned staff to start organising some fairs and exhibitions and they gathered strength and unity. Thus, most of the European countries are now gathered under the Hong Kong European Chamber of Commerce.

Are the concerns of most European companies in Macau the same, like the import of labour?

Yes, for most of them. In Hong Kong, they were very worried about education, it’s very expensive and troublesome. Here, it’s not education but labour and infrastructure, so I’d say 80 percent of concerns are the same.

The role of this organism in Macau is to lobby on behalf of European companies in Macau?

Yes. The Europeans have the big brands in retail and F&B, it’s a different aspect, but no doubt the Europeans can grow a bit more here. There’s a rebalancing between Macau and Europeans that could be done.
We’re talking about infrastructure for transportation, environment and some other sectors where Macau could expand in the future.

In which sectors are there more possibilities of cooperation between the EU and Macau?

Not only in terms of the trading profession but academic training. There’s a lot of experience we have in Europe that could help a lot; in particular, the middle levels of the Macau government.