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Selling wine in China

Podcast transcript #41: Selling wine in China in an unconventional way

Find here the full China paradigm episode 41. Learn more about Claudia Masueger’s story in selling wine in China and find all the details and additional links below.

Full transcript below:

Matthieu David: ​ Hello everyone. I am Matthieu David the founder of Daxue consulting and its China marketing podcast, China Paradigm. Today I am with Claudia Masueger, the founder and CEO of CHEERS Wines. You started this business in 2011 and opened the first shop on April 9th, 2011. Before that, you had another company selling wine in China as well, MQ Wines. It lasted more than 2 years and the warehouse was burnt down. You had to start again from zero again with another model, which is the Cheers Wines model.

Cheers Wines has now 60 wine stores, mainly in Beijing. You expanded to other cities, online up to 14 cities like the second-tier city, Zhengzhou and another big second-tier city, Chengdu. You are now very well-known in Beijing. We see your stores and logo everywhere. You are also very active on social media. I checked what you are doing on WeChat. You have a Weidian and a JD store. I guess you have extensive experience of O2O in China. Thank you very much, Claudia, for being with us. My first question as always is, what’s the size of your businesscurrently?

Claudia Masueger: Currently, Cheers Wines has 60 stores as you mentioned all around China, but with the main focus of 40 stores in Beijing. We have around 80 employees, 25 in the office and the rest on the roads and in the stores. Every week we are selling wine in China with one container of around 14,000 bottles.

Matthieu David: ​ One container is about 14,000 bottles?

Claudia Masueger: Yes.

Matthieu David: ​ The numbers I got for 2014 that in one year, you were selling 70,000 bottles. That’s what I got from 16 online outlets. That’s very strong growth. The number of bottles is not only from the shops, but also from B2B and platforms of online retail in China, right?

Claudia Masueger: In our days, offline is not working alone anymore. It’s very important to have a very good balance between offline and online retail in China and the touchpoints for O2O in China are working smoothly. You have the offline stores more for experience and lifestyle exchange, and then you basically offer your customers the convenience that they can order online immediately from stores or home. What is increasing extremely fast is the platforms for O2O in China with third parties like Baidu, Meituan, etc. The customers are sitting at restaurants nearby a store and they can order wines online and in 20 minutes we would deliver it directly where the customers are. This 20-minutes is the new guideline in Beijing and this is the huge demand from our consumers and it’s growing very rapidly. It’s very important in sales these days that you have offline and online retail in China available. We are around active in 8 different channels of online retail in China that could be e-commerce, O2O in China, and also social commerce, which is more and more popular as well.

Matthieu David: ​ Which platforms?

Claudia Masueger: Social commerce like Douyin, where you have sales at the end or other social media channels at the end offering your products.

Matthieu David: ​Before we actually go deeper in O2O in China, because I think you are in a position where you can experience a lot in O2O in China with your own shops and appearance on social media, which is kind of unique. A lot of brands they sell through third parties or only on TMall, but to have your own shop and manage social media is very unique. You said 60 stores before a lot of innovations in Beijing. Could you tell us more about what happened in Beijing about opening and closing your store? How do you manage that?

Claudia Masueger: It was between the end of 2016 and 2017 when Beijing renovated its city. Over 40,000 little stores on the streets were closed and around over 4 and half-million people had to leave Beijing from the city. A lot of our cash customers have been closed unfortunately by the government and all the stores were completely legal but the government broke into the doors. They closed our doors and mentioned that we can still legally run the store, which was not very efficient when you don’t have a door.

Nevertheless, at some stores, we did that for six months and people would actually climb up the window from outside, knock on the window and we would continue selling wine in China. We were actually very lucky because the government also put a gate in front of the window and the bottles were exactly the size that could go through the gate in front of the window. Those are normal things. China is moving seven times faster than the rest of the world and you always have to adapt and observe the Chinese market. Another challenge of selling wine in China was because most of the street stores have been closed, we had to enter the shopping malls. Shopping mall business is completely different than the street business, so it needed an adoption in terms of marketing, interior design, the product assortment, and the consumers communication and behaviours.

Everything has changed. We managed this step and we are now in many shopping malls as bigger stores with 60 sq. m where people can sit, enjoy and meet friends as well, specially learn a lot about wine through a wine tasting, visiting through suppliers and interaction. We also have smaller stores like island stores, which are very powerful and beautiful with a huge traffic of consumers. We are now in malls especially in the first-tier cities and a bit upgraded.

Matthieu David: ​ When I went to your store in Sanlitun, it was much smaller than 30 sq. m. Am I correct?

Claudia Masueger: We have stores from 13 sq. m up to 90 sq. m. In this range, there are many different models. You will recognize Cheers everywhere, but it really depends on the location and surroundings. For example, the no.3 store in Wudaokou is only 13 sq. m and very powerful. Some of them are very small and some of them are very big. The Sanlitun store is around 25 sq. m. The one which you’re talking about is the outside sittings. That was beautiful because the customers could also order the food from the neighbors and we had a beautiful terrace.

Matthieu David: ​ And this one is closed?

Claudia Masueger: This one is closed. Yes.

Matthieu David: ​ Beijing is still trying to make things basically more organized in the city to be more within malls and less on the streets. You moved from mainly on the streets to shopping malls. How did you manage it financially? How does it change the economics of selling wine in China, financially speaking? Can you still sell wine in China at 28.8 RMB or you had to change some of your way of doing business?

Claudia Masueger: The 28 RMB wine offered in shopping malls are now in three package offers. People like to spend more money, and the customer spending has increased, but in the rest of the assortments people who are going to shopping malls would like to have rather medium and even high level offers rather than the entry-level. We had to adapt there a lot, but we still have stores to sell wine in China in third or fourth-tier cities where the choice goes in the entry-level for own consumption and then really high up for gifting. It really depends on where you are and in which environment you are in. You will select a certain assortment for your store. We do have a certain standard assortment that all the stores need to have, but then we have add-on products, which we then select depending on the location.

Matthieu David:  28.8 RMB now is about 4 US dollars and 3.5 Euros. It’s extremely cheap for China.

Claudia Masueger: I wouldn’t say cheap. I don’t like the word cheap. It’s very affordable. My family is in the wine business for four generations, so we have a lot of purchase power. We know our world around it and when we sell wine in China, we would combine it with an order from a big retailer in Europe so that we can decrease the buying price. That’s why when you try all our wines, you always get the best price value of wines in this segment. We have a white and complicated process of how to select new wines and we are very strict on this, which means from 100 wines offered to us we would only take one. We can always guarantee the best price value. And also, we have to have a certain assortment so that we can satisfy customers in third and fourth-tier cities or first-tier cities. When you look at Beijing and Shanghai, they are two different worlds. People would eat differently and drink differently so this is also an important part of it.

Matthieu David: ​Is it because you have your own shop and you are both an importer and reseller that you are able to actually lower the prices in order to avoid so many intermediaries while selling wine in China? Does it affect your margins or is it simply because you are applying lower margin?

Claudia Masueger: It’s a combination of everything. First of all, we have very good purchase power in terms of combining our orders with other huge retail chains all over the world. We have also no middlemen in between, so we are importing everything. We are selling wine in China directly to end consumers, which makes us very strong on that point.

Matthieu David: ​ Because in China you need different licenses of importing and selling, you have all those licenses to be able to get everything 

Claudia Masueger: Yes absolutely.

Matthieu David: ​ You are from a wine family for four generations. Could you tell us more about how you analyze the wine market in China in 2008 when you started MQ wines at that time? In a story, you mentioned that at the time you saw some Chinese putting Coca-Cola into Bordeaux wine because it was so strong. What made you think this is the place where I can start to sell wine in China?

Claudia Masueger: I arrived in China on the 8th of January in 2008 with two suitcases full of wine samples and a very big will to find out the way of the wine market in China. In the beginning, I saw that my competitors would go to five-star hotels and do fancy wine tastings. But I wanted to know if the people on the street actually like wine, what kind of wine they like and what kind of prices they could pay. I was just randomly traveling all over the country, stood there on the street, packed out my bottles and started to figure out what kind of wines people on the street like.

In 2008, most people would know about French wine. Most people would say French wine Bordeaux must be the best wine. But I realized on a lot of meetings was that no one actually liked it because the Chinese wine culture at that time was still new. They prefer sweeter wines, so they put Coca-Cola, green tea and ice or whatever you can imagine in the wine because they would consume the wine, which means bottom-up. They can’t consume a heavy wine, so you have to mix it with sweet liquid. When I was on the street and trying to figure out what they really like, for example, there was a girl, maybe 25 years old, and said I don’t want wine. I gave her a Moscato and said try this one. She drunk it and she was so excited and asked what wine this is wine. I realized then that there was so much that they don’t know and that’s why I figured it out that they like sweeter wines to start and cannot afford so much. At that time they might afford 50 to spend for a bottle of wine.

That’s how I founded Cheers to sell wine in China and came back with this knowledge of wine, which really fits this new Chinese wine culture. But going back to 2008, my first deal was the Olympics, so I could provide wine and beverages to the Swiss house during the Olympic. I was very fortunate and started a bit of online retail in China because I also wanted to have a piece of the cake. Of course, China was booming and the wine market in China was booming, but 80% of all the wines would go to the government. We had customers and distributors all over China and they would sell wine in China to the government. Whatever wines we would give them, they would put a 100 or 200 RMB margin on it. The second problem was that they wouldn’t know how to storage wine. You can have a fantastic wine, but if you put it in the wrong warehouse, it’s gone. It’s just not good anymore. All those kinds of facts were very unsatisfying because the wine that we sold at the end was not really nicely consumed and overpriced.

In November 2010 when our complete warehouse was burnt down and luckily, I was Swiss and well insured. But we were out of business for four and a half months and then I had finally some time to think again and come back with the idea of really making fun and affordable Chinese wine culture for the younger generation. That’s a couple of months after the fire. We then opened our first store on the 9th of April 2011 and that was immediately a success. The youngsters would discover us in Beijing. They loved our wine choices and the prices from the beginning. We also founded a Cheers University where our own staffs and our customers could be really well educated. That was highly appreciated because we are not just sniffing around the grass and talking about weird words that no one understands. We would really start simply to explain how to choose the right wine, how to distinguish fake wines because at that time fake wine was still a big subject in China.

All of this, how to drink wine, how to enjoy it, what kind of lifestyle is it with the wine. I always say wine is the best product in the world to sell because wine is connected to so many countries, languages, traditions, and cultures. So, marketing and knowledge transfer are endless. We also went a lot outside on events at that time in 2011, wherever the youngsters would party and would be, we would be there with a booth making free wine tasting and then bring them back afterward to the store. We were super popular and within the first two years, we opened eight stores and people would definitely know us and it was an absolutely fantastic start.

Matthieu David: ​ How much time did it take you to be cash flow positive on one store? I believe that you were already having positive cash flow before starting another one or closing.

Claudia Masueger: The first store was cash flow positive in 3 weeks. It was special. We had no idea what we were doing and we never had any experience of sell wine in China. We were just wine people. We just selected a store in the middle of a purely Chinese neighborhood. It wasn’t fancy at all. The rent was 3,500 RMB and we wanted to experiment this if it works. When we did our first interior design, I wanted to have it as non-traditional as possible.

The Chinese wine culture sometimes can be a bit snobby and a lot of youngsters would tell me they were scared to go to a wine store. They thought they need to be really sophisticated and know about wine. I wanted to have it colorful, fun and non-intimidating so that people could really come in. We would really welcome in an uncomplicated atmosphere in very simple interior design, especially at the beginning and people would just discover the Chinese wine culture. We had a free tasting from the beginning in all our stores, which was very important because people needed to know what kind of wines are available. When they started to discover fruity wines, rounder wines, easy drinkable wines, they would really have fun to discover this wonderful Chinese wine culture. When I look back now and see people who drink with us in 7-8 years, they really step by step improve their skills and become very sophisticated. They even discover how food and wine in combination change everything, then a whole new Chinese wine culture opens and that is something very, very beautiful.

Matthieu David: ​ How you manage growth? Usually, the first store is more quickly cash flow positive and breaking even because you have your network you know and can bring to maximize with it. That’s the same with restaurant businesses but the second one, the third one, it takes much more time. Could you share a bit about the next store? How did you manage the growth to basically finance it? How much time did it take to be cash positive? It was three weeks for the first one, I guess it was longer for the others?

Claudia Masueger: The first two years were absolutely amazing. There was no real competition on the street. We were selling wine in China like crazy and it was just absolutely wonderful. Then in 2013, Xi Jinping came in power and then everything changed. The first thing was the consequences of the anti-corruption campaign was felt everywhere, so B2B business would stop. Basically, government channels would not buy wine anymore. Everyone looked around and at this time two channels started to increase, which was online retail in China and wine stores. There was a very tough time when I lost almost 50% of my staff during this time because competitors would pick them and make them open their own stores to sell wine in China. In one area of Beijing, we only had one wine store, and during this time within three months, there were five wine stores within 150 meters and everyone was educated about Cheers. But that is okay. These were mostly copycats.

Being a Swiss copycat was a bit strange for me, but now I know it’s a compliment and it’s good. Therefore, at that time we realized there was a huge demand for people who wanted their own stores to sell wine in China. We started to open a franchise in China, which means then we gave our staff and customers a chance to open their own store to sell wine in China. That’s how we started to scale. I have to say all the former employees who opened copycats or went with other competitors went bankrupt within 9 and 12 months because people realized running a wine store is not just having a room with a lot of shelves inside. There is huge machinery in the backside who makes sure that everything is stable and brings the education and good wines in. Therefore, people would realize it’s not easy, so they open a franchise in China with Cheers. That’s how we started to quickly grow with the franchise system.

Selling wine in China

Matthieu David: ​ How many do you have in the franchise? 

Claudia Masueger: All the stores that we have lost in Beijing due to the renovation were all our own stores. Right now, we only have 6 own stores and the rest is all franchises. The demand and the willingness to open a franchise in China is huge. Chinese are very smart business people and they have this habit of entrepreneurship in China inside and they’re doing a good job. The demand is very big for opening a franchise in China.

Matthieu David: ​ Could you explain more about what kind of contract you sign and what kind of support you provide? I understand the franchisee can leverage your brand. They can leverage your portfolio of wine. They can buy from your inventory. Do they have to pay you a monthly fee or a yearly fee? Could you explain how it works?

Claudia Masueger: We adapted our concept very much to China and it’s a legal system to copy and paste. They have to follow the whole Cheers philosophy. Of course, the products must 100% come from us because 99% of all products are exclusive for Cheers. We want that transparency because we don’t do private label. We want our customers are looking at the retail prices of this wine existing in another country. The franchise partners need to have our assortment, marketing, and interior design. It’s a completely legal way to really copy-paste our concept. We don’t charge a monthly fee, but we charge an upfront one-time fee for three years, which is very reasonable, only 50,000. People would also have to pay a deposit so that they would follow our rules. If they would, for example, be caught selling wine in China other than Cheers Wines, then we have the right to reduce the deposit. The reason we do that is we want to be very strict.

I am putting my faith behind every single bottle, so I need to make sure that we can have a stable quality in our stores and with our products as well. They are part of our team. We’re providing sales KPIs like we would do it in our own stores. We also have an entrance training, which is very intensive, and weekly follow-up training on WeChat. We have a huge community within franchise partners and employees where they exchange ideas and experience, especially about new arrivals.

One part that is very successful is the mini wine school on every Wednesday at 7 PM. One wine will be opened at the same time at all stores national wide for our customers to explain a little bit more about wine. The reason we do that is that on Monday morning, we would train all our store staff about this particular wine and they would then pass this knowledge on Wednesday. Because you have to understand the Chinese wine culture is huge and endless to learn. You can continuously educate your team at stores with a running concept. This mini wine school is proven to be a very good success for our store managers and also for customers in the end.

Matthieu David: ​ Basically the staff is trained on Monday and have a bit of pressure to say on Friday I need to be ready. They have to rehearse to make sure they know about it. It’s a good way actually have to educate 52 points in a year.

Claudia Masueger: Many of our store members or staff all have the WSET certification. WSET is wine spirit educational trust, an international certification we offer at Cheers as well. We appreciate when our store staff passes those level one and level two and mostly level 3 as well. That is also important that we have well-educated people in the store so that they can guide the wine drinkers through the complex Chinese wine culture.

Matthieu David: ​ Some of your copycat people would try to copy wine Cheers in 2013 and 2014 when regulations became tougher for B2B businesses. A lot of them failed after 9 and 12 months. How do you analyze that failure? It’s about creating a brand and they were not able to do so. Financially speaking, what was a burden for them, the inventory, the rent, or the salary of the staff? How do you analyze it?

Claudia Masueger: It’s a lot of reasons. One is the choice of wines. People would not really know much about wine and they would randomly buy wines from importers in China. A wine something is so sensitive and if you choose a wrong wine with wrong prices, the customers will lose the trust immediately. At the end of the day, it’s building an honest brand with extraordinary good products and very knowledgeable customer service and also thinking pro-customer.

Our mission in Cheers is much more important than selling wine in China. Our mission in Cheers is to make you smile. We give the customer good feelings so that the customer feel trusted and feel that we have the best selection. When a customer comes to Cheers, we are not guiding them to the expensive French wine. We would ask a lot of question to really make sure that we offer the right wine for this person or the event they are needing the wine for, and that’s what our customers appreciate. You will always receive a smile and a very good recommendation, which brings the customers afterward back to us.

Matthieu David: ​ You would conclude that it is much more than product issues that make them fail in terms of selection. Of course, it’s correlated, but basically, you would assess that it’s the product.

You talked about people in the shop, your own team or the team of the franchisee. I remember when I was in your shop indeed, the people in the shop are much more friendly and it’s easier to talk to them than most of the shops I’ve been to like most of the restaurants or shops. They would just present some wines they have been told to sell within this week or month. How did you build a corporate culture in China? How did you train them? Is it more difficult than in other countries? Do you feel especially difficult in China as some people say or it’s a niche?

Claudia Masueger: I love working in China and with the young generation because, in China, people really want to learn and grow. We have a very strong internal corporate culture in China. We hire people who are willing to develop themselves. We also train them about self-confidence. We train them about customer service skills, sales knowledge. They need to read and discuss a lot of articles, Dale Carnegie, for example, and books like The Go-Giver, which they discuss internally as well. It’s a brighter education and it’s not just about wine, but the general attitude to life. We only want people who understand this and want to develop themselves. I think that makes the biggest difference.

It’s beautiful because the Chinese are really active and really willing to learn. It’s really amazing how they can grow in a very short time. I can’t tell you how it is in other countries. I did live in India before and India is also beautiful, but it’s completely a different country. It’s really hard to compare with any other country. China is full of smart people, so you have a lot of possibilities to make a business right.

Matthieu David: ​ When you say you make them read and think about Dale Carnegie and some people like this, is it also salespeople in the store or mainly the management?

Claudia Masueger: The salespeople absolutely. For example, our corporate culture in China is a bit different when we hire a C level person or a higher-level person. This person also gets interviewed by assistants and lower level of people. We try to include all the people together, especially the sales staff in the store. They need confidence and to be trained how to deal with people, make people happy not in a fake way, but an honest way. We are also looking towards ourselves first. We always say if you want to lead others or if you want to sell others you first have to know yourself better. It’s all about mindfulness and having the right attitude. Then you can start building up the professional knowledge around.

Matthieu David: ​I am surprised that most of the people in the shop are not from Beijing or Shanghai. They come from far away. They are not used to this kind of corporate culture in China. How do they react?

Claudia Masueger: Especially people from the countryside are so hungry for knowledge and so willing to improve themselves. That’s just amazing. We have many people from outside Beijing who work with us. They are just the best and amazing.

Matthieu David: ​Have you got outside investment? Did I saw somewhere Movenpick invested?

Claudia Masueger: It was 2016 when Movenpick actually came to us. They wanted to sell wine in China. Movenpick is a Swiss company now belongs to a German owner and they believed in us and invested in us. They are still with us so we are growing together.

Matthieu David: ​ Movenpick is not the ice cream?

Claudia Masueger: They are famous for ice cream and coffee. They actually had a lot of hotels and so on. But most of their business is either licenses, so Nestle owns the ice cream for example and they just sold the hotels. They are more in the financial investment world right now, but Movenpick itself also has very successful wine stores in Switzerland and some in Germany as well. That was always good because we can also learn from their operational experience. That is the most important thing as you mentioned EO. Within the world of entrepreneurship in China, it’s really important to have experience sharing constantly. That’s why we have a very strong community of entrepreneurs in China, Beijing, and Shanghai as well. When you come and exchange the experience, it makes you at the end much stronger.

Matthieu David:  EO is an entrepreneur organization, a US-based organization initially, but now all over the world. You are the president of the Beijing chapter and it’s a very interesting organization. I’ve been part of it as well where you learn a lot about getting help in your business. What do you think they expect Movenpick? Does Movenpick expect to resell the shares in later stages? What do they see in you? Why do they invest?

Claudia Masueger: After all, selling wine in China is a huge market. The ultimate goal for Cheers from the beginning was to open 888 stores, but that was back in 2011. Now it’s not so much about stores alone, now it’s O2O in China. You have to have offline and online retail in China integrated together. We all have one goal. It’s growth. 

Matthieu David: ​ We talked about the eight platforms that you are on, Weidian, JD store, which linked to your WeChat, because JD and WeChat are working together. We are talking about Douyin, Weibo, and Youku as well. Could you describe what do you do on each of them? Do you have a specific strategy for each of them?

Claudia Masueger: is very big as well. It really depends on the area you are in. We have 40 stores in Beijing, so I can mainly talk about Beijing. You have the classical channels of online retail in China like Taobao and JD that are linked to certain social media as well. You always combine wine content with sell wine in China as well, but what makes it very interesting are those channels of online retail in China where we can deliver very fast from the stores. The delivery time of Taobao and JD is 24 hours, but when you order it on, Baidu, Meituan and so on, you have 20 minutes delivery time. That makes it attractive and that is the new standard in China.

As a consumer, you can order food and products from any kind of offline stores. They would only find you when you have the offline location somewhere so that you can deliver. If you are too far away, customers can’t find you. That is the very big advantage of having a lot of little outlets all over the place so that we are always on top and the fastest to deliver in Beijing when somebody searches for wine.

Matthieu David: ​ I interviewed a few months ago someone in coffee shops here in Shanghai and they are using Meituan and as well. They told me that the pricing to deliver is changing based on the weather if it’s raining. Could you tell us more about how do you integrate all those systems into one system? Because I feel to plug, Meituan, all those systems into your own inventory and for different shops, franchisee as well, how do you do that and have you built an internal CRM? How did you do it?

Claudia Masueger: That is always a big challenge because new channels of online retail in China are also appearing all the time. Right now, it’s a lot of manual work from the back end. We are just about to upgrade our CRM system, so that it’s much easier to connect the different channels into one system because you have a lot of different systems and they all need to come back to your main system. We haven’t found the ultimate greater solution yet. Luckily, we are in China, so we can hire a lot of people as well. We are just in the middle of upgrading our system.

Matthieu David: ​ In terms of driving clients from online to offline, and Meituan find clients for you. It’s a platform so people would buy. But some platforms are only providing the logistics, the delivery and you have your own clients. Could you tell us more about how you drive your own clients to your platform? Could you share some experience?

Claudia Masueger: O2O in China for me is driving traffic offline to online and driving online traffic to offline. It’s in both directions. Let’s say you are in a store you are invited for wine tasting. You have a one-time life experience and you really enjoy it. On every price, you have QR codes, which you can immediately deliver. Wines are heavy. No one likes to carry around. Beijing doesn’t have a lot of parking spaces, so it’s a bit different than the western world. You have to make it as convenient as possible. There are many touchpoints within the store where people can say, I can deliver it at home. Some of the people order it directly from the store and they have it delivered it faster than they would arrive at home. That is in China or in Beijing with a standard that you have to follow and it’s great actually. I am a consumer and I love it very much.

Matthieu David: ​ I interviewed also someone who worked in the wine industry before. I believe you know his website named Z9H, Adrien Fabry and he was talking about the Chinese wine culture. Actually, he closed the business after five years. He was telling me that the reason he was at flash sales websites, selling wine in China at a discount. He was telling me the reason that we were not able to build the flash sales website business in China compared to Europe where it’s existing and doing well is that Chinese don’t consume wine on a daily basis. It’s not a daily drink. It’s not a drink you will have for every meal like in the West or Europe where they would open a bottle nearly two days, every three days or every day. What’s your analysis on the Chinese wine culture at home, not only for a birthday, not only for celebration, not only for weddings?

Claudia Masueger: According to the statistics, it’s actually 50-50 now, 50% off-trade 50% on the trade. In fact, the Chinese don’t drink wine regularly yet. Our VIP customers return back 5 times a year. It’s absolutely true, but you have the mass of the people in China which makes it beautiful.

Matthieu David: ​ What kind of business model do you see for the future in selling wine in China? Do you think flash sales are going to take off? Also, events like Juhuasuan, nine-nine sales started by TMall. What do you see in your product stores? What do you see for the future?

Claudia Masueger: The future is when you find a good balance between offline and online retail in China. You have to have a footprint on both channels but also cross border online retail in China becomes more and more popular, especially limited and special wines from very hidden producers where people wouldn’t really know about it. You offer, you show the vineyards, you have the winemaker and there is maybe a limitation of 1000 or only 10,000 bottles. People in China can order it from the living room directly and it will be delivered 3-5 days from the vineyard to the customers. This is something I feel the trend has picked up in the wine market in China. It was very popular in cosmetics and baby ware.

The success in China is always to find a good balance between different things. You cannot just have the e-commerce side or just have stores to sell wine in China. You really have to offer different channels of online retail in China and think customers first, because customers are your biggest assets and you need to listen to the wine market in China, understand what the wine market in China wants. The wine market in China is changing, especially the Chinese consumers are changing so fast. It’s incredible. You need to know what’s happening and you need to know which channel of online retail in China to jump in. There are new channels coming up constantly. Some will work and some doesn’t work, so you have to find a good balance between all your activities around it.

Matthieu David: ​ Cross border is a topic, which is very often mentioned by overseas businesses because now they don’t have to register their businesses in China to sell from overseas. Taxes are being reduced recently in early 2019, but still, a lot of people who are outside of China would say what’s the difference for customers. You said you need to be customer-centric. What’s the difference for the customer to buy from overseas like a cross border or to from a shop basically? The product is the same, but you have to wait when you buy from the cross border. What’s the advantage?

Claudia Masueger: It depends on which channel of online retail in China you normally buy. But it’s really important when the quality issues are very important. For example, at Cheers, we are doing competitive check every month. We are buying products from other sources and you cannot believe how many bad products are still out there in the market. As a consumer, when I have a cross border deal, I know the quality is real because I get it directly from suppliers. You would also find some specialty, which is not just something you bring it in in the warehouse and everyone can buy it. You would have access to very special wineries or special wines to try out. There are many advantages out of it.

Trust is huge for an overseas supplier just to open a cross border channel of online retail in China. It might not work so easily, because you have to have access to the customers as well and you have to know what the customers want. You have to build the content, which the customers want and the wine tastings in China. Maybe for other products like baby powder and milk powder, it is a different story. For wine, people also need to trust the channel of online retail in China and they need to have this experience of O2O in China. It’s not just selling wine in China online. You must have the offline experience. You must have the way to try the wine or to build trust with your customers through the offline experience. That is absolutely essential.

Matthieu David: ​  You are working on going on overseas. Could you share more about the countries you are thinking of? When we are based in China, what countries do you think of and what’s your analysis of other countries?

Claudia Masueger: We’re going step by step. I just got a lot of demands from other countries such as Philippines, Vietnam. I am talking about Southeast Asia because Cheers has really shaken up the wine industry in terms of how to sell wine in China in an uncomplicated and fun way, and of course in China also very affordable. The next countries would be Vietnam and Philippines. I am not sure yet. We are just in the research stage. We have a lot of interest you know; the weather is different. The consumers are different though it’s a lot to prepare before we would make the next step.

Matthieu David: ​ Thank you very much for your time Claudia, directly from Switzerland.

Claudia Masueger: Thank you very much.

Matthieu David: ​ Thanks congratulation for everything you have achieved. Very impressive and hope everyone enjoyed the talk. Thank you very much

Claudia Masueger: Great. Wishing you a wonderful day. Bye, thank you.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

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