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Bordeaux vineyards: have Chinese investors really neglected them?

19 April 2024 On the Research side
Published by Patrick BOUILLET
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Article written by Alexandre Bohas (ESSCA) and Pierre-Xavier Meschi (Skema Business School, IAE Aix-Marseille Graduate School of Management - Aix-Marseille Université) for The Conversation.

Is the wave of purchases of Bordeaux châteaux by Chinese investors over? Several signs point to this. None of them has shown any interest in recent transactions. Many châteaux have even been put up for sale by their former buyers: there were some fifty offers up for grabs at the end of 2022.

Since 2012, over 200 acquisitions have been made by Chinese investors in the prestigious Bordeaux vineyards, mainly from the country's economic, political and artistic elite.

Alibaba founder Jack Ma, for example, has bought several châteaux, including Château de Sours in the Entre-Deux-Mers appellation, while actress Zhao Wei has set her sights on several châteaux in the Saint-Émilion appellation.

These transactions, involving both elite members and prestigious assets, are quite unusual in the world of mergers and acquisitions. Regarded indiscriminately as "dancers", "ego operations", " ostentatious spending" or what the Anglo-Saxons call "self-interest transactions", these atypical acquisitions are widely decried in academic financial literature.

By producing few or no synergies and complementarities between the target and the acquirer, they would be value-destroying and doomed to failure.

The cases of Bordeaux châteaux abandoned by their Chinese owners, reported in the press and on television, support this negative perception, which is widespread in public opinion.

On closer inspection, however, these Chinese investments in Bordeaux are far from all failures. That's what we show in a recent research paper that analyzes the aftermath of 123 acquisitions between 2008 and 2015.

What are your purchasing intentions?

A sociological approach has enabled us to show that some of these transactions create value from an economic, social and symbolic point of view.

Providing an opportunity to distinguish oneself socially, these goods are acquired for the increased prestige they confer on their holders, enabling them to climb to the top of the social ladder.

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