Socialeconomic Political and Financial Conditions of India and China

The practice of wine consumption is gradually becoming a fashion trend among the youth, particularly, the population of the urban centres. This trend is majorly visible in China. In India, although there are strong government regulations against the practice of consuming wine, the young generation of the country are increasingly showing greater interest towards wine drinking. This paper presents a comparative study of the social-economic, political and financial conditions of two countries, India and China. Based on the information revealed, a particular country is chosen in which an Australian wine-producing firm might invest in making international expansion. 2. Market Research Market size and potential growth Country China India Potential demand Drinking wine is one of the oldest traditions in China. This tradition can be dated as long as 5000 years back in the history of the country to. Brewing was a dominant industry in China. Wine made from food grains (such as rice) and grapes are the most favourite drinks for the people of China. This shows that the potential demand for wine in the country is quite high. Recent studies reveal that wine consumption by the population of China is showing an increasing trend over the period of last ten years. According to various researchers, consumption of wine by the Chinese would almost become double of the current figure (UPENN, 2012). The pattern of changes in the society as well as the economy has been the major thrust behind the changing trends in wine consumption in China. The market for wine in India is changing. The rise of the retail industry and the growing middle class in India acts as a catalyst to the growth of the wine industry in the country. According to recent research, wine consumption in India reflects tremendous growth since the beginning of the 21st century. Wine market in India has increased by almost 30 percent between 2003 and 2010. As a result of globalization, India has been exposed to western culture. The middle class in the country is fast accepting and adapting to western fashion. Although India does not have a heritage of drinking wine, the practice of wine consumption is increasing, particularly, on social occasions. In the past, only the males in the elite class used to patronize a wine-drinking culture. However, presently, the high-income middle class is gradually becoming a loyal customer base for wine sellers. Costs Cost of the product is determined by the cost of the raw material used in the production of the good and cost of other inputs. Grapes are one of the major ingredients used in wine production. China has grape vines covering 1.25 million acres. Half of the produce is dedicated to the production of wine (G. G. Brostrom and J. Brostrom, 2008). Since there is adequate availability of grapes in China and cheap labour is also available, the costs of producing wine in China is not very high. In India, the government protects the domestic wine industry against competition from foreign producers. Although cheap labour is available in abundance, other ingredients, such as grapes, are costly. This makes the cost of producing quality wine quite high in India. Sellers often discriminate among the target customers with regard to pricing policies. While prices of certain products are lowered to attract more customers, while the prices of premium brands are kept high.