In recent years, the cost of production (wine grapes and labour), logistics and marketing have gradually risen and so have the retail prices as well.

In terms of regional players with large grape resources and high standard of production technology, the concentration in the China wine industry is relatively high, dominated by Zhangyu, Dynasty and Great Wall. The total income of these three companies in 2007 accounted for 38.43 per cent of the total amount of China's wine industry, furthermore their profits accounted for 67 per cent, of which Zhangyu as a leading manufacturer stands on top.

In terms of brands, Great Wall and Zhangyu are ahead of Dynasty whose growth in recent years has been lower than the industry average. Some second-tier brands have nevertheless emerged, such as LongWei, but Zhangyu’s strong brand awareness and their lead in other sectors support the idea that it will continue leading the Chinese wine industry for long.

The three domestic wine giants have their own marketing advantages in each region: Dynasty enjoys a 40% market share in Shanghai; Great Wall ranks No.1 in North China, South China, the Southwest and Northwest regions; and Shandong and Fujian provinces are the main markets for Zhangyu.

Although the import of wine has increased dramatically during the last 10 years, in terms of brand recognition Chinese brands are clearly leading the market for Chinese consumers. In 2006, the volume of import wine increased 116 %, in 2007 by 29 % and in 2008 by 11% but almost 80 % of the wine imported is still cheap wine, sometimes delivered in bulk, then bottled by domestic brands to sell. As a result, the proportion of foreign brands is relatively low, which is partly caused by their low brand recognition in China.

Nevertheless, the wine market capacity in China is huge, control and regulation have improved, market competition has become more intense and foreign wines are strengthening their competitiveness on the Chinese market; meanwhile, domestic consumers’ behaviour has matured; all these elements will affect the Chinese wine industry and the structure of products should step by step change from low-grade to mid-and high-grade, and domestic wine manufacturers will have to face this new competitive environment.