Saturday, January 20, 2018

The new face of B.C. wine: Why Chinese buyers are scrambling into the Okanagan's vineyards

The new face of B.C. wine: Why Chinese buyers are scrambling into the Okanagan's vineyards

China has become the world’s leading market for red wine, and Chinese investors are snapping up wineries in this B.C. valley to supply that demand

KELOWNA, B.C. — It’s harvest season in British Columbia’s Okanagan wine country. Among the yellowing vineyards, the crushing of grapes, and the tourists flocking to winery shops to sample and stock up on past vintages, Zhenzhen Fu is on a life-changing mission.
She wants to buy and run a winery.
The 28-year-old, who moved to Canada from Weihai, a seaside city in China’s eastern Shandong province, is on her fourth visit to Canada’s western wine region this year. She says her passion for wine runs deep. She can’t wait to make quality reds of her own — first to serve the local market, then for export to China, where red is considered a lucky colour.
“I am a wine lover,” says Ms. Fu,  moving here in her teens and completed a computer  degree from the University of Alberta, before settling in Vancouver.
“It’s the reason I want to get into this business. I want to make a wine that is special.”
Clad in a Chanel jacket, Valentino bag and black platform shoes for an eclectic urban look, Ms. Fu hardly cuts the figure of the weathered wine farmer.
But she is part of a growing number of Chinese, and other investors from China, snapping up wineries in this B.C. valley. 
Many of them own homes in Vancouver and see the Okanagan wineries, just a quick flight or a half-day’s drive from the city, as an extension of their Canadian presence.
They also see an alluring business case: Demand for wine among China’s growing and more sophisticated middle class is booming. The country has quickly become the world’s leading market for red wine, according to London-based International Wine and Spirit Research. Last year, China consumed 1.86 billion bottles of red, an increase of 136% over the previous five years. Younger Chinese consumers see wine as a healthier choice than the high-alcohol grain liquors favoured by their parents; and the B.C. government has been supportive of Asian investment in the province. For those not already Canadian citizens, the purchase of a winery can help win permanent residency in Canada as business immigrants through the provincial nominee program.
Many of them own homes in Vancouver and see the Okanagan wineries, just a quick flight or a half-day’s drive from the city, as an extension of their Canadian presence.
They also see an alluring business case: Demand for wine among China’s growing and more sophisticated middle class is booming. The country has quickly become the world’s leading market for red wine, according to London-based International Wine and Spirit Research. Last year, China consumed 1.86 billion bottles of red, an increase of 136% over the previous five years. Younger Chinese consumers see wine as a healthier choice than the high-alcohol grain liquors favoured by their parents; and the B.C. government has promoted Chinese investment in the province. For those not already Canadian citizens, the purchase of a winery can win permanent residency in Canada as business immigrants through the provincial nominee program.
“Today the Chinese are drinking about one bottle of wine per capita, adult, a year, where we’re drinking about 36 bottles a year,” says Harry McWatters, founder of B.C.’s Sumac Ridge Estate winery. “If we can get them halfway in between, the world wouldn’t have enough wine.”

Jeff Bassett for National Post
Christa Frosch, a Vancouver-based sales representative at Sotheby’s International Realty Canada, and one of a handful of winery specialists in Canada, is on the front lines of the emerging trend of the Okanagan’s changing Chinese tastes . Buyers living in China, or who have immigrated to Canada — together comprising about 80% of her clientele — have purchased or invested in a dozen wineries in the past three to four years in the province, she says. She estimates another hundred are actively looking to invest in the B.C. wine business.
“We have about 10 families that we are working with right now and trying to find the right fit,” she says.
It’s a growing niche for Sotheby’s, which launched its “vineyard collection” in Canada in 2009 to support the growing trade.
There are 240 grape wineries in British Columbia today, from just 17 in 1990 and 86 in 2003. The thirst by Chinese investment and ownership turnover is high in a business that is extremely capital intensive.
The average sale price of a winery in B.C. is $10-million. The listing price of the 40 now available for sale, publicly and privately, ranges from $1.85 million to $55-million.
Chinese interest in buying B.C. wineries started to spike around 2008–2009, as families from Mainland China built a presence in British Columbia and began scouring for investment opportunities, Ms. Frosch says.
“Once the Chinese families get dug in, and someone speaks a bit of English, then there is a confidence to get into that business,” she says. “Then we have some families who are in the export business, so it’s a natural add on.”

Jeff Bassett for National Post
Selling a winery is complex and takes time. The product is specialized and the operations involve many components, from vineyards, inventory, and equipment to, in some cases buildings, restaurants and retail outlets. With buyers from China unfamiliar with the region, the sale process can involve extensive tours around the Okanagan.
“It has to be the right price point, and then the right location, then you have to have a good team and a good brand, and have decent cash flow,” she says. “And then we have to match the family with the winery, and make sure that all the components are looked after so that it continues to be successful.”
Ms. Frosch makes a point of booking her clients a room at Sparkling Hill resort near Vernon, B.C., the architectural masterpiece owned by Austria’s Swarowski family that is a favourite with Chinese tourists. She arranges tastings in wineries with avant-garde names: 50th Parallel Estate; Bench 1775; Liquidity.
Her Chinese clients often bring along their complete extended families, with many, like Ms. Fu’s family, evaluating the wineries as a legacy businesses for their children to one day take over.
And when they do make their move, they pay cash — an important edge. Traditional banks tend to be uneasy about a business that requires such a long-term horizon and deep pockets. Farm Credit Canada, Canada’s largest agricultural term lender, is the main financial institution that supports the Chinese in the wine business. 
The Okanagan’s ripening as a reputable wine region happened just in time to position it as a draw for Chinese money. The rapidly emerging rich middle class in China was soon followed by a taste for western culture. Now one of the world’s top wine markets, there are an estimated 1 million planted acres of vineyards in the country (compared to about 10,000 in British Columbia and 40,000 in California’s Napa region), but production hasn’t kept up with demand, the quality is often poor, and there is a widespread problem with Chinese counterfeit wines.
“In China you cannot control the quality of the red wine, so they import a lot,” says Ms. Fu. “There are too many kinds and there are a lot of fake red wines… And when we came to the wine tour, in the Okanagan, we saw a lot of wineries in the Okanagan. They are so beautiful, and we just fell in love.”
Canadian wine exports to China have been increasing from a modest base, says Mr. McWatters, a pioneer and leader in the province’s wine industry, with 47 vintages under his belt.
Because B.C. has limited capacity to expand, its wine makers have been focusing on quality, and the Chinese are catching on.
“[The Chinese are] looking for wines of distinction, wines that have breeding and a unique characteristic,” says Mr. McWatters, who is starting a new winery after launching well-known establishments like Sumac Ridge Estate in 1980 and See Ya Later Ranch Estate Winery in 1995.
As they discover B.C.’s wide range of varietals, from Pinot noirs and Merlots to Rieslings and Gewurztraminers, they become interested in owning the production, he says.
“There have certainly been lots of Asians looking at the investment here over the last five to 10 years, but it’s really only in the last three to four years that we have seen real traction take place,” Mr. McWatters says. “It’s a direct reflection of the way wine is growing with such excitement in China.”

Jeff Bassett for National Post
As is often the case with China, there are reasons for nervousness in this region about Chinese ownership which would bring unwelcome consequences — job losses for locals, slipping quality, loss of local control, to name a few.
One winery spokesman says there has been negative reaction recently from wine consumers “when they hear a local winery is  owned by China.”
Ms. Frosch acknowledged that the first Chinese buyers were greeted with concern, their unwillingness to communicate in English, the long timelines required to close a sale and their stubbornness in understanding the business.
Val Tait says she’s seeing positive changes from the new owner of her former winery, Bench 1775 — a man from Beijing who paid more than $8-million for the operation in February.

Jeff Bassett for National Post
One of the Naramata, B.C.’s iconic wineries because of its sweeping vistas, Bench 1775 is located on a 31-acre property with a tasting room overlooking Lake Okanagan. Already, it exports 8,000 cases a year to China, its biggest export market — as much as it sells domestically.
The owner (who prefers to remain incognito) offers expertise in the retail end of the Chinese market, where he has been exporting B.C. wines for a decade, she says.
And as is often the case with Chinese purchases, Ms. Tait, a viticulture expert with an extensive history of producing red table wines, was asked to continue as general manager and told to keep up the high-quality product.
With Canadian brands competing with many better-known wines in China, “we have to produce a premium product,” she says. “It’s a very developing market. Brand and quality are very important.”
Chinese investors “are bringing in capital that we need to be able to operate in the global stage,” Ms. Tait says. “It ups everybody’s game.

Jeff Bassett for National Post
She credits the new owner with having a remarkably long-term vision, and unusual patience. While spending most of his time in China, he participates in all aspects of the business when he is at the winery — from bottling wines to picking grapes.
“Now I am thinking: ‘Where will this winery be in 100 years?’ whereas before it was, ‘Where will be in 10 years?’ It changes everything in your approach when you start thinking 100 years down the road,” Ms. Tait says.
“In China there are more millionaires than the Canadian population,” says industry pioneer, Guenther Lang, whose Lang Vineyards was the province’s first to sell its products directly to the public, setting off a trend that has led to a booming wine-tourism market. “Chinese people want to get investments outside of China, and one of the preferred locations is the Okanagan B.C.; Canada is investment friendly and the last big banking crisis confirmed that — our big banks … performed best in the world.”
After Mr. Lang sold his winery to a Canadian investor in 2005, the buyer ran into trouble during the recession.
Enter Yong Wang, a wealthy Chinese investor, who bought it out from the Bank of Montreal in 2009. Mr. Wang bought new equipment, invited Mr. Lang to return as a consultant and installed his nephew, Mike Lang, as general manager.
Mr. Wang kept the winery’s 10 employees, and is consulted on major decisions, but for the most part, Mike Lang says, the owner allows the staff to do what it takes to be successful.
“We started from scratch and worked our way back,” he says. “Our wine sales have been up again. We are getting the market we used to have. We are bringing some new varietals to the table, so that is drawing in a lot of customers.” He exports about 500 cases a year to China, where Mr. Wang’s daughter opened a store that sells the B.C.-produced wine. The plan is for her eventually to move to B.C.
As for Zhenzhen Fu, she is continuing to look for a winery with a great view, land to expand and to build guest rooms, and a solid balance sheet. She is also taking sommelier courses to refine her knowledge of wine. She’s fallen in love with winemaking far more than she ever had with computer engineering. At the very least, she says, when she buys her winery, “maybe I can fix my own computer.”

Okanagan wine sector to get $100 million investment

Okanagan wine sector to get $100 million investment

Many other wine industry entrepreneurs are also pumping capital into the region 
Here is a rendering of the winery that Vancouver’s Bai family plans to spend up to $50 million to build. The family is spending a similar amount to buy land and plant vineyards | Phantom Creek Estates
Vancouver’s Bai family is pumping an estimated $100 million into its wine business in the Okanagan in a move that industry watchers say is among the largest investments ever committed to B.C.’s wine industry.
The only other investments that could come close to that value – using standardized 2017 dollars – would be Anthony von Mandl’s reconstruction of Mission Hill Family Estate winery between 1996 and 2002, and the joint venture between the Osoyoos Indian Band and Vincor International to build Nk’Mip Cellars winery and a desert cultural centre and accommodations, which also opened in 2002.
The Bai family, headed by patriarch Bai Jiping, has spent about $50 million on land and intends to spend about $50 million more to build a winery in the Black Sage Bench region of the south Okanagan, said Ingo Grady, who is president of the family’s Phantom Creek Estates winery.
So far, the family has accumulated 67 acres of planted grapevines in that region. It has also purchased 20 acres of orchard land in the area and another 160 acres of unplanted future vineyard land near Cawston, Grady told Business in Vancouver.
The family has accumulated much of its wealth from flax seeds and flax seed oil and has holdings in places such as Saskatchewan, B.C. and China.
Its $100 million investment includes the future planting of all of that land as well as building the winery.
“When the winery is finished in mid-2019, it will be close to 72,000 square feet, with 50,000 square feet of that dedicated to production on two levels underground,” Grady explained.
“Levels 3 and 4 will be above ground and be dedicated to hospitality with tasting rooms, a wine shop and a multi-purpose room linked to a small amphitheatre with seats for 400 people.”
The plan is to also open a restaurant with 120 seats, including 70 on a patio.
“It’s a significant investment, especially when you consider how far down south it is,” said Miles Prodan, CEO of the BC Wine Institute.
“What we’re talking about is a place to go to experience wine as opposed to a place to quickly knock off on a list as you’re trying to take in four or five wineries during a day.”
Encore Vineyards Ltd. owner Harry McWatters, who sold some of the land to the Bai family, agreed with Prodan that the Bai family's new destination winery will draw tourists to the Black Sage Bench region. That will help sales for the many wineries already in the area, such as Burrowing Owl Estate Winery, Stoneboat Vineyards and Black Hills Estate Winery, he added.
(Image: Workers position a tank at the new Encore Vineyards Ltd. winery in downtown Penticton | Chris Stenberg)
McWatters is one of many entrepreneurs who are investing smaller, but still significant, amounts of money to build wineries that are also destinations because they have restaurants or other attractions.
McWatters bought a former theatre complex in downtown Penticton and is spending $7 million to convert it into a 20,000-square-foot winery, complete with production facilities, a 50-seat restaurant patio, barrel room and presentation centre.
The winery is the Okanagan’s first urban winery. Even though it is located on pricier land than a rural vineyard property, it makes financial sense because it will stay open year-round and likely get more traffic from visitors to Penticton and those who live in the Penticton area, McWatters said.
The lack of proximity to a vineyard is not a problem because Encore buys from many grape growers.
“We’ve contracted grapes from a wide range of growers all over the valley so we’re really in the centre of the vineyards,” he said.
McWatters plans to crush his first grapes in the new facility in September and open the restaurant next year.
Fitzpatrick Family Vineyards owner Gordon Fitzpatrick has similarly invested in a destination winery.
(Image: Fitzpatrick Family Vineyards opened a destination winery, complete with a restaurant, in May | Fitzpatrick Family Vineyards)
His family built a 20,000-square-foot winery on its long-owned Greata Ranch vineyard using capital partly derived by selling its CedarCreek Estate Winery to Mission Hill owner von Mandl in 2014.
The Fitzpatricks’ winery and 66-seat restaurant opened to the public in May.
Other entrepreneurs have similar ideas for the future.
“We’re breaking ground on a big renovation of Mt. Boucherie [Family Estate Winery] in the fall and it will probably be a year-and-a-half to two-year renovation,” said Rust Wine Co. principal Jesse Harnden.
He estimated that it would cost $7 million to transform the space with a new tasting room, barrel cellar, restaurant and bed and breakfast.
“After that, we have a plan to build another estate winery in Okanagan Falls but we’re taking it one step at a time.”
(Image: Rust Wine Co. spent hundreds of thousands of dollars to build the above small winery in the past year. Future plans involve building a large winery on a site that it bought last year. That site includes land and the small Mt. Boucherie winery. Principals in Rust Wine Co., including leading investor Sonny Huang, plan to spend $7 million to rebuild that winery starting in the fall) •

Microsoft Unveils Special Version of Windows 10 For Chinese Government


China is all about about censorship, which is why the country has become very paranoid when it comes to adopting foreign technologies.

The country banned Microsoft's Windows operating system on government computers in 2014 amid concerns about security and US surveillance.

Even in the wake of that, China had been pushing its custom version of Windows XP and its forked version of Ubuntu Linux.

To deal with this issue and target the world's largest market, Microsoft's CEO for the Greater China region last year confirmed that the company was working on a Chinese version of Windows 10 that included "more management and security controls" and less bloatware.
Now, Microsoft has just announced a new version of its Windows 10, which is now ready for Chinese government agencies to use.

In its event in Shanghai on Tuesday, Microsoft announced Windows 10 China Government Edition specifically designed for the Chinese government.The OS is based on Windows 10 Enterprise Edition, but with a few tweaks to keep Chinese officials happy.

Windows 10 Enterprise Edition already provides several security, identity, and manageability features governments and enterprises need, but Windows 10 China Government Edition will let the country use the management feature to monitor and deploy updates as needed, manage telemetry, and use its own encrypted algorithms.

Designed to work with Chinese Encryption Algorithms

Microsoft enables the Chinese government to use its own encrypted algorithms in its Windows 10 China Government Edition in order to secure data that they do not want others to see.

Allows to Remove Unwanted Apps

The Chinese version of Windows 10 does not allow access to features that are not needed by Chinese government employees like Microsoft's OneDrive service that let people store their documents and files on Microsoft-controlled data centers.

Apparently, the Chinese officials don't want anyone to access their data, so they will keep their data locked down on their own computers in an attempt to have full control over it.

Manage Telemetry Data Collection & Updates

The last year's outcry over Microsoft's silent slurping of telemetry data from users' computers might have made the Chinese officials ask for the control over telemetry of its China version of Windows, preventing Microsoft to collect data on its citizen.

So basically, all Windows 10 users around the world do not have any option to turn off telemetry, but the Chinese government could do so.

"For more than two decades, Microsoft has had the distinct honor to work in China, learning and advancing technology together," executive vice president Terry Myerson writes on the Windows 10 Blog. 
"Over the last two years, we have earnestly cooperated with the Chinese government on the security review of Windows 10. The Chinese government has the highest standards for security."
A release date for the Windows 10 China Government Edition have not yet announced, but three Chinese government groups have already announced their plans to adopt Windows 10 China Government Edition.

These three government groups are China Customs, Westone Information Technology and the City of Shanghai on the national, state-owned and regional enterprise levels, respectively.

Besides this, Lenovo has also announced its plans to be the first OEM partner to have devices that come preinstalled with Windows 10 China Government Edition.

Ex-IBM employee from China pleads guilty to code theft charges

Ex-IBM employee from China pleads guilty to code theft charges

Former software engineer for IBM, Jiaqiang Xu, 31, pleaded guilty on May 19 to economic espionage and theft of a trade secret. — Reuters
Image result for Jiaqiang Xu, 31, pleaded guilty to economic espionage and theft of a trade secretImage result for jiaqiang xu
In this Wednesday, April 26, 2017, photo, a woman looks out from the lobby next to the logo displayed on the IBM Building in New York. On Thursday, Jan. 18, 2018, IBM Corp. reports financial results. (AP Photo/Mary Altaffer)

NEW YORK: A former software engineer for IBM in China pleaded guilty on May 19 to stealing proprietary source code from the company, federal prosecutors announced on May 19.

Jiaqiang Xu, 31, pleaded guilty to economic espionage and theft of a trade secret before US District Judge Kenneth Karas in White Plains, New York, prosecutors said. He is scheduled to be sentenced on Oct 13.
Leanne Marek, Xu's attorney, declined to comment.
Xu was arrested in December 2015 after meeting with an undercover officer at a White Plains hotel, where authorities said he was recorded saying he used the code to make software to sell to customers.
He was originally charged with theft of a trade secret. The economic espionage charges were added in a superseding indictment filed last June.
International Business Machines Corp was not identified by name in the complaint. But a LinkedIn profile for Xu said he was employed as a system software developer at IBM during the period in question.
Prosecutors said the proprietary computer code Xu stole was related to a so-called clustered file system, which facilitates faster computer performance.
Xu, who began working at IBM in China in 2010, had full access to the source code before voluntarily resigning in May 2014, prosecutors said.
According to the criminal complaint filed in 2015, the Federal Bureau of Investigation in 2014 received a report that someone in China was claiming to have access to the code and using it for business ventures, prompting the investigation that led to the arrest. — Reuters

Thursday, January 18, 2018

Systematic doping of Chinese athletes in Olympic Games revealed by former doctor..and now the 2018 Games

Systematic doping of Chinese athletes in Olympic Games revealed by former doctor..and now the 2018 Games

A former doctor has revealed the massive extent of doping of Chinese Olympic athletes during the 1980s and 1990s. The whistleblower has claimed more than 10,000 athletes were doped in the state-backed program.
The Chinese team at the 1984 Los Angeles Olympic Games
The Chinese team at the 1984 Los Angeles Olympic Games
A former doctor for the Chinese Olympic team told German media that tens of thousands of Chinese athletes took performance enhancing drugs in the 1980s and 1990s as part of a systematic government doping scheme.
"There must have been more than 10,000 people involved," Xue Yinxian told public broadcaster ARD in a television interview first broadcast on Friday. "All international medals (won by Chinese athletes in that time) should be taken back."
Xue's claim of systematic doping contradicted previous statements by the Chinese government, which had denied any involvement in individual cases of Chinese athletes taking performance enhancing drugs.
Chinese athlete at Rio Olympics in 2016
Chinese athletes have been suspected of using banned substances at multiple Olympic Games
Her claim also contradicted comments previously made by Chen Zhanghao, the Chinese Olympic team's chief doctor at the 1984, 1988 and 1992 Olympic Games. In 2012, Chen told the Australian daily The Sydney Morning Herald that "about 50'' Chinese athletes had taken various performance-enhancing drugs during his tenure.
'If you refused to dope, you had to leave'
Xue, who was the Chinese gymnastics team's chief medical supervisor in the 1980s, said Chinese authorities had "insisted that all sports teams had to use doping substances: football, volleyball, basketball, table tennis, badminton, track and field, swimming, diving, gymnastics, weightlifting."
"If you refused to dope, you had to leave the team," she said, adding "the youth-age group teams used the substances - the youngest were 11 years old."
"As long as you were not caught, you were a good athlete. The government only wanted to produce gold medals irrespective of the means," she told German daily Süddeutsche Zeitung (German language) in a separate interview.

Xue said the extent of the problem became apparent after a colleague told her about the unhealthy physical effects certain drugs were having on younger male athletes.
She was eventually fired from the Chinese Olympic team during the 1988 Olympic Games in the South Korean capital Seoul after she refused to use a banned substance on a gymnast, but continued working as a doctor for other sporting organizations in China until she retired in 1998.
'They wanted to silence me'
The 79-year-old fled China with her son, Yang Weidong, and his wife in 2015 and all three have since sought asylum in Germany after Xue spoke about "rampant" Chinese doping practices in an interview with The Sydney Morning Heraldin 2012.
"Anyone against doping damaged the country and anyone who endangered the country now sits in prison," she told ARD.
Xue said government authorities tried to intimidate her before leaving China to ensure she would not talk.
"Once, eight people came to my home. They wanted me not to speak about the use of doping substances. They urged me to give up. I said 'I can't do that.' They wanted to silence me," she said.
The Chinese government refused to comment on Xue's allegations after ARD and the Süddeutsche Zeitungasked for a response.
Safety in Germany?
Xue and her son Yang have been waiting four months for Geman authorities to approve their asylum requests, according to the Süddeutsche Zeitung.
Yang claimed the family had been followed by a Chinese agent near to their asylum center after they first arrived. Shortly thereafter, the family was assigned to a new accommodation.
Speaking of his mother's actions to uncover the state-backed doping program, Yang said, "the government is afraid that these people are pronouncing the truth."