Exploring the Chinese Distribution Strategy for Gallo

gibe to chinaware Research and Intelligence (2010), diffusion channels are save the key factor to success. Since the Chinese and Hong Kong markets show a slight choice for on-trade channels, especially concerning exclusive products such(prenominal) as vino, E&J Gallo roseate concentrates on them ( china Research and Intelligence, 2010). According to Hollensen (2011), given that Gallo Rose is a risque quality product selective distribution would be the appropriate abidance of distribution as Gallo Rose would be targeting a specific market.Gallo would expect on Chinese and Hong Kong wholesalers to distribute the wine to hotels and supermarkets, preferably those whom the competitors are non currently using. Therefore, a range of intermediaries has to be chosen carefully mid(prenominal) to high price restaurants offering Western food, international pubs and lounges build a trading base. Once the wine is established, cooperation with high class Chinese and Hong Kong establishme nts could be considered. However, a presence in high segment supermarkets will be obligatory to make the product accessible.Jenster and Cheng (2008) stress the rise of other off-trade channels, such as specialty wine stores and online wine-sites. The former is berthicularly important for spic-and-span Chinese wine drinkers. The latter will be a part of Gallos distribution chain as soon as it reaches a higher market share. As outlined by Bretherton and Carswell (2001), the Chinese distribution system is improving slowly. To set up in Hong Kong and coastal areas of China is relatively easy, as the infrastructure is excellent. Direct exports with the support of an executive fleck are sufficient.Nonetheless, further expansion will conflict with trade barriers and topical anesthetic protectionism. Areas have to be treated separately and high transaction be are necessary to build own distribution channels. However, the advantages of higher confidence and lower control costs are obvi ous. Import taxes in China are lowered according to WTO agreements (9), but still 14% (Yu and sunniness et al, 2009) plus value-added and consumption tax. On the other hand, Hong Kong tries to create a wine trading hub with the exemption of import taxes since 2008 (Winechina. com, 2010).