Our Stories

Ferngrove

From the case studies emerge three distinct strategies for engagement that are linked to specific corporate aims and preparedness to take risks. The first is a basic relational approach, the second a coordinated approach, and the third an integrated strategy.
The basic relational strategy refers to relationship building with Chinese partners with the purpose of creating interpersonal trust. This relational strategy does not commit either of the partners to adjust their corporate structure or business procedures, but requires demonstrated personal commitment to on-going performance that benefits both partners. Examples for this type of relationship are the DevWest and the Tangalooma case.
A transformational form of relationship develops when both partners pool some of their resources for the purpose of expanding existing cooperation. This relationship requires long-term commitment and inter-organisational trust between both organisations. An example is Ferngrove Winery.

Ferngrove is an Australian winery based at Frankland River, in the Great Southern wine region of Western Australia. Established in 1997, Ferngrove is a well reputed private company with high profile Board members. Ferngrove produces premium Shiraz, Cabernet Sauvignon, Riesling, Chardonnay, Sauvignon Blanc, Semillon, Merlot, Malbec, Pinot grapes from 305ha of its own vineyards and 70ha of leased vineyards. In 2010 Ferngrove Wines found itself short of capital and with sharply reduced revenue after the contract that delivered 60 per cent of its produce to a major Australian winery came to an end.

Ferngrove received assistance from a well-connected Australian businessperson who arranged an introduction to a Chinese entrepreneur, Mr Ma from Hangzhou who had interests in metal processing and manufacturing.

In addition to investing in Ferngrove’s Australian operations, Mr Ma opened over fifty Ferngrove branded wine shops in China. These shops employ over a hundred staff and convey a specific Western Australian wine offering to wealthier Chinese consumers. In addition, Mr Ma has recently purchased a 12,000 tonne winery in South Australia. Expanding from his investment in wine, Mr Ma is now pursuing opportunities in other areas of Australian agribusiness in making use of the expertise of this Australian top management team.

Ferngrove Wines is an example of a successful Chinese investment in the Australian agribusiness sector. It is a useful lesson in how cultural and business motives have to come together to make a successful business relationship. In the case of Ferngrove, personal trust was indispensable in convincing a Chinese investor who had limited experience in investing in agribusiness and in Australia to make a major commitment. Once the personal relationship was established, the business strategy of the joint operation was to link up Chinese capital and access to Chinese consumer markets with Australian expertise in running the operation of the winery.

This initial strategy paid off as Ferngrove was able to continue expanding into global markets and expand production. Access to these new markets also enabled Ferngrove to introduce new branding and wine ranges specific to consumers within China.

The most advanced form of commitment we observe in our cases is when both parties contribute core know-how and resources in order to jointly establish new ventures at positions in the value chain that would have been beyond the reach of the individual partners. Examples in our case studies are Snowden Group and Qenos, both of which created specialised services for global clients after having spent years in preparation. Both new ventures are fully integrated in the Chinese value chains and can serve global market through their unique combination of expertise.