Workers packaging China Kweichow Moutai Distillery Co baijiu liquor at the company's facility in the Maotai area of Renhuai district in Zunyi, Guizhou province. [Photo/Bloomberg]

Turnover said to reach 30b yuan by 2013 and 100b yuan in 2015

SHANGHAI - Shanghai International Wine Exchange (SIWE), an exchange platform for trading premium alcoholic products including wine, baijiu (white liquor) and imported liquor, formally opened on Dec 18 in Shanghai.

SIWE started trial operations in 2010 and is said to be the first exchange center designed for higher-end investors and traders in China. Li Wenfeng, president of SIWE, said some 30 billion yuan ($4.69 billion) turnover would be achieved in 2013 and the figure would reach some 100 billion yuan in 2015.

The operating model for SIWE is similar to London International Vintner Exchange. Li said the difference is SIWE will have a more strict evaluation process to ensure the quality of liquor before products are introduced to traders.

Luzhoulaojiao Co Ltd (LCL), a famous baijiu supplier with 1,000 years of history in China, supplied the first batch of products - bottles containing three liters of white liquor priced at 9,000 yuan each, the same as the factory price. LCL said only 9,999 bottles will be supplied in 2011.

LCL is the first company known to be incorporated with SIWE at present. SIWE said it is negotiating with many well-known domestic white liquor suppliers to provide more choice for traders. Li did not give extra details.

"The establishment of SIWE will help to lower expenses incurred during the whole trading process and provide more affordable products to consumers," said Sha Hailin, director of Shanghai Municipal Commission of Commerce. "It also will become a platform to enhance communication between suppliers, collectors and traders and support the development of liquor trading in Shanghai."

A special business and trade service zone is expected to be established in the Hongkou district of Shanghai in the next two to three years to enhance liquor trading, research, development and information to support the city's role as an international financial center.

The price of spirits including white liquor has risen dramatically in China in recent years. People are buying premium products either for business banquets or for personal collections. For example, a bottle of Feitian Moutai made by Kweichow Moutai Co Ltd is currently priced at around 2,000 yuan. Some experts said there might be a bubble in the sector. The National Development and Reform Commission, China's price watchdog, has held talks with white liquor makers to try to stabilize prices.

Li said SIWE would help to provide transparent information to investors that will enable them to understand the true value of liquor and ensure transactions are settled in accordance with regulations.