Xiamen’s Anti-graft Watchdog Investigates Former Deputy Head of C&D

The anti-graft watchdog in Xiamen has announced on March 3 that Chen Fei, the former Deputy Party Secretary of Xiamen C&D Group Co., Ltd., the Chinese state-owned conglomerate, is suspected of serious disciplinary and legal violations. He is currently subject to a disciplinary review and supervisory investigation by the Xiamen City Commission for Discipline Inspection.

The WeChat public account Bailuzhou Zhizheng reports that Chen Fei was born in July 1959 in Nantong, Jiangsu Province. The 65-year-old started his career in December 1977, is a member of the Communist Party of China, and acquired an associate college degree while in office. Throughout his tenure at C&D Group, Chen held various key positions, including Director and Party Committee Member of Xiamen C&D Group Co., Ltd., Party Secretary and Chairman of Xiamen C&D Tourism Group Co., Ltd., and eventually Deputy Party Secretary of Xiamen C&D Group Co., Ltd.

Over the past two years, at least three senior executives of C&D Group have been investigated for serious disciplinary and legal violations. On August 23, 2022, the city’s anti-graft watchdog reported that Shi Zhen, a Party Committee Member of Xiamen C&D Group Co., Ltd. and Party Secretary and Chairman of Xiamen C&D City Service Development Co., Ltd., is under investigation for serious violations.

Additionally, Zhuang Yuekai, a Party Committee Member and Deputy General Manager of Xiamen C&D Group Co., Ltd., and Party Secretary and Chairman of C&D Real Estate Group Co., Ltd., is undergoing a disciplinary review and supervisory investigation for serious violations.

Xiamen C&D Group Co., Ltd. is a state-owned enterprise founded in 1980 in Xiamen, the capital of the affluent coastal Fujian province. Its business spans from shipping to logistics to real estate and wine, with several listed subsidiaries, including C&D Inc., C&D International, and C&D Property. C&D Liquor, which focuses on wine products, is a subsidiary of C&D Inc.

Bordeaux Broke with Traditions for C&D

Before 2012, C&D Wine was a prominent player in China’s wine market. Initially a distributor for China’s famed Baijiu brand, Wuliangye, it partnered with French wine giant Castel in 2006 to become the exclusive distributor of Roche Mazet in Fujian and nationwide, turning the French wine brand a major name in the country. Within five years, Roche Mazet became the best selling French imported wine brand in China, with annual sales revenue reaching RMB 1 billion(US$139 million).

In 2009, as China’s fine wine market grew, C&D Wine expanded into the high-end wine sector, eyeing Bordeaux. At that time, C&D Wine obtained the exclusive distribution rights in China for wines from 13 classified Bordeaux wineries, establishing China’s first premier wine brand alliance—the C&D Grand Cru Classe Alliance. This initiative broke with the traditional Bordeaux sales model through negociants, setting a precedent for exclusive agency agreements with classified wineries.

By 2011, C&D Wine exclusively represented 26 French classified estates. Notably, renowned Bordeaux first growths including Lafite, Margaux, Latour, Mouton Rothschild, and Haut-Brion allocated the majority of their allocations for the Chinese mainland market to C&D Wine.

C&D Wine’s approach diverged from traditional foreign-invested wine importing companies by integrating these premium wines into traditional distribution channels. The company made headlines by organizing 61 free tasting events for classified estates during the CFDF trade show, significantly enhancing its industry standing.

However, following the implementation of the “Three Public Expenses” ban in 2012, or more commonly known as the anti-corruption clampdown, C&D Wine was severely impacted, leading to a substantial downturn in its financial performance. The 2012 financial report of C&D Group revealed a RMB 150 million (US$20.7 million) loss for C&D Wine, a stark reversal from the RMB 36 million profit reported in 2011, marking a sharp decline of 517.87%. Since then, C&D Wine has adopted a lower profile in the industry.

Currently, in addition to Roche Mazet, C&D Wine also represents several brands, including Rawson’s Retreat, a major volume brand owned by Australian wine giant Treasury Wine Estates. According to its official website, C&D Wine has built strategic partnerships with over 2,000 professional wine and spirits distributors and has a nearly 500-person team.

C&D Wine’s official WeChat account indicates the company is still operational. At the recent CFDF trade fair in Chengdu, C&D Wine hosted an exhibition on the first floor of the Kempinski Hotel and participated in various activities. We learned from a wine merchant in Xiamen that C&D Liquor at the moment is still running normally.

Vino Joy News will keep a close eye on whether the future of C&D Wine will be impacted by the downfall of the group company’s senior executives.