Dragon head enterprises in China's wine production – case study results

Abstract

PurposeIn 1998, the Chinese Communist Party introduced the strategy for modernizing agriculture with large-scale production and launching large commercial enterprises known as dragon head enterprises (DHEs) to process and market agricultural products. Although scholars have raised awareness of the development of DHEs in China, there has been little investigation on DHEs in the Chinese wine business. Based on the existing theoretical background on the concept of DHEs, this study aims to identify the structure and operating system of a DHE in the Chinese wine business. Changyu is chosen as an example because it is the oldest and largest wine company in China, operating in various grape-growing regions.Design/methodology/approachDue to the research's explorative character, the qualitative approach and case study focus were considered adequate. In-depth interviews have been conducted with the employees of the company. The authors analysed data with a qualitative content approach of Gläser and Laudel (2010).FindingsResults show that the grape procurement of Changyu is organized in an integrated system, which consists of the DHE (Changyu), the Changyu-led cooperative, and the grape producers who have a contract with the cooperative. The company takes different measures in terms of intra-organizational coordination to secure the required quantities and qualities of its grape supply base.Research limitations/implicationsIn this research, the authors could only access three interview partners of Changyu's grape procurement department, and it was not possible to conduct interviews with the management of Changyu. Another limitation is that it is difficult to collect adequate data in the Chinese wine industry.Originality/valueThere has been little investigation on DHEs in the Chinese wine business. This research contributes to the existing literature as it takes a closer look at the structure and operating system of a DHE in the Chinese wine business. The case study and chosen example (Changyu) allow a better understanding of DHEs and provide first insights into their operating principle.