This will include considering local bottling and distribution points in China and detailed partnerships like those engaged by dairy exports like A2 Milk.
The reality, according to BAML analyst David Errington, is that more involvement with Chinese partners may be the only way forward for the local wine industry.
The Chinese Ministry of Commerce has “selected” TWE as one of three exporters to answer detailed questions, with the others being Casella and Australian Swan Vintage as part of its dumping investigation into Australian wine.
Being selected is good and bad news but the positive is it gives TWE’s Ford the chance to put his case clearly on just why he is not dumping wine in China.
The Commerce Ministry uses the three selected exporters to determine its case against the entire industry.
From Ford’s perspective it’s better being on the “inside” than waiting on others, although it should be noted there is nothing to stop other exporters presenting their case.
There was some concern in the industry over delays in getting product into China in recent weeks, with some trying to land as much wine as possible ahead of a perceived 60 day “grace” period expiring on October 17.
The perception was wine entered before mid October would escape any early duty that may be imposed.
If Australian barley is any guide the Chinese officials will use the full 18 months allowed for an inquiry to determine any dumping action.
Just how much the export delays are wine specific is not known because traders across the board are complaining about shipping difficulties.
The present MUA industrial action is one cause and another is the strong demand going into China, which is making it tough to get slots on container ships.
This timing is crucial for TWE’s Ford because he was planning to spin off his Penfolds brand by the end of next year and the Chinese market is crucial.
On some estimates Penfolds could be worth as much as $11bn on its own, against the $6.4bn market value of the company today, but the bullish valuation is based on China exports.
China is a crucial market for TWE and Penfolds, accounting for 17 per cent of sales and 35 per cent of its earnings.
It is also forecast to account for $200m of the $273m increase in TWE earnings over the next three years.
China is also crucial to the entire industry, with exports to the country growing from $568m in 2017 to $1.2bn in 2020.
Exports of bottled red wine have been the big mover over the period, more than doubling from $502m to $1.1bn.
Meanwhile, A2 Milk uses a variety of means of getting product into China, including the corporate daigou who source material in New Zealand and Australia to ship to China, the trading platforms like JD.Com and Alibaba, and also a tight strategic relationship with China State Farm.
In signing the new deal A2 noted State Farm would help on a range of issues like import services, local market regulatory consulting and product traceability control.
It was noted last month A2 said it had an exclusive due diligence on a $NZ270m ($250m) investment in a financially troubled New Zealand dairy Mataura Valley Milk.
A2 is looking at buying a 75 per cent stake from a company called China Animal Husbandry Group, which is a subsidiary of China State Farm.
The Chinese will retain a 25 per cent holding.
A2 said the deal was more part of its attempt to broaden its product range into more nutritional powders to complement output from its 19 per cent owned Synlait Milk.
That may be true but it certainly doesn’t hurt to back its Chinese partners.
TWE’s Ford will be examining similar relationships, including perhaps the establishment of local bottling plants in China, with Australian wine exported in barrels and bottled in China.
In Chinese Penfolds means “chasing prosperity” and that is what Ford is hoping for.
While he is sorting through the dumping issues some new relationships on the ground may just be his ticket to a sustainable future.
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As Treasury Wine Estates boss Tim Ford prepares to answer the detailed questions China has asked about his wine exports, he will also be looking at just how he needs to handle the trade going forward.