A leading wine storage company in China’s Guangdong province is embroiled in a deepening crisis, with numerous importers now unable to retrieve their wine stocks due to the firm’s escalating legal issues and severe financial difficulties.
A wine importer based in Guangzhou, who spoke on condition of anonymity, revealed the growing concerns among industry players. “I heard Kagaro is in trouble, and many wine importers can’t get their goods out,” the importer told Vino Joy News. “Recently, many importers who stored wine with this company have been scrambling to move their goods out.”
The troubles reportedly involve employees obstructing clients’ access to their products, as the company’s owner faces legal actions tied to substantial debts, creating widespread anxiety in the local wine industry.
Kagaro, based in Guangzhou, has been described as a key player in the wine storage sector, relied upon by many importers. The company, established in 2006, operates several logistics bases in Guangzhou, Foshan, and Shenzhen. According to its website, Kagaro provides a variety of storage services, including temperature-controlled, regular, and bonded warehouses, serving industries such as alcohol, food, cosmetics, raw materials, and coatings. The company claims to have over 5,000 partners, including top Chinese wine importers like Wajiu.com and Fine West.
However, when Vino Joy News attempted to reach Kagaro’s customer service for two consecutive days during working hours, the company was consistently unresponsive.
Another importer, also requesting anonymity, revealed that Kagaro had been facing significant client stock issues since December of last year. “During the peak season, we couldn’t get our goods out, which was very stressful. By January, the company’s employees went on strike, severely disrupting our orders. We had to send over a dozen of our own employees to handle deliveries. In March, Kagaro contacted us, claiming the issue was resolved, but delays persisted.”
This importer later discovered that Kagaro had fallen behind on paying its employees, leading to ongoing complications. Three months ago, the importer decided to switch storage providers but encountered serious difficulties due to a lack of cooperation from Kagaro’s staff. The situation escalated to the point where police intervention was required due to disputes with employees. “Tasks like unloading with forklifts require their cooperation. We even had to pay some of Kagaro’s staff to ensure they would help us move the goods,” the importer said.
Sources suggest that Kagaro’s inability to release stocks is primarily due to its financial troubles. An executive from a wine supply chain company, speaking anonymously, indicated that Kagaro’s rapid expansion during 2020-2021 led to significant issues, including unpaid salaries, employee disengagement, and a noticeable decline in service quality by the end of 2020.
According to Qichacha, a Chinese company directory website, Guangzhou Kagaro Technology Co., Ltd. is currently involved in five legal disputes. In August, the company and its legal representative, Wang Zhenfei, were listed as persons subject to enforcement due to a debt of RMB 1.4166 million. Additionally, the assets of both the company and Wang were frozen in July and August, and the company is facing multiple commercial disputes, highlighting the precarious situation it finds itself in.
Some industry insiders point to broader challenges within the wine sector as contributing factors. A Guangzhou importer noted that the Pearl River Delta region already had a range of storage facilities, with many companies expanding into the wine storage business in recent years. However, the overall decline in wine consumption since 2020 has heightened competition, leading to an oversupply that has strained storage companies.
The wine supply chain executive, however, disagrees with this view. “In today’s challenging market environment, companies involved in freight forwarding and storage need to adapt by adopting more stable business strategies and solving more problems for their clients. Kagaro, however, focused solely on storage and expanded without considering actual market demand, which is the main reason for their current predicament,” the executive explained.
