An Urban's Rural View

Gevrey-Chambertin is a renowned wine village in the Burgundy region of France, so it's no surprise that a serious wine buff who happens to be well-heeled would want to buy a vineyard there -- and be willing to pay top franc for it, outbidding other would-be buyers. No surprise, either, that locals aren't very happy about it, seeing that the buyer is a Chinese casino owner in Macau.

Meanwhile, in New Zealand, a property developer from Shanghai has triggered a similar backlash in purchasing 13 dairy farms. The Associated Press, which reported on these acquisitions (http://tiny.cc/…) quotes a New Zealander's response: "If they want to buy land, they should come and live here and farm it themselves, like the rest of us."

It's a natural, understandable reaction, echoing the reaction Japanese investors got when they wanted to buy cattle ranches in Nebraska in the 1980s. We all instinctively prefer local ownership of land, and if we're hoping to buy ourselves we resent outsiders coming in and driving up prices.

Having covered Japanese foreign investment when it was causing concerns a couple decades ago, I can offer a few consolatory thoughts.

-- Life may not change much under foreign ownership. In 1989, during my reporting on Japanese investment, I stood in the lobby of a New York skyscraper that had been acquired the year before by a Japanese company. As people who worked in the building poured into the lobby on their way home, I accosted them with one simple question: "Do you know who owns this building?" Almost no one did.

-- They invest because they like the land's product, whether it's American beef or French wine. According to the Associated Press, "In some ways, China has become a savior for some French vineyards, although few in France are willing to say that out loud. China is now a major buyer of wine, picking up the slack as sales to other countries slip."

-- They can't take it home with them. They may own the land, but their ownership gives locals leverage over them. Buying land in a foreign country subjects the buyer to that country's laws, now and in the future. More even than a local buyer, the foreigner contemplating changes in the management of his investment must weigh the political risks.

-- Sometimes foreign investors rejuvenate a property. When the Japanese company Suntory bought the California winery Chateau St. Jean in the 1980s, the quality of the wine improved. Suntory later sold Chateau St. Jean to Beringer, a California winery that had been purchased by Nestle, a Swiss company. Nestle later sold Beringer to Fosters, an Australian company. The chateau's wines are still pretty decent.

Urban Lehner can be reached at urbanity@hotmail.com