Last month, a Beijing-based billionaire splashed out £250,000 on 27 bottles of wine – a far cry from what the man and woman in the street spends in China. What they drink is largely the £1-a-bottle home-grown brands from big wine companies like Changyu, Great Wall, Dynasty, Huaxia and Vini Suntime, the latter one of China's fastest-growing wineries, established by the People's Liberation Army.

These days, most city dwellers in the People's Republic can afford a bottle of local putao jiu ("grape alcohol") – though needless to say, the expensive stuff bought by the Beijing entrepreneur did not come from China. It was Romanée-Conti, the world's most expensive wine. Despite the glaring inequality between the prices of everyday Chinese plonk and the increasingly popular French imports, one thing is clear: wine, whether of the Chinese or imported variety, has become a booming business in China with consumption growing each year by a healthy 10-15 per cent.

Health was one of the kick-starters of the new boom when the red-wine-is-good-for-your-heart mantra was being chanted the world over in the mid-1990s. Before that, the first Great Leap Forward was made in 1978, when the country opened its doors to the outside world. Overseas companies like Rémy Martin (Dynasty), Pernod-Ricard (Dragon Seal) and Seagram (Summer Palace) teamed up with locals, bringing technical know-how, modern equipment and European vine varieties with them to steer the Chinese sweet tooth towards drier but fruity Western-style wines. The second Great Leap Forward came as a result of government encouragement of winemaking in the early 1990s.

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Most vineyards in China are state or collectively owned and subdivided into individual units of less than half a hectare. With more than 100 wineries opening since 1996, there are nearly 500 wineries now in the country. Changyu is the big one in Shandong, south-east of Beijing, where a similar latitude to California combined with a maritime climate makes this, monsoons notwithstanding, one of the most suitable regions for wine production. In the north-west province of Xinjiang, where winters are bitterly cold, Vini Suntime manages 10,000 hectares of vineyards.

Three hundred kilometres east of Beijing, Hebei province is home to Bodega Langes, a 200-hectare vineyard-hotel-vino-therapy spa owned by the Austrian crystal family Swarovski. In Shanxi province south-west of Beijing, Grace has established a reputation for quality wine also based on premium French grapes. The latest growth area is Yunnan, China's south-west highland province, where extensive plantings of cabernet sauvignon and other classic French varieties supplement the local Chinese grapes, Rose Honey and Crystal.

The Chinese plan to expand wineries such as Dynasty, Changyu and Great Wall to cope with the growing shelf space of the burgeoning supermarkets. Since China drinks almost all the wine it produces, and its thirst for wine appears insatiable, the one dark cloud on the horizon comes from critics who suggest that Chinese brands are poor value for money. Hardly surprising when imported bulk wine can still be blended with native-grape wines to end up labelled cabernet sauvignon or chardonnay. Sure, Chinese wine needs to up its quality, but as its consumers start to switch from tea and beer to wine, both domestic wines and imports from Mouton Cadet to Mouton Rothschild look like becoming a staple of the Chinese diet.