Try the winery's rose and red wines, blends of cabernet sauvignon and merlot, and you will be surprised by their high quality. The winery that is just 11 years old won a Decanter's silver award with its 2009 cabernet sauvignon-merlot blend.

Blessed with good soil, water from the Yellow River and plenty of sunshine in Ningxia, quite a few good wines and wineries have emerged in the region. The Ningxia local government gives a lot of support, Feng says, and the region is likely to assemble a team to represent themselves collectively at a wine fair in the future.

Wine consumption by the Chinese is different from foreigners', says Shen Zhongxun, wine expert with the Wine Institute of Northwest Agriculture and Forestry University.

"It is not just a way to celebrate holidays but also a means to maintain social and business relationships," he says at a fair forum.

"Imported wines such as those from Bordeaux once created sales miracles. Chinese people for a while thought only imported wines are good wines. That boosted prices to far above value."

The situation has now changed, he says, as the quality of Chinese wines rises and problems with some imported wines are exposed.

"Now Chinese wine lovers understand high-priced wines are not always the best," he says. "They are more willing to try wines with unique flavors."

On the other hand, there are opportunities for imported wines, too. As import taxes decrease, Chinese wines are not as competitive in price as before. Good imported wines are now available for less than 100 yuan ($16) a bottle.

For the first time at the fair, grape-wine displays exceeded those for baijiu, Chinese clear liquor. But Vats Liquor's Wu believes wine and baijiu are not competitive varieties of alcohol. He says many Chinese people drink wine when they are middle-aged, and consider it a healthy substitute for baijiu.