Companies

Moutai raises a glass to exports

By Bao Chang (China Daily)
Updated: 2010-08-02 10:44

Yuan Renguo, general manager and board chairman of China Kweichow Moutai Distillery Co Ltd, China’s largest liquor company, said he planned to set up marketing networks in France and Japan for the company’s overseas expansion as a first step in attempts by the company to gain a stronger international foothold this year.

Moutai first came to international fame in 1915 when it won a gold medal at the Panama-Pacific Exposition in San Francisco. This year, Moutai makers have been using the Shanghai expo to expand foreign market opportunities. Moutai paid 100 million yuan to become the international event's sole spirit provider, with more than 80 kinds of the drink available for tasting.

"Moutai's internationalization will definitely originate from the export of Chinese culture. The Shanghai expo is providing an opportunity to advertise Chinese and Moutai culture," Yuan said. He is expecting an 8 to 10 percent increase in sales this year as a result of the expo sales promotion.

If the expo is Moutai's launch pad to the wider world, diplomatic feasts held by the Chinese government are the drink's political platform. The international fame of Moutai has mostly been spread by foreign leaders coming to China. Ever since 1949, when Mao Zedong announced the establishment of the People's Republic of China, the drink has played a role in international relations, being used as a toast for leaders and representatives of foreign governments. One of the most popular reports is that Moutai was served to US President Richard Nixon during the meal at which China established diplomatic relations with the US in 1972.

Former US diplomat Henry Kissinger, who paved the way for Nixon's visit, once remarked to former Chinese paramount leader Deng Xiaoping that "if we drink enough Moutai we can solve anything".

Another well-known anecdote recalls the meeting between the comic western actor Charlie Chaplin and Chinese Premier Zhou Enlai. Both men were known to be able to drink large amounts of alcohol. Chaplin took a liking to the Chinese brew and called it the drink of "real men" in front of the press.

CURRICULUM VITAE OF YUAN RENGUO Yuan Renguo was born in 1956 in Renhuai city, Guizhou province. After graduating in administration management at Guizhou University, he entered China Kweichow Moutai Distillery Co Ltd in 1975as an “educated youth”. Yuan worked as a warehouseman, salesman, publicist, workshopdirector and factory director assistant in his first 10 years at the company. In 1998, he was promoted to general manager of Kweichow Moutai and became chairman of the boardtwo years later. In 2008, Yuanreceived an EMBA degree at Ecole des Hautes Etudes Commerciales de Paris in France. In his leisure time, Yuan likes talking about military affairs and enjoys a great interest in ancient poems.

There is an old Chinese saying that states: "An emperor's daughter does not need to worry about not being able to get married." A sales strategy was previously not needed for Moutai because it was always in short supply.

That stopped being the case in 1998 when the brand suffered a big slump in sales because of intensified domestic and overseas competition and the Asian financial crisis.

It was in that year that Yuan Renguo was promoted to the top position in the company.

Only 700 tons of the drink were sold by July 1998 against an annual target of 2,000 tons. Yuan recognized the need for drastic action.

He recruited 17 salesmen and launched a nationwide promotion of Moutai. He also held a party at his home for all sales agents. During the eveninh he made the toast "that friendship multiplies joys and divides grief" and added: "I hope everyone here can help Moutai get over its current difficulties and drink the spirit that shares woe."

By the end of 1998, 2,000 tons of Moutai were sold, a 13 percent increase on 1997. Yuan's corporate tact is said to have played an important role in the company's recovery from financial crisis.

Moutai diplomacy had been born. These days, Yuan exchanges toasts with every distributor who comes to Moutai, so long as he is in residence.

Liu Tao, a distributor in Sichuan province, said, "Although I'm not a big business partner for them, I get respected in Maotai town."

Yuan, who joined the company at the age of 18, has always insisted on diversification. In recent years, he has overseen the launch of Moutai beer, Moutai red wine and Moutai health tonic industries.

Related readings:  Moutai looks to int'l markets  Moutai chairman earns 20 times more than Wuliangye's  Liquor producer Kweichow Moutai net profit up 13.5%  Moutai moves to double output  Moutai to raise price by 13% next year

"Moutai is going to establish its own fund company to invest in more industries such as real estate, energy and packaging materials," Yuan told China Business Weekly.

The company was reported to have bought a 300 million yuan stake in the Bank of Communications three years ago. That is now worth 1.4 billion yuan.

Huang Wei, an analyst with China Jianyin Investment Securities, said he believed diversification was the way forward for the liquor industry. "Diversification is the breakthrough for large wine companies to find new profit growth due to the fierce market competition and declining profit," he said.