Kirin increases its presence in China
By Zhang Lu (China Daily)
Updated: 2005-11-25 06:17

Kirin Brewery Co plans to take full control of its joint venture in Zhuhai and is also building a new plant there, to increase its presence in the Chinese market.

The Japanese brewery said it will turn Zhuhai Kirin President Brewery, a joint venture with Uni-President Enterprises Corp, into a wholly-owned subsidiary, Reuters reported yesterday.

It said Kirin will spend about 4.8 billion yen (US$45 million) to purchase the 40 per cent stake currently owned by its Taiwanese partner.

Liu Dayuan, spokesman of the Zhuhai venture, confirmed yesterday that "the deal has been almost closed."

Officials from the company's headquarters were not available for comment yesterday.

"Our brands are quickly penetrating the Chinese market. We hope that by making it a wholly-owned unit we will be able to further speed up management decisions," the Reuters report quoted Kirin's spokeswoman as saying.

Market sources said the deal will be done before the end of this year and the venture will be renamed Kirin Brewery (Zhuhai) Co.

As Japan's beer market has shrunk by one-third during the last five years, Japanese brewers have been shifting their focus overseas, and to other alcoholic beverages and soft drinks to sustain their growth.

In the past two years, Kirin, Japan's second largest beer maker after Asahi in terms of beer shipments, views the Chinese market as a key element of its strategy to become the leading brewery in Asia.

It has been focusing on developing its business operations in Northeast China, the Yangtze River Delta and the Pearl River Delta.

In addition to establishing the fully-owned unit, the first such move taken by a Japanese brewery in China, Kirin will take on further measures to boost its production efficiency and competitiveness in the country.

It started the construction of a new plant on the outskirts of Zhuhai, in South China's Guangdong Province, on Wednesday, Liu Dayuan said.

According to Liu, 450 million yuan (US$55.5 million) will be invested in the first phase of the project, which is scheduled to be operational by June 2007 with a production capacity of 200,000 tons a year.

An additional investment will go into the new plant in the future, with a view to increase the annual production capacity to 400,000 tons, though this will depend on the market demand.

At present, the Zhuhai venture can produce 100,000 tons of beer annually.

Japanese media Nihon Keizai Shimbun reported that Kirin also plans to increase its investment in its other joint venture in Dalian and is considering starting production in Shanghai.

Kirin's move shows increased interest in the growing Chinese market by foreign beer makers.

Global beer giants like SABMiller, Anheuser-Busch and Interbrew have been scrambling to invest in local beer production.

Dutch beer maker Heineken NV tried to increase its stake in Kingway Brewery Holdings Ltd from the current 21.44 per cent to gain the control of the company.

Earlier this year, Anheuser-Busch (AB) tripled its stake in Tsingtao Brewery.

(China Daily 11/25/2005 page9)