A production facility of Tsingtao Brewery Co Ltd operating at full capacity to complete orders from both the domestic and overseas markets. In October, the brewery announced plans to invest about $100 million to build a plant in Bangkok. Li Ziheng/Xinhua News Agency

Company mulls opening plants in Southeast Asia as part of expansion

Tsingtao Brewery Co Ltd is considering opening breweries in China's neighboring countries in Southeast Asia, a region with great opportunities for the country's second-largest beer brewer by volume.

"We aren't excluding the possibility of having more plants in the ASEAN (Association of Southeast Asian Nations) region, on top of the plant in Bangkok," said Ma Ning, deputy general manager of Tsingtao Brewery's international headquarters.

"We are especially aiming at markets that are large and open enough - those that have comparatively cheap labor and where the Tsingtao brand is already well recognized."

In October, Tsingtao Brewery announced plans to invest about $100 million to build a plant in Bangkok, capital of Thailand. The operation will be the company's first overseas and the first for the Chinese brewery industry.

The plant is expected to start production in early 2013 with an annual capacity of 200,000 liters.

In the US market, Tsingtao now has the greatest sales among brands of Asian beer.

As the United States, European Union and other developed markets are dominated by some well-established brands and the outlook remains grim for the global economy, "we will place a priority on the domestic Chinese market and on some emerging markets such as Latin America, the Middle East and ASEAN," Ma said.

Of the company's sales, 1.5 percent come from overseas and "we expect the figure to increase to 50 percent in the next three years".

Reports from an institute run by the Japanese brewer Kirin Holdings Co Ltd showed that customers bought more beer in Asia, South America, Africa and other emerging markets in 2010, even as the demand for the drinks decreased in the US and EU because of the global financial crisis.

In China in 2010, general beer sales increased by 5.9 percent year-on-year, and the country consumed the most beer in the world for the eighth year in a row.

In 2010, Tsingtao Brewery's sales in Eastern Europe increased by 202 percent from a year earlier. In the Middle East, the company's sales increased by 76 percent.

ASEAN, with the largest population in the world and a free trade agreement with China in place, is an important market for Tsingtao, experts said.

"We are fairly well recognized in the ASEAN markets, and the region will be Tsingtao's strategic market," Ma said.

The company has sent a team to look closer at ASEAN and is expected to draft a plan on how its products can be best developed and promoted in the 10 countries of the organization, Ma said.

The China-ASEAN free trade agreement came into effect in 2010 and an increasing amount of investment is flowing from China into ASEAN.

China and ASEAN signed their free-trade agreement in 2002; it is the largest in the world measured by the populations it affects, and the third- largest measured by the gross domestic products it pertains to. Under the agreement, China and ASEAN are to see a free flow of investment.

From January to November last year, China's direct investment into ASEAN increased by 12.4 percent year-on-year. That was much higher than growth in China's outbound direct investment in the same period, which went up by 5.2 percent, according to the Ministry of Commerce.

China Daily

(China Daily 01/10/2012 page16)