A venture that takes time
Presence in China 'initial reconnaissance'
It was 1988 when Heineken announced that in
combination with the Chia Xai Group from
Thailand, a participation had been acquired in the
Shanghai-based Mila Brewery. The participation
had to be seen as an initial reconnaissance. Almost
three years Later general manager Bert Slootweg
takes stock of what's been achieved so far:
'Gradual change is the typical feature of China's
development'.
experience with joint ventures in
China. After lengthy negotiations the
contract was signed in 1988 linking
Heineken (via its joint venture in
Singapore) and Chia Tai to the au
thorities in Shanghai.
Those authorities had already
made a start in 1984 on constructing a
brewery to avert the threatened short
age of beer in Shanghai. Financial and
technical problems slowed down the
construction of the first big brewery to
be built by the Chinese themselves.
The lion's share of the production
equipment was manufactured locally,
one of the motives being cost consid
erations.
Heel»
After the first hectolitres of beer
had been brewed, Chia Tai and
Heineken signed the joint venture
agreement on 23 October 1988.
Heineken man Bert Slootweg was
appointed general manager. On
behalf of Shanghai's Light Industry
Bureau, Liu Lu Sheng became chair
man of the Mila board.
In January 1989 the operational
plan was presented: the Mila brewery
would brew Reeb beer and sell it at a
significantly higher price than the
competition. But the quality of Reeb
would be head and shoulders above
that of the competition, so that a
Heineken simply could not ignore.
Besides, there were signs that per
capita consumption would grow.
The Chinese authorities were re
ceptive to Heineken's approach, but
the problem of hard currency stood in
the way of a definitive form of co
operation. With the aim of getting
hard currency to flow into China the
authorities set the requirement that
Heineken beer should be brewed
locally and then exported. Heineken
could see little in that idea and the
negotiations became deadlocked.
Tt was 1980 when the first serious
talks were held within the
Heineken Board of Directors
about opportunities in the People's
Republic of China. The country had
one billion inhabitants and, despite
the low beer consumption per head of
the population, it was a market which
Cilia Tai
In 1986 Heineken established con
tact with the Chia Tai Group, from
Thailand, which had already gained
