Drink responsibly

Moutai builds a hospital and a university in Guizhou

Moutai bottle w

That’s the spirit...

Not many people have noticed but President Xi Jinping was elected as one of Guizhou’s delegates to the National People’s Congress in April. Having previously represented Shanghai in the lawmaking body, Xi’s switch was “huge encouragement” for Guizhou’s efforts to fight poverty, Xinhua claimed.

Since then the good news has kept flowing for the province. In July, Apple said it had picked Guizhou for its first data centre on Chinese soil, with a $1 billion investment that fuels the province’s drive to become a Big Data hub (see WiC375). The country’s leading property firm China Evergrande said in May that it would donate Rmb8 billion for charitable purposes in Guizhou, and even remote Pingtang county has been enjoying a windfall as tourists pour in to see the world’s biggest radio telescope.

The 500-metre-wide dish was built to detect interstellar signals but scientists warn that the influx of noisy visitors (nearly 3.8 million people in the first half of 2017) could drown out alien activity.

Guizhou’s most iconic enterprise, Kweichow Moutai, has also found reasons to be cheerful. Since April the baijiu maker has displaced Diageo, the maker of Johnny Walker whisky, as the world’s most valuable liquor firm. As of this week, its market cap stands at Rmb614 billion ($92.6 billion), compared with Diageo’s $83.2 billion, and at one point in mid-August, Moutai’s Shanghai-listed shares breached the Rmb500 threshold, or the highest nominal value that an A-share firm has ever attained.

Moutai’s shares have more than quadrupled from their trough in late 2013, when sales in luxury liquor were badly hit by Xi’s austerity drive and anti-graft campaign. Much of the prohibition is still in place ­­– bureaucrats in Guizhou were told in August that alcohol can no longer be served at official events, says Xinhua – but Moutai has tried to rid itself of a reputation as a proxy for corruption (aka the gift of choice for improper apparatchiks) and broadened its sales to middle-class consumers (see WiC325).

The Global Times has picked up on the wider transformation of Guizhou’s economy, which is only twice the size of Moutai’s market capitalisation. “The relatively underdeveloped province has been one of the fastest-growing regions in China for the past six years,” the newspaper noted.

An older saying highlights the harsh life in the mountainous region: “Not three feet of flat land, not three days without rain, and not a family with three silver coins.” And perhaps that’s why the liquor heavyweight has been putting capital to work in the province that produces its illustrious brand.

Last month, Moutai announced an investment of Rmb1.9 billion in a “first class” hospital with 1,000 beds in Renhuai county, where the spirits maker is headquartered. Some aren’t convinced by the move, pointing out that state-controlled firms have been discouraged from healthcare investment if it is not their core business. “Moutai has no experience or expertise in running a hospital,” Sohu Finance warned. “Perhaps the local government just wants its brand and its money.” Whether it is appropriate for the maker of a high alcohol distilled spirit to be sponsoring a medical facility is also left unsaid, although the hospital joins the Rmb2 billion Moutai University in the baijiu maker’s social responsibility programme. It received its first intake of 600 students in the summer, largely made up of Guizhou natives, studying courses in winemaking, grape cultivation, food safety and marketing. “There are not many higher education institutions in Guizhou, and those enterprises with economic profitability should show their commitment to society. The liquor sector is the backbone industry in Guizhou, and Moutai Group has been endeavouring to contribute to the economic growth of the province,” the university’s president told the China Daily.

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