E-Malt.com News article: China: SABMiller’s joint venture China Resources Snow Breweries rejects bribe accusation

Global brewing giant SABMiller Plc's China venture hit back September 06 at an accusation by the local government in the southwestern city of Chongqing that its sales promotions amounted to bribery, Reuters said September 06.

In late August, the Chongqing government froze assets of the local operations of China Resources Snow Breweries (CRSB) for allegedly giving kickbacks totalling over CHY3.8 million (252,000 pounds) to retailers in exchange for market access, state media reported.

That had caused hefty losses for CRSB in the region, as its distribution network had collapsed and sales had halted, CRSB said in a statement.

"It's a grossly unfair accusation," CRSB's chief marketing officer, Hou Xiaohai, told Reuters. SABMiller holds 49 percent of CRSB while China Resources Enterprise Ltd. has 51 percent.

"When we promote our products, we do give our distributors things like freezers or a case of beer as a reward ... but it is a widely accepted practice in the brewery industry, and we are no different from our peers," Hou said.

CRSB said Chongqing authorities had impounded 17,179 cases of beer, worth roughly CHY1 million. It declined to say what proportion of the company's total China sales this represented.

Hou said Chongqing's action was a typical case of local protectionism designed to shut out competition for the benefit of Chongqing Brewery, the biggest beer provider in the city with an 80 percent market share.

Calls to the Chongqing city government's industrial and commercial department went unanswered September 05 and September 06. CRSB has appealed to China's State Administration for Industry and Commerce as well as to the Chongqing government, Hou said.

China's beer industry is seeing fierce competition as global giants and local companies battle for market share.

In a widely publicised clash in 2005, at least three people were injured as rivalry between two major players, Tsingtao Brewery Co. Ltd. and Kingway Brewery Holdings Ltd., erupted into brawling and vandalism in the southern boomtown of Shenzhen.

(US$1=CHY7.949)


06 September, 2006