1、Project Gold - strictly confidential Macro Report Guangdong province Draft 05-2003 GuangGuangd dongong 3 Strictly confidential discussion draft Macro economic summary Guangdong province has the largest absolute GDP and second highest per capita GDP in China. With 85 million people in the province, i
2、t is also one of the most populated provinces. However, wealth is not evenly distributed and most of the cities in Guangdong remain relatively poor in terms of per capita disposable income compared with the affluent Guangzhou, Shenzhen and Zhuhai areas, which comprise 66% of the total GDP but only 3
3、8% of the total population. Population in the affluent areas will continue to rise as people migrate there from both the less developed cities within the province and neighbouring provinces. The transport infrastructure is well developed with rail, highway and airports, and proximity to Hong Kong. G
4、uangdong provinces economic base is focused on the Pearl River delta and Shantou, and these areas form the most developed market for consumer goods manufacturers. 4 Strictly confidential discussion draft Key Municipalities County/City Area (Km2 ) Guangzhou 2 7,434 Jieyang 4 5,241 Foshan 4 3,814 Chao
5、zhou 2 3,614 Dongguan 2,465 Shantou 3 2,064 Shenzhen 1,949 Zhongshan 1,800 Zhuhai 1,640 - Key Total 15 30,021 Province Total 76 179,838 Key / Province 17% Political geography Guangzhou Dongguan Foshan Zhongshan Shenzhen Shantou Chaozhou Jieyang 21 municipalities21 municipalities Guangdong province h
6、as 21 municipalities. Its political and economic power centre is concentrated in nine key municipalities, six clustered around the Pearl River delta and three clustered around Shantou. Zhuhai Hong KongPearl River Delta Shantou Cluster 5 Strictly confidential discussion draft Demographics Population
7、is concentrated largely in the central and eastern parts of the province; more than half of the population live in the urban areas and cities. Central area Eastern area Note: Size of the circle represents the population size. Larger circle means bigger population size. Pearl River Delta Population p
8、er Km2 2000 500 - 1000 100 40-100 100) (40 100) (20,000 10,000-20,000 10,000 Low High Per capita GDP Per capita GDP (Rmb) Shenzhen 43,355 Guangzhou 38,007 Dongguan 37,777 Foshan 31,972 Zhuhai 29,306 Zhongshan 26,944 Huizhou 17,211 Jiangmen 16,155 Zhaoqing 10,600 Shantou 10,077 Maoming 8,313 Chaozhou
9、 8,312 Yangjiang 7,221 Jieyang 7,124 Shaoguan 7,030 Yunfu 6,975 Zhanjiang 6,232 Shanwei 5,211 Qingyuan 4,190 Meizhou 3,902 Heyuan 3,170 Per capita GDP Cities in the Pearl River delta have far higher per capita GDP than the rural areas, with Shenzhen having 13.6 times the per capita GDP of Heyuan. Pe
10、r capita GDP (Rmb) Note: Size of the circle represents the level of the per capita GDP. Bigger circle means higher per capita GDP. 10 Strictly confidential discussion draft Disposable income Steadily rising real per capita disposable income (20% growth from 1998 2001) off a higher base has increased
11、 consumer purchasing power Per capita disposable income 4th highest in the country Steady growth trend Price and real income Almost deflationary retail prices Rising real incomes Growing per capita buying power * 1998 = 100 * 1998 = 100 Unit: Rmb 11 Strictly confidential discussion draft 2001 Averag
12、e Wage (Rmb) 15,492 16,115 7,704 2001 Employment Unit: million 4.36 2.49 1.07 Employment and wages * SOU = State owned units * Others = Foreign-funded enterprises and private enterprises * COU = Collectively owned units CAGR (98-01) CAGR (95-01) Others* SOU* COU* -4% 8% -10% 14% 9% 5% Employment Emp
13、loyment outside the state sector continues to grow rapidly, and is expected to continue doing so. Unlike other provinces, non-state sector wages are above state sector levels. 12 Strictly confidential discussion draft Railway Highway Highway From Guangzhou To - Zhanjiang 491 Meizhou469 Shantou454 Sh
14、aoguan245 Zhuhai135 Shenzhen123 Average320 Railway From Guangzhou To - Shantou605 Meizhou434 Shaoguan237 Shenzhen147 Average356 Transportation (Approximate in Km) Guangdong has one of the most developed rail and highway transportation networks providing easy access between all of its key cities and
15、Hong Kong. The rural areas are less well served. 13 Strictly confidential discussion draft Guangdong Province Tourism Attracted 84.84 million total tourists in 2001 1st largest province in international number 1st largest in total international tourism income Stable growth in tourists Stable growth
16、in tourism income Province tourism Number of tourists (Unit: million) Tourism income (Unit: Rmb in billion) 7.79% 11.26% 8.24% 10.51% Given its close proximity to Hong Kong and Macau and the developed Pearl River delta, Guangdong is the leading province for international tourism Project Gold - stric
17、tly confidential Long list Guangdong province Draft 05-2003 15 Strictly confidential discussion draftBrewers in Guangdong Province Players clustered around Guangzhou Several foreign investment s Pearl River and Tsingtao dominate the market High price and profitability, but strong competition Fairly
18、consolidate d market, fewer market players Provincial domination? Municipal domination? Production base for Heineken? Distribution network for premium brand? HAPBs strategy in Guangdong ? ? 16 Strictly confidential discussion draft 15 16 2 10 17 18 6 7 20 1 4 5 19 9 12 3 21 13 14 8 11 railway highwa
19、y Location of brewers and transport links in Guangdong Tsingtao Pearl River Blue Ribbon San Miguel 17 Strictly confidential discussion draft NoNameCityCounty 1Guangzhou Pearl RiverGuangzhouNA 2Zhanjiang Pearl RiverZhanjiangNA 3Conghua Pearl RiverGuangzhouConghua 4Xingfeng Pearl RiverShaoguanXingfeng
20、 5Haifeng Pearl RiverShenzhenHaifeng 6Meizhou Pearl RiverZhuhaiMeizhou 7Chaoyang Pearl RiverFoshanChaoyang 8Yangjiang Pearl RiverShenzhenYangjiang 9Shenzhen Tsingtao Asahi Brewery Co.ZhaoqingShenzhen 10Tsingtao (Zhuhai) Brewery Co.ZhaoqingZhuhai 11Tsingtao (Sanshui) Brewery Co.GuangzhouSanshui 12She
21、nzhen Kingway Brewery Co.FoshanShenzhen 13ZhaoQing Blue Ribbon Gaoli Co.ZhuhaiZhaoqing 14ZhaoQing Blue Ribbon Lubao Co.ShaoguanZhaoqing 15Guangzhou San Miguel Brewery Co.HuizhouGuangzhou 16Shunde San Miguel Brewery Co.JieyangShunde 17Zhuhai Kirin Tongyi Brewery Co.JiangmenZhuhai 18Shaoguan Vigour Br
22、ewery Co.ShaoguanNA 19Carlsberg(Guangdong)Brewery Co.ZhanjiangHuizhou 20Guangdong Jiadan Brewery Co.JieyangNA 21Guangdong Baishida Qitian Co. Ltd.JiangmenNA Location of brewers and transport links in Guangdong - continued 18 Strictly confidential discussion draft Top 5 groups production volume compr
23、ises 90% of total production volume 4 major domestic brewers: Pearl River, Tsingtao, Kingway and Vigour 5 major foreign brewers: Interbrew, Blue Ribbon, San Miguel, Kirin and Carlsberg Tsingtaos sales figures likely understated imports from other provinces not included Pearl River dominates volume e
24、qual to next 4 players combined how to challenge this? 19 Strictly confidential discussion draft Sales and profitability q Figures above are intended to give a rough estimate, they are from several different sources and cannot be fully reconciled. q Sales and profitability shown above are only for t
25、he factory located in the province and they may not reflect the true position, as sales of some companies are made through affiliated sales companies, including Tsingtao, Kingway, Blue Ribbon and Kirin. 20 Strictly confidential discussion draft Ex-factory selling price per HL q Figures above are int
26、ended to give a rough estimate, they are from several different sources and cannot be fully reconciled. 21 Strictly confidential discussion draft Pearl RiverPearl River Production and technical q Established 1985 (land over 250,000 square meters) q Centralised brewing, dispersed bottling (the only p
27、layer in this province with wide geographic coverage) Breweries in Guangzhou and Zhanjiang (acquired in 1998) Bottling plants in Yangjiang, Xinfeng, Meizhou, Chaoyang, Haifeng and Conghua q Capacity: 6,603,774 HLS Products and brands q Major brands: Pearl River, Supra Ownership/ Alliance q Alliance
28、with Interbrew (strategic investor holds 24% of equity) q Planning IPO Market share/Size q Provincial dominator q Have two breweries outside Guangdong in Hangzhou and Shijiazhuang Financials q Sales in 2002 were Rmb2,139 million; a 10.8% increase on 2001 q Profit in 2002 was Rmb268 million, or 13% o
29、f sales q Production volume for the year was 8,157,600 HLS 22 Strictly confidential discussion draft TsingtaoTsingtao Production and technical q Have three breweries: Tsingtao -Asahi JV in Zhuhai Also Zhuhai and Sanshui Products and brands q Major brands: Tsingtao Ownership/ Alliance q Alliance with
30、 AB q Tsingtao Asahi is a JV (Tsingtao holds majority) Market share/Size q Started to explore Guangdong market in mid 1990s and Guangdong is currently the second largest province in Tsingtaos profile in terms of sales Distribution q National distribution network q Has a sales company for southern Ch
31、ina in Shenzhen Financials q Sales in 2002 were Rmb479 million; a 36.2% decrease from 2001 q Profit in 2002 was Rmb75 million, or 16% of sales q Production volume for the year was 3,419,100 HLS 23 Strictly confidential discussion draft KingwayKingway Production and technical q 2 plants in Shenzhen (
32、100% controlled) Products and brands q Major brands: Kingway q Top three products: 12 Kingway (45.4%), Kingway “2008” (17.1%) and bottled draft beer (7.0%) Ownership/ Alliance q Owned by a HK listed company, Guangdong Brewery Holdings Ltd. (“GDBH”), ultimately owned by Guangdong Yue Gang Investment
33、Holdings Company Limited (72%, through GDH) Market share/Size q Dominates Shenzhen market (85% market share) Distribution q Sales through Guangdong Kingway Sales Limited (100% subsidiary of GDBH) Financials q Sales volume 2,113,207 HLS in 2002, 39.1% higher than 2001 q Revenue and profit both increa
34、sed in 2002 24 Strictly confidential discussion draft Blue RibbonBlue Ribbon Production and technical q 2 breweries in Zhaoqing (High Worth and Noble) q Noble capacity 2,358,490 HLS, very low utilisation Products and brands q Major brands: Blue Ribbon q US company owns the brand, Blue Ribbon China o
35、btained exclusive rights through licensing agreement Ownership/ Alliance q Complicated ownership structure and licensing agreement, issues have not been resolved yet q A company controlled by Zhaoqing government, Lanwei Alcohol Holding Co. Ltd. currently owns those plants Market share/Size q Used to
36、 be No.1 foreign beer brand in China, declined in recent years, but still No.2 foreign brand behind Budweiser Distribution q National distribution network, sold through Blue Ribbon Sales Co. Ltd., an affiliated company Financials q Sales in 2002 were Rmb723 million; a 27.2% increase from 2001 q Prof
37、it in 2002 was Rmb23 million, or 3% of sales q Production volume for the year was 1,474,680 HLS 25 Strictly confidential discussion draft San MiguelSan Miguel Production and technical q 3 breweries in China, 2 in Guangdong (Guangzhou and Shunde), 1 in Hebei q Guangzhou San Miguel established in 1991
38、, Shunde in 1994 q Some bottles and packaging from affiliated companies in Guangdong Products and brands q Guangzhou - San Miguel, Guangs Pineapple Beer, Double Happiness q Shunde San Miguel, Dragon Ownership/ Alliance q Kirin is the biggest shareholder of San Miguel Corporation Guangzhou San Miguel
39、 - JV between San Miguel HK(70%) and Guangzhou Brewery Factory (30%) q Shunde San Miguel - 100% owned by San Miguel HK (85% before 2003) Distribution q National distribution network for San Miguel, covering 27 cities, clustered around Beijing, Shanghai, Guangzhou Financials q Poor performance in 200
40、2 Sales of Guangzhou dropped by 11.4% and suffered first loss (severe competition, high marketing expenses) Sales of Shunde down by 9.5% 26 Strictly confidential discussion draft Production and technical q Established December 1997 Products and brands q Major brands: Kirin, Haizhu Ownership/ Allianc
41、e q JV of Kirin (60%) and President (40%) q Controlled San Miguel and Lion Nathan worldwide, are building China competency also through San Miguel and Lion Nathans plants Distribution q Sales through a Japan-affiliated trading company Kirin PresidentKirin President Financials q Sales in 2002 were Rm
42、b189 million; a 22% decrease from 2001 q Profit in 2001 was Rmb24 million, or 10% of sales q Production volume for the year was 696,440 HLS 27 Strictly confidential discussion draft Production and technical q Established December 1987, predecessor was Shaoguan Brewery Factory q Use Ziwei Spring as w
43、ater supply q Capacity 1,415,094 HLS, (a line of 943,396 HLS was installed in September 1998), 2001 production volume only around 613,207 HLS, very low utilisation Products and brands q Major brand: Vigour Ownership/ Alliance q Hongkong Eaglelink Investment Company acquired 51% of the equity in Janu
44、ary 1996 Distribution q Sales through a Japanese -affiliated trading company VigourVigour Market share/Size q Located in Shaoguan, north of Guangdong, relatively far from brewers in this province, and one of Guangdongs poorer municipalities Financials q Sales in 2002 were Rmb84.5 million; a 33% decr
45、ease from 2001 q Production volume for year 2002 was 475,680 HLS 28 Strictly confidential discussion draft Production and technical q Used to have two plants in China (one in Huizhou Guangdong, the other in Shanghai - sold to Tsingtao in 2000), q Recently acquired Yunan Kunming Huashi Brewery from Z
46、hejiang KK Group q Carlsberg Huizhou established 1991 Products and brands q Major brands: Carlsberg, Dragon 8 Ownership/ Alliance q Carlsberg holds 99% of Carlsberg Huizhou Distribution q National distribution network (Northern China - 8, Eastern China - 6, Central China -7 and Southern China -7) Ca
47、rlsbergCarlsberg Financials q Sales in 2002 were Rmb291 million; a 12.2% increase from 2001 q Profit in 2002 was Rmb5.4 million, or 2% of sales q Production volume for the year was 576,770 HLS 29 Strictly confidential discussion draft For discussion purposes only - preliminary assessment of market p
48、layers Pearl River Tsingtao Kingway Blue Ribbon San Miguel Kirin President Vigour Carlsberg Jiadan Baishida Already allied with Interbrew Already allied with AB Solid base but still distant third behind Pearl River and Tsingtao strong enough alone? Production base for Heineken? Biggest issues are brand portfolio, ownership structure, also nee
