TSINGTAO BEER : BOTTLING PROFITS FOR CHINA

Twice a year, every family in this easygoing Chinese port city receives a special treat: a guaranteed, cut-rate ration of five bottles of the beer made in the downtown brewery.

At other times, the city’s inhabitants, like beer drinkers elsewhere in China, find the beer produced in Qingdao expensive and virtually impossible to find.

The prized brew is Tsingtao, China’s principal export beer, which has become a significant source of foreign currency earnings for China and has now become one of the top 10 foreign beers imported into the United States.

Tsingtao is made in China’s biggest and oldest brewery, which was built by German and British businessmen in 1903. The name of the beer and brewery is an earlier rendition of the spelling for Qingdao, (pronounced ching-dow ) , and brewery officials say that since the name has already been registered and has gained recognition overseas, they are reluctant to change it.

At the moment, Tsingtao’s green bottles are a much more common sight in Chinese restaurants in the United States than in China itself. Officials at the Tsingtao brewery acknowledge that the situation will stay that way in China for quite some time.

“In spite of the fact that we have increased our production capacity rapidly, we export the major part of our product, so it’s hard to meet the growing demand in China,” explained manager Pang Chuanshi. “Chinese consumers know that our country lacks foreign currency, and so they understand why there is a shortage of Tsingtao in the domestic market.”

Pang said that at least 60% of the 100,000 tons of Tsingtao beer to be produced this year will be exported, mostly to Hong Kong and the United States. The earnings for the Chinese government from the state-owned brewery were more than $16 million last year and are expected to be higher this year.

All of the beer sold overseas is still made in a single, unimposing, dirty-brown brewery here, although there are now plans to build Tsingtao production facilities in a new special economic zone in Qingdao.

At the old brewery, there are none of the regular daily tours with free samples for visitors, none of the hordes of tipsy tourists common at the beer factories of, say, Munich, West Germany, or Copenhagen.

Brewery tours are a frill, and at Tsingtao the emphasis for the 1,955 workers is on production--or, to be more exact, on stepping up production as quickly as possible. The aim is to raise the output of the factory 30% by 1988.

Brewery manager Pang said the quality of Tsingtao will remain the same as production increases.

The most prized ingredient in the beer is its water. Tsingtao is made with spring water from Laoshan, a mountain outside the city that gives its name to China’s best-known bottled mineral water.

In 1898, Germany gained control of Qingdao and the surrounding area in Shandong province under a 99-year lease, supposedly in compensation for the murder of two German missionaries. In 1914, however, Japanese troops occupied the city, which they held for most of the next three decades.

Pang bristled when asked by a European visitor whether the Germans had brought the hops used to make the beer at his brewery. “As far as I know, the growing of hops is mentioned in Chinese texts from the Ming Dynasty (1368-1644),” he replied. “Before the year 1644, I don’t know what was happening in Germany.”

Pang admitted, however, that when the Tsingtao brewery was founded in 1903, the technology and recipe used was essentially that of the German brewmasters. “It was a joint venture of German and British merchants, but it was mostly the Germans,” he said.

Many other brands of beer are sold in China. In fact, because cross-country transportation is so difficult, virtually every city or region has its own brewery. Some of the beers these breweries make, such as Peking’s Wu Xing (Five Star) beer, have attracted their own following and are even beginning to make their way into overseas markets.

But for now, Tsingtao accounts for 95% of all China’s beer exports. Tsingtao began selling in the United States in 1978. Last year, 850,000 cases were sold in the United States, and Pang said the figure should reach 1 million cases this year.

“We think our main rival in the U.S. is Heineken’s,” he said. Heineken is a Dutch import.

In an attempt to compete with the steadily increasing sales of Tsingtao, Taiwan last year began exporting its own beer to the United States with the label “China Beer.” So far, however, Tsingtao is winning the war of beer exports.

Inside China, on the other hand, it is an uphill battle. Not only Tsingtao but all Chinese beer has been in short supply for years.

A few months ago, China’s Ministry of Light Industry announced plans to double beer production over the next five years to 6 million liters annually from 3 million. For China’s 1 billon people, this works out to a per-capita increase to six one-thousandths of a liter from three one-thousandths.

The Communist Party newspaper People’s Daily reported recently that during the past two years, new and hastily established breweries have been using low-grade malt, and that the quality of Chinese beer has been dropping.

Foreign visitors to China can usually find Tsingtao at tourist hotels in the major cities, where the price of a can or bottle is usually more than two Chinese yuan (54 cents). Ordinary Chinese generally cannot afford to pay such high prices, and even those willing to spend the money usually cannot locate a store with a supply of the beer.

One solution, of course, would be to move to Qingdao, where each of the city’s 360,000 households gets its rationed supply of five bottles for Chinese New Year and five bottles at the beginning of autumn. Qingdao residents pay the state-controlled price of about 80 fen (22 cents) a bottle.

For other thirsty Chinese, Pang offered little hope.

“We are always short of beer,” he sighed.