COLUMN ONE : Beer Battle Brewing in China : Clydesdales are in, cowboys are out as Anheuser-Busch tries to market an American icon in a very un-American land. Brewery king hopes to beat foreign rivals to quenching nation’s thirst.

Cowboys are out, horses are in and the Budweiser girls . . . well, they may have to make some costume adjustments if they’re going to venture this far from home.

With the launching of Budweiser beer in China this summer, Anheuser-Busch Inc. is learning a lot about how to sell an American icon in a very un-American place.

Cowboys didn’t fare well with Chinese focus groups, but the St. Louis company’s giant Clydesdale horses scored enough votes to make it into Budweiser’s debut marketing campaign. Sports, particularly basketball and soccer, got high ratings for conveying health and happiness.

And the Budweiser girls? Stepped-up enforcement of China’s advertising laws has created some confusion about the dos and don’ts of alcohol promotion. Anheuser-Busch has been allowed to distribute posters featuring attractive young women dressed in Budweiser swimsuits for use in bars and stores with an adult clientele.

But Chinese mothers have proven to be tougher critics. When the company hired several women to wear its trademark swimsuits at the Tsingtao Beer Festival this year, their mothers made them wear T-shirts beneath the body-hugging apparel.

Putting a cultural spin on the product is just one of the many skills Anheuser-Busch is acquiring as it launches a dizzying campaign not only to bring Budweiser to China, but to protect its position as the world’s leading beer maker.

Within the past two years, the company outbid Netherlands-based Heineken for an 80% share of a brewery here in Wuhan, an industrial center in the nation’s interior. Anheuser-Busch also purchased a 5% interest in China’s leading beer maker, Tsingtao Brewery Co., and spent $477 million on an equity position in Grupo Modelo, Mexico’s largest brewery. India and Thailand recently joined the list of more than 60 countries where Budweiser and 12 other company brands are sold.

Last year, the company’s international sales expanded by 30%, to 4.5 million barrels, and international earnings grew by about 50%, officials said.

But this global push is neither cheap nor easy, given the intense competition and high costs of building breweries.

“The price of poker is very high,” said Ray Goss, president of Anheuser-Busch Asia Inc., which is based in Hong Kong.

Still, Stephen Burrows, president of Anheuser-Busch’s international operations, said Asia’s relatively young population, expanding middle class and fast-growing economies provide an unbeatable combination of expanding beer sales and profitable investment opportunities.

The company’s overseas strategy is to form partnerships with leading brewers around the world through joint ventures or licensing agreements.

“Our foreign partners bring a knowledge and expertise in the local market,” Burrows said. “If you don’t know the distribution system, you could easily end up spending all your money getting your product to the market.”

It is here in China where Anheuser-Busch has focused its attention in recent months as the company prepares to try to turn the nation’s tepid beer drinkers into world-class guzzlers.

Per capita beer consumption in this huge country is tiny--about 10 liters a year--compared to 85 in the United States. But beer sales in China--which has more than 1 billion people--expanded by 33% between 1988 and 1993 and are expected to soak up 46% of the growth in worldwide consumption through the year 2000.

For U.S., European and Asian brewers facing stagnant markets at home, China is the next frontier. San Miguel of the Philippines, Fosters Brewing Group of Australia, Denmark’s Carlsberg and Heineken are all competing for a piece of the premium beer market, which is estimated to be about 10% of overall Chinese sales.

Foreign beers such as Bai Wei, Budweiser’s Chinese name, which was selling for about 5.4 yuan a can--roughly 65 cents--in a Beijing supermarket, cost up to three times as much as the local brews.

Earlier this year, Miller Brewing Co. of Milwaukee joined ASIMCO, a Beijing-based investment company, in purchasing a minority share of four Beijing-area brewers owned by Five-Star Beer Group Co. Ltd. and Three Ring Beer Co. Five-Star has been producing and distributing Miller products in the Beijing area since 1992.

The Chinese market is extremely fragmented, with more than 800 breweries spread across the country, two-thirds of them less than two decades old. No brewery holds more than 5% of the market, and many are inefficient, state-owned operations that are being cut loose to sink or swim in the country’s move toward privatization.

Richard Burgess, Miller’s vice president of the Asia-Pacific region, predicts China’s beer market will look very different after foreign brewers squeeze out the smaller, less profitable local operations and expand their legitimate sales. Until now, the availability of Miller beer in much of China depended largely on how much was smuggled in from places such as Hong Kong and Taiwan.

“This is a beer culture in its infancy,” Burgess said.

Douglas Christopher, an analyst with Crowell, Weedon in Los Angeles, said the leading U.S. brewers were slow to recognize the potential of the export markets in Latin America and Asia: They devoted too much time and too many resources battling for shelf space in the United States, where the competition from micro-breweries is fierce.

But Budweiser, he said, is a “cash machine” that “has all the attributes which make for a successful export from the United States.”

Anheuser-Busch’s most recent foreign gamble is its $52.8-million investment in the Zhongde Steinbrau Brewery, a Chinese-German joint venture on the outskirts of Wuhan, which is known as one of the “three furnaces” along the Yangtze River because of its sizzling summers.

Wuhan has been overshadowed by its more cosmopolitan and aggressively capitalistic neighbors in Shanghai and Guangzhou. But it is the country’s fifth-largest city with a population of 7 million.

One of the Zhongde Steinbrau Brewery’s main attractions is Wuhan’s strategic location at the center of the national railroad system and at the intersection of two major rivers--the Yangzte and Han. Plus, the brewery, built in 1989, had a reputation for producing a high-quality beer with German technology and equipment.

One of Anheuser-Busch’s seven partners is the Wuhan government, which has aggressively recruited foreign investors, including the French auto maker Citroen, Japan’s NEC and America’s Coca-Cola. Anheuser officials said the city assured them that the brewery would have adequate electricity and water, although there have been occasional brownouts because of the city’s rapid industrial expansion.

Budweiser is known for giving beer drinkers a beer that tastes the same the world over.

Chief brew master Lee Po Son landed the job of modifying the Wuhan brewery’s production line to match the taste of beer produced in places like Los Angeles, where it is created with far more sophisticated machinery.

Replicating a perishable consumer product thousands of miles from home is no simple matter. Deep wells provide the brewery with fresh water. But other key ingredients, such as malt and barley, are being imported from the United States until the brewery finds a local source that meets corporate demands for quality and consistency.

Technicians were brought in from Germany and the United States to overhaul the plant because the original German joint venture partners had run into money problems and allowed the equipment to deteriorate.

Lee said recreating the “crisp, clean taste of Budweiser” in hot, humid Wuhan required weeks of juggling the basic recipe and adjusting the mechanical apparatus. Close monitoring is critical, since the taste is affected dramatically by temperature and the length of time the mixture remains in the giant cooking vats. In Anheuser-Busch’s Los Angeles plant, by contrast, much more of the process is controlled by computers.

“Anyone can make a good glass of beer one time,” Lee said. “What we do is make a good glass of beer time after time.”

Distribution was another Gargantuan hurdle, since Anheuser-Busch wanted to get its beer to the market before the summer season. And to provide a steady flow to distributors to compensate for the lack of refrigerated trucks or storage facilities, the brewery needed to develop its own transportation network.

The Wuhan factory began producing Budweiser in May, and last month began distributing it in Shanghai, Beijing and Guangzhou. Since then, sales have been extended to seven other cities, including Wuhan and Nanjing.

“China’s a market that if you wait until everything is perfect, you’ll never start,” said Phillip Davis, vice president of marketing for Anheuser-Busch Asia.

Lee’s biggest frustration is riding herd on a work force raised with the Iron Rice Bowl’s guarantee of lifetime employment, regardless of performance. Some of the brewery’s German-trained Chinese technicians are top-notch, he said, while others in the 900-employee operation lack a “sense of urgency” about their jobs.

Efforts to enforce workplace safety rules meet with limited success. During a recent visit to the Wuhan brewery, at least half of the workers on the production line weren’t wearing safety glasses; broken glass littered the floor beneath the filling line.

The Wuhan brewery passed a huge hurdle when Lee sent some cans of the Chinese-produced Budweiser to St. Louis. There, August A. Busch III, the fourth-generation leader of the 143-year-old company, gave the Chinese-made brew his stamp of approval.

“We got very favorable comments from him,” Lee said proudly.

But the real test comes this summer, as the distinctive red, white and blue Budweiser cans hit the market.

The initial push is in five-star hotels and joint-venture restaurants that cater to foreigners, although China’s rising standard of living has created a middle-class consumer willing to pay more for quality.

Clifford Torng, managing director of China operations for advertising giant Saatchi & Saatchi, said companies such as Coca-Cola have succeeded in selling the American lifestyle to China’s “aspirational consumers.”

Budweiser’s ties to Tsingtao, the country’s best-known beer, could also be a powerful lever in the market. The popular brewery’s financial problems have been making headlines for the past year, but Torng expressed confidence that the Chinese government will keep the high-visibility company afloat.

“That could be a very, very good platform for Anheuser-Busch and its products,” Torng said.

When Anheuser-Busch first tested its product with Chinese focus groups, it discovered that most of them knew nothing about the Budweiser name. In their case, the question wasn’t “Is this a good beer or bad beer?” The question was, ‘What is it?’ ” said Goss of Anheuser-Busch Asia.

“It could have been motor oil or orange juice.”

So the Budweiser campaign in China will be simple. While “blatantly nationalistic” themes don’t sell well in this nominally Communist country--where official relations with the United States, after all, have taken a decided turn for the worse in recent weeks--there is a strong attraction to the American ideal of personal independence.

“One of the most positively perceived parts of American culture is the concept of freedom,” said Davis, the Asia marketing manager. “Not [political] liberty, but the freedom to do what you want to do.”

So rather than push the Stars and Stripes too aggressively, the emphasis will be on the American lifestyle, associating Bud with popular sports and the great outdoors.

The company also intends to promote its beer at major Chinese sports events and festivities--the Tsingtao Beer Festival, for example, and Fourth of July celebrations at the U.S. Embassy and consulates throughout China.

But old drinking habits are hard to break. In spite of Anheuser-Busch’s tremendous efforts to convince the Chinese that this Bud’s for them, it will take more than fancy marketing and flashy labels to woo drinkers accustomed to familiar home brews.

When commercial photographer Chen Jian Hua goes out for a meal at his favorite Wuhan place, an outdoor restaurant featuring the river shrimp and fish that were a favorite of former Chinese leader Mao Tse-tung, he orders Xingyinge, a popular Chinese beer. Chen likes the “cool taste” of Budweiser, but isn’t willing to pay the much steeper price.

“I prefer the taste of Xingyinge,” he said. “It is more familiar.”