Click the image for details Snow, Budweiser, Tsingtao, Yanjing, and Carlsberg, these five giants have been conquering markets across the country, but they have encountered stubborn resistance in Henan, where their opponent is Jinxing Beer. However, Jinxing Beer, known as 'No. 4 in China, No. 1 in Henan', was not unwilling to join the first tier by attaching itself to a giant, but due to its origin, it failed to sell to Budweiser. A 'suspicious' transfer turned Jinxing Beer from a village-owned enterprise into a family business controlled by Zhang Tieshan and his son. The origin problem was solved, but the market has changed dramatically. With internal and external troubles, how much time is left for Jinxing Beer? Henan's No. 1 Beer Once Failed to Sell to Budweiser In 1985, Zhang Tieshan, who started as a truck driver, took the helm of Jinxing Beer—a small workshop that had been founded just three years earlier, with an annual output of two to three thousand tons, and was on the verge of bankruptcy. At that time, China's beer industry was undergoing a period of extensive growth. By the end of 1988, there were 813 breweries nationwide with a total capacity of 6.6277 million kiloliters, ranking third in the world after the United States and Germany. The first major thing Zhang Tieshan did after taking office was the widely circulated 'beer dumping incident' in Jinxing Beer's history: a batch of beer worth 200,000 yuan was 'defective'. In an era of material scarcity, selling it would have been fine, but Zhang Tieshan ordered it all to be dumped. This was seen as 'decisive'. From the outside, it was because of Zhang Tieshan's leadership that Jinxing Beer stood out when the wild-growing beer industry inevitably faced consolidation. At that time, it should have been the beginning of the golden age of China's beer industry. In 1993, Tsingtao Beer (600600.SH) was listed on the Hong Kong Stock Exchange, becoming the first mainland enterprise to list overseas, and was also listed on the A-share market the same year. In 1994, China Resources Snow Breweries (China) Co., Ltd., a joint venture between Budweiser and China Resources Enterprise (China Resources Beer, 00291.HK), was established, starting comprehensive expansion. In 1995, Jinxing Beer Group was established, declaring its status as 'local overlord'. In the same year, Carlsberg entered the mainland Chinese market via Huizhou Beer. For Jinxing Beer, 1998 was equally important. Besides setting up a factory in Guizhou to start nationwide expansion, it also took the lead in launching wheat beer, a high-quality product. After China's accession to the WTO, China's beer market entered a period of 'consolidation and expansion'. The five giants—Snow, Tsingtao, Yanjing, Budweiser, and Carlsberg—were conquering markets across the country, but because of Jinxing, their progress in Henan was blocked. In Sichuan, Lanjian and Jinwei surrendered to Snow, and countless small breweries were crushed; in Anhui, Snow relied on the 'Seven Little Giants' to radiate across East China; as soon as Yanjing Beer (000729.SZ) arrived in Hunan, the Hunan beer forces collapsed completely... In Henan, local brands fell one by one, and only Jinxing grew stronger in the cracks. Up to now, Jinxing Beer has 16 breweries, 26 production lines, and an annual capacity of 2 million tons, ranking among the 'Top Four in China's Beer Industry and No. 1 in Henan Beer' for many consecutive years. In fact, many people don't know that Jinxing Beer was not unwilling to join the giant camp, but because of its 'origin', it couldn't sell to Budweiser. As early as 2003, Jinxing Beer had contact with Budweiser, but because Jinxing Beer was a village-run enterprise of Longhai Village, Guancheng District, Zhengzhou, with shares scattered among villagers, the transaction could not be completed. Starting in 2010, after a series of 'suspicious' equity listings and transfers, Jinxing Beer completed its restructuring, changing from a village-owned enterprise to a family business controlled by the Zhang Tieshan family. Although Jinxing Beer cleared the institutional obstacles, unexpectedly, the beer market took a sharp downturn. With overcapacity, declining production and sales, and declining performance of giants, whether introducing external investors or going public on its own, Jinxing Beer undoubtedly missed the best opportunity for capital operations. Internal Control Failures Repeatedly 'Catching Fire in the Backyard' Joining the first tier of the beer industry was not only Jinxing Beer's 'desire', but also should have been one of the most effective measures for Jinxing Beer to use the advantages of giants to make up for its own shortcomings. After missing the opportunity, Jinxing Beer, with poor management, more often appeared in public due to internal control and product issues. According to incomplete statistics from media reports compiled by Zebra Consumption, since 2014, Jinxing Beer has had at least 5 production accidents and at least 5 product accidents. If product accidents like beer bottles exploding for no reason or foreign objects in beer are 'uncontrollable' and unavoidable for all manufacturers, then production safety tests the management ability of enterprises. Major beer manufacturers rarely make mistakes, but Jinxing has repeatedly touched the industry's nerves. In February 2016, Kunming Jinxing illegally used high-pollution fuel; In April 2016, a fermentation tank at Kunming Jinxing caught fire; In May 2016, Xishuangbanna Jinxing had an ammonia leak; In April 2017, Fumin Jinxing had an ammonia leak that injured one person; In April 2017, Zhengzhou Jinxing was found to have no environmental assessment or acceptance, and was also reported to have obstructed law enforcement inspections. It is impossible to determine what level this accident rate and harm degree are in the industry, but Zebra Consumption has searched in various ways and indeed found it difficult to find production accidents of other manufacturers in recent years in media reports. Even more surprising, in April 2013, Jinxing Beer was investigated and reported by the media for launching 'Jinxing Xuepi', which imitated Snow Beer and was suspected of trademark infringement. Against this background, Zhang Tieshan still set 'ambitious goals' for Jinxing Beer's sales in 2016: market share of over 60% in Henan county towns, over 80% in rural markets, 100% in Zhengzhou circulation terminals, and over 60% in catering terminals. Because it is not a listed company, no one knows how well Jinxing Beer actually sells, except for Zhang Tieshan and his son. Currently, Zhang Tieshan's son Zhang Feng serves as vice chairman of Jinxing Beer, seemingly ready to take over. But under the current market conditions, the beer industry consolidation has evolved from big fish eating small fish to big fish eating big fish. If Jinxing Beer cannot improve its management, products, marketing, and other aspects, how long can it continue to 'shine'? This has become a question. Source: Zebra Consumption (ID: banmaxiaofei) -END-