Booze, smokes: symbols of official graft

PUBLISHED : Monday, 10 January, 2011, 12:00am
UPDATED : Monday, 10 January, 2011, 12:00am

China's nouveau riche may use vintage wines from Bordeaux, Louis Vuitton bags and Rolex watches to signal their status. But few things on the mainland denote exclusivity, privilege and power like Maotai, the fiery Chinese liquor, and Zhonghua cigarettes.

Until the 1980s, they were reserved exclusively for Communist Party leaders, senior government officials and their relatives as well as visiting heads of state at official banquets.

Maotai attained a mythical status in the history of the Communist Party. When the Red Army, pursued by Chiang Kai-shek's nationalist forces, fled through the town of Maotai, Guizhou , in the spring of 1935, the hungry and sick soldiers drank the liquor and used it to wash their sore feet, which greatly helped relieve pain and fatigue. Zhou Enlai , the People's Republic's first premier, became an avid drinker and promoter of Maotai, saying half-jokingly that the liquor had saved the Red Army. He was understood to drink the liquor only when he was suffering from the flu. It gained more international exposure in 1972, when he used it to toast Richard Nixon at a state banquet during Nixon's visit to China.

Zhonghua cigarettes were first made in 1950 at the specific request of top leaders including Mao Zedong , a chain smoker.

From 1988, both Maotai and Zhonghua were available to the public, although about 40 per cent of each continued to be reserved for the consumption of officials and their guests. But most of the 60 per cent available for public consumption and export still ended up with government officials because few people could afford them.

Today, a soft-top packet of Zhonghua (or Chunghwa, as preferred by the manufacturer) cigarettes costs 70 yuan (HK$82) , and a bottle of standard Maotai (or Moutai, which the company uses), with an alcoholic content of 53 per cent, can fetch as much as 1,500 yuan. This has given rise to a popular saying on the mainland that the people who drink Maotai or smoke Zhonghua don't buy them, and the people who buy them don't use them. It's interesting to note, however, that those two items have been exempted from mainland economic controls for 30 years.

When Maotai, the national liquor, was made available to the public, the average price was set at 140 yuan per bottle, which was the average monthly salary in many parts of the mainland at that time. It rose more than 800 per cent - to 1,300 yuan last year. At the beginning of this month, the Kweichow Moutai Company raised the average price by another 20 per cent, to 1,500 yuan.

Savvy investors who invested in the brewery's share float in 2001 are laughing all the way to the bank. The share price has soared at least 500 per cent, excluding bonus and rights issues. The firm's market capitalisation of 169.6 billion yuan is even bigger than that of Baosteel, one of the mainland's largest steelmakers, at 114.8 billion yuan, or Vanke, one of its largest property companies, at 97.7 billion yuan, as at market close on Friday.

Now Kweichow Moutai has unveiled its next two five-year plans - a 40,000-tonne output with annual sales of 26 billion yuan by 2015 and a 50,000-tonne output with annual sales of 50 billion yuan by 2020. That compares with 30,000 tonnes and 10 billion yuan in sales last year.

Shanghai Tobacco (Group), producer of Zhonghua cigarettes, has also become a major money spinner. In 2003, Zhonghua became the first cigarette brand to achieve 10 billion yuan in sales. Now the company expects sales to reach 100 billion yuan by 2015.

It is little wonder, then, that many mainlanders have begun to cry foul, saying those two items have become the very symbols of official corruption and extravagance, as mainland officials are the major consumers of both products. According to one popular estimate, government officials spend up to 300 billion yuan wining and dining each year, and certainly Maotai and Zhonghua are musts on their tables.

To their credit, mainland leaders have started to crack down on officials who waste taxpayers' money, including tight controls on overseas trips and spending on vehicles.

It is time they added Maotai and Zhonghua to the list - if just for health reasons. Last week, experts warned that lost productivity from smoking-related health problems is harming China's economic growth. China has more than 300 million smokers. About 1.2 million people die from smoking-related diseases each year, and the number is forecast to reach 3.5 million by 2030.

Yesterday, China for the first time declined to honour a major international agreement to ban smoking in indoor public venues.

But if officials moved to ban spending on Zhonghua cigarettes, it would be a good first step to save face.