TNAG-2527-FCO40-3696-Hong-Kong-China-Relations-Committee-1992 — Page 23

CONFIDENTIAL

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which produced 'Tsingtao Beer', their overseas sales efforts had been coordinated to avoid competition. Beer produced by the No. 1 Brewery for example would be sold to USA and UK, the No. 2 to Europe and the No.3 to Taiwan and Korea.

41.

The No. 2 Brewery was a joint venture between Hong Kong, China, Macau

and Qingdao, with a total capital investment of Rmb30 million. The Hong Kong partners Comprised 3 banks, namely Po Sang Bank, Yien Yieh Commercial Bank and the China and

South Sea Bank, all of which were of Chinese interest. They only supplied funding and did

not participate in the factory management.

42.

The No. 2 brewery had a total factory area of 20 000 sq. km, and employed

420 workers at present (compared with 3 000 for the No. 1 Brewery). All the machinery and

equipment were imported either from France or Germany. Initial annual production

capacity was 140 000 tonnes, rising ultimately to 200 000 tonnes.

43.

We were of the opinion that the No.2 Brewery could be even more

enterprising in conducting their business. For example, in the production of canned beer,

instead of buying empty beer cans all the way from MC Packaging in Guangzhou, the

company could venture into the production of beer cans in Qingdao not only to satisfy its

own requirements but also to supply to other breweries. We also wondered why the factory

had insisted on using more expensive new bottles when used bottles were cheaper and readily available.

Visit to Laoshan District

44.

We had a brief stopover in the Laoshan District near the airport and met the Director of the local Commission of Foreign Economic Relations and Trade. We were told that total direct foreign investment in the district amounted to US$100 million. Hong Kong was the largest source of foreign investment, followed by South Korea and Taiwan. Hong

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