Anheuser One of the Many

Anheuser One of the many challenges faced by any foreign company attempting to do business in the vast marketplace of China is the fact that the majority of Chinese believe that no foreigner is capable of success in their culture. This belief is promulgated by the statement many Chinese reiterate constantly, "Chinese problems require Chinese solutions." The belief is ingrained in the Chinese culture and their attitudes towards foreigners.

It would probably have been a good idea for Anheuser-Busch to consider such attitudes before investing into what may have seemed like a very good idea.

Anheuser-Busch more than likely saw dollar signs before it took a good hard look at who the company would be dealing with, who would be purchasing their product, how the product would be distributed, and especially how much it was going to cost the company in order to maintain the footprint they thought they were purchasing when making a bid to takeover Harbin Brewery Group of China. Many of the problems that Anheuser-Busch could experience by attempting entry into China's marketplace could probably be solved by understanding that attitude.

As an example would be the example in the case study of Tim Clissold describing a common occurrence at a brewing plant; "I watched the operators gossiping and making half-hearted grabs for the occasional bottle but generally watching the containers go past, sometimes even less than half full. Whenever I went over to yell at them, the operators looked at me as though I was a madman. They had grown so used to lax management that they just didn't bother any more..." (Thunderbird 2005-page 9).

Lax management was only one of the many problems with which Anheuser-Busch would be confronted in their efforts to establish themselves in the Chinese market. The attempts to correct that lax management could also backfire, especially if the individual attempting to make the correction was a 'foreigner' which would then lead to the problem with the Chinese attitudes towards the foreigners, whom they believed were inferior. On the positive side of the equation for Anheuser was the perceived potential of the marketplace.

All three segments (economy, premium and standard) have lots of room for growth both in terms of dollars spent, as well as consumption. The potential is enormous. However, in addition to the lax management and the negative attitudes held by most of the Chinese (whether in positions of authority or not), was the political hierarchy and structure that faced any foreign company entering China's marketplace. The provincial and municipal governments along with the mayoral governments in the larger cities had very significant sway over local affairs." (Thunderbird pg 1).

What this meant to the foreign company attempting to establish a marketplace for their particular product, was that the deal could be negotiated at the highest deal, but it would not necessarily mean that such negotiations would be recognized by the local authorities, no matter how high up the deal was originally negotiated. Many times there would be an individual not included in the transaction who held the official company 'chop', or the red stamp which gave unquestionable power to the individual who held it.

Without the official chop, the deal was not consummated, at least to the Chinese way of thinking. According to the Chinese way of thinking about the chop; "He who held it - by whatever means - held the power without question to all transactions associated with the organization itself." (Thunderbird pg 3). With this type of political system in place, the Chinese would ensure that everyone involved received a 'piece of the action'.

If someone was left out or ignored, then the plan would in all probability have a difficult time in being fully implemented. Anheuser-Busch may have felt that they could overcome this situation by sheer strength and size, but the ironic part of such thinking is that it does not take an entire army to stop a tank, sometimes all it takes is one individual willing to stand in front of the tank and say 'stop'.

Many problems surface for companies such as Anheuser-Busch because the company believes that their 'global' presence means they can act and do what ever it is they think is best. Such an attitude does not work well in China, because of the hundreds of brewers that provide cheap beer on a regional and local basis. Many Chinese citizens would rather drink their local beer than the 'global' beer for two reasons, once of which is loyalty but the other which is price.

These are two factors that the global company has to consider when entering the Chinese market. One of the most prevalent problems experienced by Anheuser-Busch (or any brewery) in China could be the lack of a coherent, comprehensive distribution network. Events to consider when attempting to distribute a product that quickly loses its appeal, flavor and freshness (such as beer) would normally entail scheduling refrigerated trucks for pick-up and delivery to a number of various locations within a certain geographical area of the brewery.

In China, scheduling refrigerated trucks could be one of the lesser concerns for a company seeking to establish a 'national identity' such as the one being sought by Anheuser-Busch. Instead, a consideration for AB is that many of the 'distributors' are individuals on tricycles delivering one or two cases of product to a local outlet. The economy of scale becomes indescribable when considering a distribution made up mostly of delivery boys on bikes.

When trucks are employed, such things as giving the trucks a 'day of rest' affect the efficiency of the distribution system. You can't bring trucks into some areas, other areas you can't bring vans into. You can't use your vehicle that ends in an even number on Tuesdays, you can only use the odd number plate. It has to have a day off, or go to another part of the city." (Thunderbird pg 9).

Realistically adhering to a schedule that is so diverse and fluid could be the cause of drastic snafus, especially since the product is so vulnerable to freshness issues. One other consideration for Anheuser-Busch was the price consciousness of the Chinese coupled with their loyalty to the 'local' brands. These factors play a part.