1. What are the drivers of competition in the Chinese beer industry? What are some of the critical parameters of an entry strategy that you would recommend?
? Drivers of competition
? Price ? Most customers drink at home and were quite price sensitive.
? Potential market ? High growth rate and largest market size in the world.
? Lack of brand loyalty.
? Critical parameters of an entry strategy
? Fragment market ? rural area was wide and hard to reach.
? Poor infrastructure.
? Government policy and relationship.
? Local labor culture.
2. What is the primary 'lessons learned' from the multitude of failed strategies used in the Chinese beer market? What were the major causes of failure in your estimation?
? Political issue ? complex hierarchy power structure, you have to deal with not only the top level but also local government.
? Poor infrastructure ? antiquated equipments and lack of skilled labors.
? Management ? China labors were used to lazy and careless.
? Distribution challenge
? Product's nature makes it hard to keeping quality for long time.
? The container was expensive in cost.
? The market was fragment and most rural area was important for market but hard to access.
3. AB paid $720 million for Harbin. What are the potential benefits that you see arising from this investment? In retrospect, was this a fair price to pay?
? Hit SABMiller in China directly.
? Relative low cost than others.
? Local brand and distribution channels.
? Currently largest segment dominated by Harbin combined with AB's strategy focusing on premium, high margin segment.
4. AB wrested control of Harbin Brewery away from SABMiller. What do you believe are the likely competitive and market performa ...