One of China's top brewers plans to build a brewery with an annual capacity of 500,000 tons in Dongguan, one of the major cities in its home province, as part of a massive expansion plan.

Guangzhou Zhujiang Brewery Co, based in Guangzhou, capital of the southern province of Guangdong, plans to invest about 1 billion yuan (US$120 million) in the project.

A subsidiary of the State-owned Guangzhou Zhujiang Brewery Group Co, it is 24 per cent-owned by Belgium's Interbrew, which is one of the world's largest brewers.

Zhujiang Brewery is scheduled to start construction of the 200,000-ton first phase of the project in October and to start production in the middle of next year, the company announced at the weekend.

The 150,000-ton second phase is scheduled to start by the end of 2007.

The announcement came after Kingway, a brewer based in Shenzhen, Guangdong, said in late May it would invest 700 million yuan (US$84.34 million) in a 400,000-ton brewery in Dongguan. Although it is an important manufacturing base in China, Dongguan is presently without a brewery.

With a permanent population of 1.5 million, a transient population of 6.4 million and thousands of foreign-invested manufacturing enterprises, the city is, however, one of Zhujiang Brewery's largest markets.

And a number of other domestic brewers are said to be interested in setting up in the city.

Dongguan consumed 150,000 tons of the 900,000 tons that the Zhujiang Brewery sold last year and the brewery occupies about 60 per cent of Dongguan's market, according to General Manager Fang Guiquan.

Besides catering for the Dongguan market, the new project will help Zhujiang Brewery with its sales in Shenzhen and eastern Guangdong, and help with the production of some of its bottling plants in the province, the company said in a statement.

The firm runs six bottling plants all of which are in Guangdong and breweries in Guangzhou, Zhanjiang in western Guangdong and Shijiazhuang in North China's Hebei Province, Fang said.

The brewery's sales surged by 25 per cent to about 450,000 tons in the first half of this year, Fang said, adding that full-year sales were expected to top 1.15 million tons.

With the vast southern China area as the priority for its expansion, Zhujiang Brewery is considering more acquisitions and building new breweries, the company said, revealing no further details except that it was also intending to build breweries in northern and western Guangdong.

Zhujiang Brewery plans to expand its 40,000 ton-brewery in Zhanjiang into a 200,000-ton operation, Fang said.

Acquisitions and the establishment of its own breweries overseas are also being considered, he said.

(China Daily July 12, 2004)