Top baijiu executive investigated for corruption

1st December, 2014 by Amy Hopkins

The deputy general manager of Moutai baijiu’s parent company is under investigation by China’s disciplinary watchdog, as the Chinese government continues its anti-corruption drive.

Moutai-corruption

The deputy general manager of state-run Moutai baijiu is being investigated for corruption

As reported by Fox News, Fang Guoxing, deputy general manager of the state-run Moutai Group, is suspected of “serious violations of discipline” by the crime watchdog the Central Committee for Discipline Inspection.

According to local reports, the investigation most likely refers to allegations of corruption. Guoxing was also a “party boss” of the city of Renhuai from 2006-2013.

In 2012, President Xi Jinping embarked on a crackdown on extravagant spending and gifting among politicians and the military in order to counter claims of corruption.

As such, sales of high-end baijiu have been hit, since the fiery spirit, distilled from sorghum, wheat or rice, has historically been served at government and military banquets. The government’s anti-corruption drive and resulting austerity measures have as such forced some producers to resort to deep discounting.

In 2013, volumes of baijiu continued to grow to 1.17 billion nine-litre cases, from 1.16bn in 2012, however the value of the spirit fell from more than US$92bn in 2012, to US$83bn in 2013 (IWSR).

In particular, Moutai, a state-owned baijiu brand viewed a symbol of wealth in China, has become ensnared in allegations of corruption, since critics claim it is often sold at a discount to officials who then sell bottles onward for a profit.

The Chinese government has already brought down senior government officials and executives at state-owned enterprises, such as Moutai.

Moutai saw its sales slide by 3.4% to 10.7 billion yuan ($1.75 billion) in its latest financial results. Meanwhile, Diageo has been forced to write-down the value of its Shui Jing Fang baijiu £264m.

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