Tsingtao Brewery Co, China's second biggest brewer, plans to build its first overseas plant in Thailand to boost sales to the international market.

 

The company said in a statement yesterday that it will form a joint venture for the project with an unnamed Thai partner. The facility will have an annual capacity of 80,000 kiloliters of beer.

 

Tsingtao will hold a 40 percent stake in the new venture, with registered capital of 100 million yuan.

 

The first phase of the project will cost 294 million yuan and will have a production capacity of 40,000 kiloliters of beer a year.

 

"This is a good project for the company to target beer drinkers in Southeast Asia. Thailand is the right place for beer companies to build factories because it has great potential as a beer market," said Wang Yiguo, analyst at China Jianyin Investment Securities.

 

"The Thailand project is an important step in our global strategy," said Yuan Lu, board secretary of Tsingtao.

 

Tsingtao is 27 percent-owned by Anheuser-Busch Co. It set up a Thai marketing branch in Bangkok in its initial step to enter the Southeast Asian market in July, 2005, according to Yuan.

 

But due to Thailand's high duty on beer imports, Tsingtao's sales in the country remain a small part of the company's total.

 

"Producing beer locally will help Tsingtao avoid a 3 percent duty, reduce sales costs and boost the company's competitiveness on the international market," Yuan said, adding that the Thai government supports the new project.

 

(China Daily October 25, 2007)