There is an old Chinese saying that states: "An emperor's daughter does not need to worry about not being able to get married." A sales strategy was previously not needed for Moutai because it was always in short supply.

That stopped being the case in 1998 when the brand suffered a big slump in sales because of intensified domestic and overseas competition and the Asian financial crisis.

It was in that year that Yuan Renguo was promoted to the top position in the company.

Only 700 tons of the drink were sold by July 1998 against an annual target of 2,000 tons. Yuan recognized the need for drastic action.

He recruited 17 salesmen and launched a nationwide promotion of Moutai. He also held a party at his home for all sales agents. During the eveninh he made the toast "that friendship multiplies joys and divides grief" and added: "I hope everyone here can help Moutai get over its current difficulties and drink the spirit that shares woe."

By the end of 1998, 2,000 tons of Moutai were sold, a 13 percent increase on 1997. Yuan's corporate tact is said to have played an important role in the company's recovery from financial crisis.

Moutai diplomacy had been born. These days, Yuan exchanges toasts with every distributor who comes to Moutai, so long as he is in residence.

Liu Tao, a distributor in Sichuan province, said, "Although I'm not a big business partner for them, I get respected in Maotai town."

Yuan, who joined the company at the age of 18, has always insisted on diversification. In recent years, he has overseen the launch of Moutai beer, Moutai red wine and Moutai health tonic industries.

"Moutai is going to establish its own fund company to invest in more industries such as real estate, energy and packaging materials," Yuan told China Business Weekly.

The company was reported to have bought a 300 million yuan stake in the Bank of Communications three years ago. That is now worth 1.4 billion yuan.

Huang Wei, an analyst with China Jianyin Investment Securities, said he believed diversification was the way forward for the liquor industry. "Diversification is the breakthrough for large wine companies to find new profit growth due to the fierce market competition and declining profit," he said.

Yuan Renguo, general manager and board chairman of China Kweichow Moutai Distillery Co Ltd, China's largest liquor company, said he planned to set up marketing networks in France and Japan for the company's overseas expansion as a first step in attempts by the company to gain a stronger international foothold this year.