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Case Studies

Additional Info
Date 2005
Subject Domestic Trading License
Location China
Client Maxxium


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    Background & Challenges

    As with all wholly owned foreign companies engaged in the drinks industry in China, Maxxium was placed at an unfair disadvantage under Chinese law as the company was not allowed to directly distribute its brands or directly service retail accounts. This meant that the company had to appoint and rely on local distributors which were able to attain significant margins to distribute the company 's brands. Legislation changed upon Chinese WTO membership in that foreign drinks companies were allowed to attain a domestic trading and distribution license. However, the process of attaining a domestic distribution license was highly complex and bureaucratic. In 2005, Maxxium appointed DDMA to assist in the process of securing a domestic trading license.

    Action

    DDMA has an alliance with a leading domestic law company based in Beijing. The senior partner of this company is the head of the Beijing Law Society and has all the required contacts in central government to navigate through the complex field of Chinese law, which actually became more complex after WTO ascendancy. This company handled the Maxxium application process and DDMA coordinated the project and supported in lobbying, document preparation and undertook other supporting activities.

    DDMA also identified several second and third tier markets where Coors should focus their marketing efforts and spend. These markets met a set of pre-determined economic, social and trade criteria and, most importantly, had a significant premium beer segment which was not dominated by other international players. Two of the key markets selected were Kunming and Lhasa. Once the markets were selected, a trade overview was conducted which identified key on-premise, and hence, image building accounts. Suitable local distributors were appointed to support these accounts. A complete re-launch strategy was then developed and implemented.

    Result/Outcome

    In December 2005, Maxxium was the first wholly owned foreign drinks company to receive a domestic distribution and trading license under the new WTO legislation. The impact of this on Maxxium's business is vast as it means that the company can now develop and deploy its own sales force and directly service key accounts across China. Maxxium enjoys large cost savings by adopting a localised approach to this application process.