Anheuser One of the Many Term Paper

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Many problems surface for companies such as Anheuser-Busch because the company believes that their 'global' presence means they can act and do what ever it is they think is best. Such an attitude does not work well in China, because of the hundreds of brewers that provide cheap beer on a regional and local basis. Many Chinese citizens would rather drink their local beer than the 'global' beer for two reasons, once of which is loyalty but the other which is price. These are two factors that the global company has to consider when entering the Chinese market.

One of the most prevalent problems experienced by Anheuser-Busch (or any brewery) in China could be the lack of a coherent, comprehensive distribution network.

Events to consider when attempting to distribute a product that quickly loses its appeal, flavor and freshness (such as beer) would normally entail scheduling refrigerated trucks for pick-up and delivery to a number of various locations within a certain geographical area of the brewery. In China, scheduling refrigerated trucks could be one of the lesser concerns for a company seeking to establish a 'national identity' such as the one being sought by Anheuser-Busch. Instead, a consideration for AB is that many of the 'distributors' are individuals on tricycles delivering one or two cases of product to a local outlet. The economy of scale becomes indescribable when considering a distribution made up mostly of delivery boys on bikes.

When trucks are employed, such things as giving the trucks a 'day of rest' affect the efficiency of the distribution system.

You can't bring trucks into some areas, other areas you can't bring vans into. You can't use your vehicle that ends in an even number on Tuesdays, you can only use the odd number plate. It has to have a day off, or go to another part of the city." (Thunderbird pg 9). Realistically adhering to a schedule that is so diverse and fluid could be the cause of drastic snafus, especially since the product is so vulnerable to freshness issues.

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One other consideration for Anheuser-Busch was the price consciousness of the Chinese coupled with their loyalty to the 'local' brands. These factors play a part in establishing a brand name in China.

Establishing a name brand with the constraints that Anheuser-Busch, or any other brewery will have to toil under while building a business in China can be very costly and leads to the question of; did Anheuser-Busch receive fair value for their investment dollars?

Under the vast array of problems that carry with them the necessity for minute solutions, the answer to the question is probably no. Even when considering the fact that Anheuser-Busch expected so much in return for their dollars, it is probably wishful thinking that they actually will do so. Only time will tell if the investment will pan out or not, but with the myriad of problems facing the company coupled with the vastly different culture and the disdain that a large portion of the Chinese people have for 'Western' products it will be interesting to see if the investment made by Anheuser-Busch provides investors with a decent return, or if Anheuser-Busch becomes just one more company that could have, should have but ultimately did not in regards to building a business in China.

If I was the investor I would have let SAB have the Harbin company for 30% over premium. My approach would have been to buy a small, regional firm, buy the loyalty of the Chinese workers and sell the beer inexpensively in order to maintain and grow the base, and then slowly expand from there. This seems more like the Chinese solution, than an American one, but in the words of a famous Chinese individual; "Chinese….....

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