China's second-biggest brewer, Beijing Yanjing Brewery Co., has acquired a 38.2% stake in Huiquan Beer Group Inc., the largest beer producer in the eastern province of Fujian. Yanjing Brewery paid government authorities in the eastern Chinese province of Fujian about CNY362.4m (US$43.7m) and becomes the biggest shareholder in Huiquan, which had sales of CNY900m in 2002.

The acquisition boosts Yanjing's business outside its base in northern China, where it controls about 45 % of the market. The company has said it wants to be one of the world's 10- largest breweries by 2005, with an annual production capacity of 3 million metric tons. “With the cooperation between Yanjing and Huiquan, we will continue to expand our market share,'' Yanjing said in the statement. “We will set up a comprehensive sales network in Fujian province and raise the market share of Yanjing and Huiquan beer."

Yanjing has been targeting beer drinkers in China's eastern provinces, whose economic growth regularly outpaces that of the nation. Last month, Yanjing invested 50 million yuan to buy a 60 percent stake in Yanjing Brewery Zhejiang Xiandu Co.

Since selling shares on the Shenzhen stock market in 1997, Yanjing has acquired 14 breweries excluding Huiquan to grab a greater market share of China's fragmented beer market. Last year, Yanjing brewed 2.08 million tons of beer, which represented 9.8 percent of total production.

Hui'an, Fujian province-based Huiqian will add 550,000 tons of annual production capacity and a well-known brand in eastern China. Last year, Huiquan sold 410,000 tons of beer and generated 900 million yuan in sales.
Huiquan started trading on the Shanghai stock exchange on February 26 after raising 450 million yuan. There are currently six publicly traded brewers in China. The others comprise Tsingtao Brewery Co. Ltd., Chongqing Brewery Co. Ltd., Lanzhou Huanghe Enterprise Co. Ltd. and Xinjiang Hops Co. Ltd.

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