Its industry in a slump, a Chinese Baijiu company hires American CEO

Jim Rice, a successful American businessman who helped companies like Tyson Foods adapt to the China market, has been selected by top Baijiu company Shuijingfang to be its next CEO during a time of crisis for the alcohol industry.

Jim Rice became CEO of Shuijingfang baijiu company nearly a year ago.

It was terrible timing.

"About the time I arrived, the industry started to go on a slide," Rice says, referring to Chinese President Xi Jinping's new austerity measures, "My sales are down 50 percent. We’ve just given a warning to the stock market that our profit will be down between 80 percent and 100 percent."

Shuijingfang, partly owned by multinational Diageo, hired Rice because he’s got a good track record of adapting foreign companies like Tyson Foods to China. “My job role today is to take a very traditional Chinese company in a very traditional Chinese industry and adapt Western practices to it. I’ve got to globalize the company," says Rice.

Rice has to cut staff, prices, and expenses, as well as overhaul his sales network, but his biggest challenge might be a plan to market baijiu to a new type of customer -- including foreigners. Part of his plan is to market the brand's long history.

A worker creates a new baijiu pit with mud, yeast, and five different grains: rice, sticky rice, wheat, corn, and sorghum at the Shuijingfang distillery in Chengdu, Sichuan province.

Inside Shuijingfang’s distillery in the city of Chengdu, Rice shows off a 600 year-old baijiu pit. Next to that, mounds of mud covering a fermenting mixture of grains like rice, corn, and wheat, giving off baijiu’s distinctive odor. "It’s uh sweet," pauses Rice, choosing his descriptors carefully,"and a little bit rancid, I suppose."

This smell -- Westerners compare it to anything from nail polish to dumpster juice -- is baijiu’s Achilles' heel in markets outside of China. The Chinese drink it at room temperature, but if baijiu’s served on ice, the smell is diminished. It’s nearly erased if you mix it with other liquids. At a tasting event in California, Rice created four baijiu cocktails, including a baijiu martini and a baijiu mojito.

He says they were a hit.

Workers at Shuijingfang's Chengdu distillery mix fermented grains with rice husks before they steam it, the final step in making baijiu.

Back at the distillery, fresh hot baijiu pours out of steamers. "That is seventy percent alcohol, 140 proof," Rice says, pointing to one vat. Standing next to Rice is a short, smiling man: the master distiller. He offers me a shot of his finest product with both hands. It is a situation where refusing is out of the question. As they say in China, ganbei. For a foreigner who has been the victim of many baijiu contests at Chinese banquets, the taste conjures up dark memories long forgotten.

The master distiller interrupts my stupor by grabbing the shot glass from my hand, refilling it from another vat. "Oh, I’m good with one, I don’t know if I can…" I murmur, trying to be polite.

"But our master distiller thinks you should try them all," says Jim, his employee nodding his head cheerfully behind him.

For this potential American customer, a baijiu mojito sounds pretty good right about now.

Want to know more about the baiju business? Click here to learn about baiju sales, the number of drinkers in China, and more.

About the author

Rob Schmitz is Marketplace’s China correspondent in Shanghai.

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