China Tries to Crack Down on Fake Moutai

Three men were arrested earlier this week in Shenzhen for selling fake Moutai, the fiery Chinese liquor, to one of the city’s most prominent department stores and an indication of the volume of various kinds of faked liquors in China.

The three were arrested for delivering more than 450 bottles of fake Moutai, worth RMB 914,040 (US$144,870) to the Sharable department store, forcing the retailer, one of the leading such establishments in the city, to announce it would tighten its checks of suppliers’ qualifications in an attempt to prevent more sales of fake products.

The sorghum-based Moutai, also known as Maotai for its revolutionary connotations, is a potent 144-proof booze that reportedly turned the late President Richard Nixon’s legs to rubber when toasting officials despite Henry Kissinger’s warnings at the opening of China. It is the most famous of scores of grain alcohol based liquors known as baiju that are sold in China.

The production of fake Maotai has grown so rampant that earlier this week, in an effort to fight it, the China Food Industry Association asked top distillers to voluntarily disclose sales volumes and distribution data in an effort to identify the real stuff. Eight producers have agreed to do so, including Maotai itself as well as Wuliangye, Luzhou Laojiao, Jiangsu Yanghe, Shanxi Fenjiu Xinghuacun, Sichuan Langjiu, Sichuan Jiannanchun, and Shuijingfang.

These are proprietary secrets of the baiju business. Provision of the data, along with the supply of liquor in each region of China, the genuine trademark logo, batch numbers and designated wholesalers, distributors and retail outlets in each region would allow authorities to track authentic liquor and seek to eliminate counterfeit booze. However, the Chinese authorities have their work cut out for them. Counterfeiters have grown so sophisticated at producing labels that they can even reproduce imprinted markings. The liquor itself, which is basically grain spirits, can be produced by anybody with a still.

As Asia Sentinel reported in January, China consumes eight or nine times as much “French Bordeaux” than is produced in all of France. One 5-star hotel in Dongguan reported selling 40,000 bottles of Chateau Lafite Rothschild annually. The entire Lafite annual allocation to the entire China market is only 50,000 bottles. Lafite sells for US$7,800 a bottle at some restaurants. Empty bottles of real Lafite trade at near US$450 a bottle to recyclers.

In fact, authorities say, the majority of liquors of all kinds sold to commemorate important dates or events throughout the country is fake. Local media reported that on March 15, World Consumer Rights Day, the Wujin Auction Co. in Changzhou, Jiangsu Province, offered consumers the opportunity to check the authenticity of their baiju by bringing in their bottles for inspection. Thirty percent of the bottles brought in turned out to contain counterfeit liquor. A year ago, on World Consumer Rights Day, the Guangzhou government seized and destroyed 100,000 bottles of fake liquor.

Maotai gets its name from the town of Maotai – Moutai in pre-revolutionary days -- in Guizhou Province, where Mao Zedong’s Long Marchers holed up in 1935 to escape defeat by the Kuomintang forces led by Chiang Kai-shek. It is the most prized of so-called baiju, or grain alcohol , because of its association with the Long Marchers. A New York Times story last year quoted Zhou Enlai of telling historians that the Long March was a success “in large part due to Maotai.”

At that, despite the fact that the stuff tastes more like gasoline or nail polish remover to western palates, it sells for US$320 a bottle, as shown in the Shirble Department store case. The average westerner with the nerve to sample the stuff often comes away wondering how to tell the real stuff from the fake, or asking why try. Baiju can be lethal, and not just because of its high alcohol content. Counterfeit producers often lace their baiju with killer chemicals.

The price has skyrocketed since the beginning of 2011 on heavy business and official consumption as China’s nouveaux riches insist on serving it at banquets and other occasions. Speculators have also got into the game, hoarding the authentic stuff.

Premier Wen Jiabao has become involved, announcing the banning of high-end baiju from consumption at official gatherings when he hosted an anti-corruption forum in Beijing. Wen’s ban on serving baiju, which sent the share price of top-line producers downward sharply, wasn’t promulgated to foil counterfeiters. It was a warning that ostentatious entertaining on the part of public officials was causing rising anger on the part of China’s citizenry. China’s teeming bloggers are increasingly documenting the expensive possessions that officials flaunt in public.

“Corruption is the biggest danger facing the ruling party,” the premier was quoted as saying in official media at a State Council meeting. “If not dealt with properly, the problem may change the nature of, or terminate, the political regime.”

China’s Hurun Report, which tracks the tastes and other aspects of the country’s elite, rates Moutai as the only domestic item in the top 10 most popular gift brands preferred by mainland millionaires.