2001 PricewaterhouseCoopers. PricewaterhouseCoopers refers to the individual member firms of the world-wide PricewaterhouseCoopers organisation. All rights reserved.,Project Gold Workshop,Draft Report 14 July 2003,2,Agenda,Agenda Session one 9:00 13:00 The four provinces,Fujian Market research findings Acquisition target research Strategic options Guangdong Market research findings Acquisition target research Strategic options Zhejiang Market research findings Acquisition target research Strategic options Jiangsu Market research findings Acquisition target research Strategic options,Strategic objective Current top tier Investment models in use Current HAPB platform National alliance options Parenting factors Key success factors Acquisition strategy Organisation design,Agenda Session two 13:00 18:00 National strategy,2001 PricewaterhouseCoopers. PricewaterhouseCoopers refers to the individual member firms of the world-wide PricewaterhouseCoopers organisation. All rights reserved.,Workshop overview,4,Structure of discussion,The original scope of our work was to look at the acquisition opportunities available in the four provinces identified. This will be the focus of the morning session. However, in assessing these opportunities we also need to consider how to make the acquisitions work. We will therefore also consider what kind of organisation structure is necessary for success, and what support the parent organisations need to give to support the achievement of the strategic objectives,Current Platform,Corporate Parenting Advantages,Key success factors,Acquisitions & alliances,Strategic Objectives,5,Dimensioning levels of success,It might be useful to have a few market graphs here, that showed over a five year period the volume and revenue performance of the entire market, then for the domestic makers and for the FI makers It would serve two purposes: Dimension the opportunity and provide a sense of development time frame Frame the achievements of the market leaders on the following page Throughout the presentation, we can follow a couple of key story lines, storylines that would organize the rather large amount of data and make it flow toward discussions and decisions These storylines can be developed in key learnings slides, and by doing so, we can avoid harshness in the section on HAPBs experience,6,Storylines (This is not a slide for the pack. These are not stories to tell loudly on the surface of the presentation, but implicitly),Heinikin through HAKB has been in China ? years, using a certain model. So have other breweries. There are many variables or factors in the models. These variables and factors have determined the difference in outcomes for the different brewers. These are the same factors and variables which Heinikin plans to reform in order to achieve the stated strategic objectives. They include: 1) How the FI role is played; 2) Associations (including EJV, regulatory, channel, investor); 3) Assets How they are acquired and managed, including manufacturing, logistic, brand, and government support Planning a strategy and executing successfully in China requires immediate improvement of some things that are within Heinikins own control1) strong and resilient alignment of interests and commitments in the parent corporation; 2) commitment to learning about the fundamentals and KSFs of building FMCG business in China; 3) adequate forward resourcing of quality advisors to accelerate learning and help manage complex market risks; 4) creating an HQ and local business governance structure that is agile and responsive to change,7,This moment in China Transitions continue at a rapid pace. The past is always only a partial guide to the future,Quick update on WTO commitments phasing in 2003-2006 relevant to this strategy Quick update on CEPA and potential impact on distribution, IPR, finance, etc. Other recent developments in China (e.g. FTZ advances, Trading rights, regulatory restructuring new FDA, MOFTECMOFCOM),In understanding the historic models used by HAKB and competitors, keep in mind that many maintain legacies from earlier regulatory and market conditions. Successful entry and growth strategies change rapidly over time as these conditions change,2001 PricewaterhouseCoopers. PricewaterhouseCoopers refers to the individual member firms of the world-wide PricewaterhouseCoopers organisation. All rights reserved.,Session one The four provinces,2001 PricewaterhouseCoopers. PricewaterhouseCoopers refers to the individual member firms of the world-wide PricewaterhouseCoopers organisation. All rights reserved.,Market data Fujian,10,Fujian overview of research performed,11,Total market volume 13 million HLS, or 5.5% of national market,Fujian Beer Market Size,Sales Volume (unit: HLS in thousands),Sales Value (unit: million),Source: PwC reasearch, China Beer Association,19982002 Volume CAGR 2.1% Value CAGR 6.8%,12,Sedrin has emerged as the volume leader, Huiquan relie