China’s new anti-corruption goal: wine business and economic news

Comments by regulators replacing business drinks with “correct value” caused most alcohol-related stocks to plummet.

The anti-corruption watchdog of the Communist Party of China stated in its comments on the sexual assault case of employees of Alibaba Group Holding Co., Ltd. that China should reduce commercial alcohol consumption and replace it with “correct values.”

The Central Commission for Discipline Inspection stated in an article published in the name of Shi Zhe in the opinion section of its website that some “behind the scenes rules”, such as forced drinking for commercial purposes, may lead to crime. Those who violated the law in the Alibaba case will be severely punished.

Most alcohol-related stocks fell in Wednesday’s trading. The share price of leader Kweichow Moutai once fell 2.1%, and its second-largest peer Wuliangye Yibin fell 2.8%. Shanxi Xinghuacun Fen Distillery’s share price fell 3.2%.

In recent weeks, China has taken action to crack down on many of the social issues that are seen as causing the Communist Party to seek solutions, especially before the five-year party congress next year, where President Xi Jinping is expected to convene to ensure a third term. Investors have been dumping stocks in any industry that has been criticized by the official media, from digital games and e-cigarettes to real estate and infant formula.

Alibaba fired a manager accused of rape this week. After an employee’s account of her ordeal went viral on social media and sparked a heated debate about the rampant sexism in China’s technology industry, Alibaba took it. Action controls the consequences. CEO Zhang Yong said in an internal memo seen by Bloomberg News that the employee’s first reported allegations of sexual assault on August 2 revealed systemic challenges to the company’s mechanisms.

The incident involved an outside client and several executives who drank on a night in the northeast of the country. It highlights the widespread abuse of female workers in Chinese companies. So far, the #MeToo campaign has not been as widespread as Silicon Valley or elsewhere.

CCDI’s comments highlighted the pressure employees face not to drink while on a company outing.

‘Hard to resist’

“If you don’t drink, you just don’t give your leaders face and ignore the’rules’,” it said. “In order to avoid encountering bullying and isolation and affecting future prospects, many people have to give in or get involved, and it is difficult to resist.”

China’s premium distilled spirits companies have been closely following government regulations to avoid the attention of Chinese regulators instead of pursuing ambitious growth. For example, it has been several years since Moutai raised the ex-factory price of its core liquor product Feitian, which has remained at 969 yuan ($150) and a half liter for three years. It also increased direct sales after regulators condemned distributors for hoarding inventory and raising prices.

Peng Hong, chairman of the Guangdong Provincial Alcoholic Drinks Association, said in response to the comments of the regulatory agency: “The government has strict policies that require those who gather at the wine table to discipline themselves and strictly abide by the law.” It has a significant impact on the industry because the market agrees that they should behave well when drinking, or they will be punished.”