In the mountains surrounding Maotai village in northern Guizhou province, the smell of baijiu, China’s popular sorghum-based liquor, is dizzyingly strong. Visitors claim that they can get drunk simply by catching a whiff of the fiery beverage, which runs between 40 and 60 percent proof, while locals brag that they have baijiu flowing in their veins. And just in case the smell wasn’t pungent enough, Kweichow Moutai Company, China’s largest baijiu producer, erected a massive, seven-story building in the shape of its signature product. Now, a red, white, and blue bottle protrudes from the peak of a nearby mountain, ushering visitors into China’s baijiu heartland.
There are more than 800 registered baijiu businesses in this town of 49,000, but one brand reigns supreme: Moutai (written as maotai in Chinese), a state-owned enterprise valued at $23.5 billion. For years, villagers in Maotai have piggybacked on the company’s success, benefitting as it rose to the top of China’s $76 billion liquor market.
“Everyone who works in Maotai village lives and breathes baijiu, especially the Moutai brand,” said He Yuan, a farmer who harvests sorghum in this northern corner of Guizhou, China’s second-poorest province. “If it weren’t for baijiu, we would live a very tough life.”
But Moutai’s exorbitant price—roughly $300 for a premium bottle—combined with its longstanding links to China’s governing elite have made it an ideal target in President Xi Jinping’s mounting campaign against corruption and extravagance. Though Moutai is officially recognized as China’s “national liquor,” often served at state functions, it is priced beyond the reach of average consumers. And because of this high price, Moutai is commonly used as a currency in bribes, prompting the popular saying: “Those who buy Moutai never drink it, while those who drink it never buy it.”
Nowhere have the effects of Xi’s anti-corruption campaign been felt more acutely than in Maotai village. Dozens of baijiu shops that line National Liquor Avenue, the town’s main commercial street, are now shuttered. A local vendor with the surname Zheng estimated that one-third of these shops have gone bankrupt since Xi came to power. In 2012, local GDP growth in Maotai village declined for the first time in more than 20 years; it is expected to fall further in 2013.
And Xi’s crackdown on luxury goods shows no signs of abating. Last week, at a meeting leading up to this weekend’s Third Plenary Session of the 18th Party Central Committee, top government officials approved regulation to fight waste and extravagance among Party and government departments.
“In recent years, some Party and government departments occasionally competed for ostentation and extravagance, which led to huge spending and waste as well as strong reactions from the people,” read an official statement released after last week’s meeting.