Thanks to a ban on extravagant official banquets, times are getting tough for businesses that used to profit from the government’s expensive tastes By Min Jie and Liu Ziqian
hou Shaoqiang, former Party secretary at a State-owned enterprise (SOE) in Zhuhai, Guangdong Province, picked exactly the wrong moment to show off his refined taste in wine. At a feast hosted by Zhou at a local private members club in early January, the 12 bottles of vintage French wine on the table struck something of a contrast with strict austerity measures introduced by China’s top authorities less than a month earlier. Unfortunately for Zhou, one of the 16 other officials at the table took a photo of the feast and posted it on WeChat, a popular instant messaging app in China. The picture, captioned “Hangover worries after 12 bottles,” showed a bleary-eyed Zhou behind an array of empty bottles. The photo soon went viral, infuriating China’s netizens, including a wine specialist who estimated the total value of the bottles to be around 80,000 yuan (US$12,800), equivalent to the annual income of a Chinese whitecollar worker. The disciplinary inspection commission, the Party’s anti-corruption arm, launched a probe into the case, and revealed the cost of the dinner (not including the wine) to be 37,517
yuan (US$6,000). The sum was large enough to cause Zhou to be removed from his post in early February. SOE bosses and government officials around the country have been erring on the side of caution since the launch of the “eight rules and six bans,” a set of regulations issued at the end of last year by Xi Jinping, the new Party general secretary who took office early November, which demand that officials at all levels be more frugal with taxpayers’ money. Lavish official dinners, extravagant receptions and even overly flowery speeches have been banned.
The new rules have brought a chill to various industries that facilitate government ostentation, such as conference hotels, and dealers of cigarettes, liquor, tea and even flower bouquets. December and January, in the run-up to the new calendar year and Chinese New Year, are normally the busiest months of the year for conference hotels in China, as most government departments and SOEs tend to host lavish celebrations and dinner parties. In the past, it was so difficult to book a venue at a confer-
ence hotel that reservations for January often had to be made six months in advance. Zhang Hong, marketing director at a major conference hotel in suburban Beijing, said that more than 70 reservations had been cancelled in January this year, resulting in losses of 20 million yuan (US$3.2m) for the hotel. Zhang said that government departments and State-owned enterprises normally accounted for more than one fifth of their revenue, and if the “eight rules and six bans” were to be permanent, China’s conference hotels would be hit hard. One such hotel in Shijiazhuang, capital of Hebei Province, used to play host to 700 conferences a year, about 500 of them sponsored by local government departments, according to Wu Shaoyuan, deputy director of the Alliance of China Conference Hotels (ACCH). Income from government conferences accounted for about half of the income for these hotels in 2011, according to a report by the ACCH. Sales of premium liquor brands have also slowed since the “eight rules and six bans” were launched. Prices of Moutai and Wuliangye, China’s CHINA WEEKLY I March 2013
April 2013 Issue