Former Kweichow Moutai Chairman Dies in Jail, Moutai Club Collapses

Moutai liquor used for wedding celebrations.( Kevin Frayer/Getty Images)

The former chairman of China’s top liquor maker, Kweichow Moutai, recently passed away unexpectedly while in prison, and the once-influential “Moutai Club” for Chinese Communist Party (CCP) elites is no more. Xi Jinping’s administration has been conducting a purge of the forces behind Moutai liquor for several years.

Moutai (or Maotai) is a colorless Chinese liquor, distilled from fermented sorghum. It is made in the town of Maotai in China’s Guizhou province and won an award during the 1915 Panama Pacific International Exposition.

Kweichow Moutai was once China’s most valuable stock. According to data from Jan. 7 last year, Kweichow Moutai’s market value was 2.44 trillion yuan (approximately $382.6 billion), twice that of the second-ranked “Industrial and Commercial Bank of China” and three times that of the fifth-ranked “PetroChina.”

However, former Chair Yuan Renguo died suddenly in prison on Sept. 9 at the age of 67. Anonymous sources have suggested that he died of a cerebral hemorrhage but there are other speculations about his cause of death.

Public records show that Yuan Renguo was born in Guizhou in October 1956 and he began working at the Moutai distillery at the age of 19. He served as chair of China Kweichow Moutai Distillery (Group) (CKMD) for seven years and chair of the publicly traded company Kweichow Moutai Co., Ltd., (KMC) for nearly 20 years.

In May 2018, Yuan Renguo was removed from his positions as chair of CKMD and KMC. In May the following year, he was expelled from the Chinese Communist Party (CCP) and stripped of his public office. In September 2021, he was sentenced to life in prison for bribery.

In March of last year, the official WeChat account of the Supreme People’s Procuratorate of China claimed that during the investigation, more than forty investigators spent “a day and a night” counting the gold products, watches, jewelry, paintings, ivory, and various amounts of cash found in Yuan Renguo’s home.

Since Yuan Renguo’s downfall, Kweichow Moutai has experienced a significant shake-up in its leadership. In just one year, at least 13 senior executives have fallen from grace. In December 2021, the Director and General Manager of Kweichow Moutai Sales Company, Zeng Xiangbin, “fell from a building” and passed away at the age of 48.

The Corrupt ‘National Liquor’ of the CCP

Moutai is regarded as the “national liquor” of the Chinese Communist Party (CCP). It is believed that in 1949 when the CCP gained power, Premier Zhou Enlai personally endorsed it as the liquor for state banquets. Since then, Moutai has acquired strong political symbolism. In China, consuming Moutai has evolved into a status symbol and is intricately linked to corruption and the political elite.

Ordinary Chinese citizens find it unaffordable to indulge in Moutai. A 500ml bottle of Flying Fairy Moutai with 53 percent alcohol, produced last year, carries a retail price of 1,499 yuan (approximately $206 USD). That is the brand’s entry-level product. For an equivalent size of rare Moutai, the retail price per bottle soars to 4,599 yuan (approximately $633 USD). There are even more expensive upgraded versions, collectible editions, and various series of Moutai.

A saying among the populace encapsulates the situation: “Those who buy Moutai don’t drink it, and those who drink Moutai don’t buy it.” Purchasing Moutai is often for gifting purposes, or as some may argue, for bribery.

Xi Jinping’s administration may have initiated the cleansing of Kweichow Moutai as far back as five years ago.

Within the CCP, many corrupt officials are known to hoard Moutai. In 2018, Wang Xiaoguang, the former deputy governor of Guizhou Province, was discovered to possess over 4,000 bottles of Moutai hidden in a secret room in his home. In 2012, General Gu Junshan of the CCP military faced apprehension, and investigators confiscated 1,800 cases of Moutai from his hometown. With each case likely containing six bottles, Mr. Gu is believed to have amassed over 10,000 bottles.

The Enigmatic Moutai Club

In fascist and totalitarian systems, influential families usually control the major corporations. So, who are the Communist Party elites behind Kweichow Moutai?

During a personnel shakeup at Kweichow Moutai, independent director Li Botan resigned in December 2020. Li Botan has an intriguing background: he is the son-in-law of a former member of the CCP Central Politburo Standing Committee, Jia Qinglin. Li Botan also holds a prominent position as the controlling figure of Beijing Zhaode Investment Company and serves as the chair of the Beijing National Liquor Moutai Culture Research Association. The commonly known “Moutai Club” is its subsidiary.

Li Botan also owns a substantial portfolio of businesses but he is most renowned for being the secretary-general of the once highly prominent “Maotai Club.” Despite the Maotai Club’s claims to be a non-profit organization dedicated to promoting Chinese liquor culture, in reality, it has been a mysterious private club catering to the top-tier CCP elite. Its headquarters is located in a traditional courtyard adjacent to Tiananmen Square and the Forbidden City in Beijing.

According to “Red Roulette,” a book by Desmond Shum, a British businessperson and ex-husband of Chinese female billionaire Duan Weihong, Moutai Club membership demands tens of thousands of dollars. However, monetary wealth alone does not guarantee entry into the Moutai Club. David (Li Botan’s English name) conducts a vetting process, and one must be a person of importance to gain entry.

Membership in the Moutai Club swiftly became one of the most sought-after social statuses in Beijing, attracting some of China’s top tycoons, including Phoenix Satellite TV Chair Liu Cheong Lok, the chair of the major state-owned enterprise CITIC Group Kong Dan, and tech giant Alibaba’s founder Jack Ma.

It is even speculated that Jiang Zemin’s grandson might have been a member of the Moutai Club. According to Mr. Shum, during one visit to the club, he encountered a young man who introduced himself as Alvin, and later, it was revealed that he was Jiang Zemin’s grandson, Jiang Zhicheng. Jiang Zhicheng went on to establish a private equity firm worth billions of dollars in his early twenties.

What exactly entices numerous CCP elites to the Moutai Club? “Red Roulette” revealed that Li Botan’s primary selling point was his connections to the back channels of the Kweichow Moutai Company.

The book highlights that the Kweichow Moutai Company would release ten-year aged Moutai liquor, which would grow more valuable with age and was often difficult to find on the market. But most of the aged Moutai liquor available for purchase contained little to no genuine old liquor; Li Botan would use authentic Moutai in one-third of the annual release of ten-year Moutai liquor by the Moutai Company.

The book also describes how Li Botan sold his ten-year Moutai liquor in red bottles, known in club circles as “red hairs.” Individuals in the circle rarely purchased Moutai from regular stores due to the prevalence of counterfeit products. To access David’s precious “red hairs,” one would have to join the Moutai Club.

“Red Roulette” also delves into why Li Botan established the Moutai Club. According to the book, the CCP’s elite like that in private settings, one can conduct political and economic transactions with no one knowing whom you meet or what you discuss. Secondly, CCP elites avoid flaunting their wealth openly, but relish highlighting it behind closed doors with trusted friends. Thirdly, in many cases, the primary benefit of private clubs is the ability to operate on government assets for personal gain.

‘Moutai Club’ Demise a Symptom of Power Struggles in Zhongnanhai

Mr. Shum said he believes that Li Botan’s relationship with Kweichow Moutai was established with the help of Jia Qinglin.

Back in Beijing, there used to be several top-tier private clubs like the “West Mountain Club,” “Pangu Club,” and “China Club.” However, since Xi Jinping assumed power, these private clubs have been successively shut down, purged, and their key figures investigated. But the Moutai Club continued to operate in secret, indicating its strong backing by influential people.

Li Botan’s father-in-law, Jia Qinglin, was a close confidant of Jiang Zemin, the former CCP leader. During the 1990s, when Jia Qinglin served as the provincial party secretary in Fujian, the infamous “Yuanhua Smuggling Case” unfolded, involving smuggled goods worth 53 billion RMB ($6.4 billion). This case was referred to as the CCP’s first major economic case since 1949, and then-Prime Minister Zhu Rongji vowed to “get to the bottom of it.”

However, Jia Qinglin not only emerged unscathed but also rose to the highest echelons of central power. This led people to think that Jia Qinglin’s relationship with Jiang Zemin was anything but ordinary.

However, as Jiang Zemin’s influence waned and he eventually passed away, the Moutai Club could not escape its eventual demise. The former headquarters of the Moutai Club now stands empty and is now the “Moutai Museum,” open to the public.

Here is one explanation as to why Xi Jinping insisted on shutting down these private clubs. Chinese entrepreneur Meng Jun, currently residing in the United States, stated on the “Elite Forum” television program on Sept. 17 that ever since the incidents involving Zhou Yongkang and Bo Xilai’s political upheaval, Xi Jinping believed that these high-end clubs were potential bases for the political power struggles of the elite. They attracted various factions and individuals with shared interests and goals. Xi Jinping was most concerned about the formation of small circles within these clubs, as they could become a force to challenge his authority.

The Moutai Club was officially established on Dec. 21, 2009, at the Great Hall of the People in Beijing. Yuan Renguo, then-chairman of Kweichow Moutai, served as vice chair, while Li Botan was the secretary-general or behind-the-scenes controller. In other words, it was Yuan Renguo who assisted Li Botan in establishing the Moutai Club.

China affairs commentator Chen Weiyu suggested on his program on Sept. 12 that the death of Yuan Renguo during the time when the Jia Qinglin family was being purged may not have been a coincidence, and that it should not be ruled out as a means of self-preservation for Li Botan.

Chen Weiyu also mentioned that Yuan Renguo served as the chair of Kweichow Moutai for 20 years, during the era of Jiang Zemin’s leadership. Yuan Renguo had cultivated connections with numerous influential figures within the Jiang faction. His death certainly took away many secrets.

Moutai liquor was initially an exceptional national brand with a long history. However, after the CCP seized power, under the pretext of a “public-private partnership,” Moutai liquor was forcibly taken under “state ownership.” The three private distillery owners who originally produced Moutai faced unfortunate fates, with one being executed, one receiving heavy sentences, and the other “voluntarily” selling to the government.