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Evergrande's liquid assets

Updated: 2013-11-12 10:03
By Shi Jing in Shanghai ( China Daily)

As fans cheered Guangzhou Evergrande's victory in the Asian Football Confederation's Champions League in Tianhe Stadium on Saturday, some members of the audience couldn't help shifting their gaze from the celebrations to a giant plastic bottle with the logo "Evergrande Spring".

The big beverage symbolized a move by Guangzhou-based Evergrande Real Estate Group Ltd into the bottled water market, as it seeks to broaden its business portfolios, which spans the property, hotel and cultural sectors.

During a news conference on Sunday, Pan Yongzhuo, chairman of Evergrande Spring Group Co, said that two waterworks in North China's Jilin province will go into operation this year. One will have an annual capacity of 400,000 tons of water, the other twice that much.

The combined annual capacity is to reach 10 million tons in three years.

Evergrande's liquid assets

Guangzhou Evergrande players celebrate on Saturday after winning the Asian Football Confederation's Champions League in Guangzhou, Guangdong province. The real estate group took the opportunity for a high-profile launch of its bottled water business, Evergrande Spring.[Photo/China Daily] 

A 350-milliliter bottle of Evergrande Spring will cost 3.8 yuan (62 US cents), slightly more than water from Nongfu Spring Co Ltd or Hangzhou Wahaha Group Co Ltd, but still a lot cheaper than the 8.4 yuan charged for 330 ml of Tibet Spring 5100, produced by Tibet Glacier MW Co Ltd.

Evergrande's presence in the property market will help with the distribution of the bottled water. Media reports have said previously that Evergrande plans to invest some 10 billion yuan in the water business in the coming three to five years.

According to market research firm Euromonitor International, the Chinese bottled water market has grown steadily in recent years.

Wahaha has held the lion's share in the past four years, accounting for 13.1 percent of the market share last year. Ting Hsin International Group was next, with 12 percent.

It's too soon to say whether Evergrande will succeed in its new business, but it's getting a lot of praise for its "football marketing".

Building on its brand name, Evergrande outshone its competitors in the real estate market in the first three quarters of the year, selling 11.05 million square meters of property, according to China Real Estate Information Corp's research center.

Over a slightly longer period - 10 months - Evergrande's revenue totaled 91.27 billion yuan, up 25.3 percent year-on-year.

The group's renown has helped increase Chairman Xu Jiayin's personal wealth. He was 13th on this year's Forbes China Rich List, with personal assets of 32.9 billion yuan, up from 30.8 billion yuan last year.

It's also premature to speculate on whether others will copy Evergrande's football marketing strategy. Ye Hui, a reporter for the newspaper Titan Sports, has been following the Evergrande Club since 2006.

He agreed that hefty investment in the team is to some extent a reason for its success. But it's the way the club is managed that sets it apart.

"Evergrande has invested about 1.5 billion yuan in the club within the past three years. But the value of the advertising connected with the team, and that added to the brand, is worth way more than the 1.5 billion yuan," he said.

David Ye, partner and vice-president for greater China at Roland Berger, agreed that Evergrande has achieved another success in terms of event marketing.

"By investing in football clubs, property developers can earn other profits. It's like building up a smooth relationship with the local government."