China is the world’s largest beer market, accounting for a quarter of the global beer volume. According to a Reuters study, 80% of this massive industry is controlled by five local beer companies, including Tsingtao Brewery and CR Snow, producer of the world’s best-selling beer brand Snow. However, the beers produced by those brands have long been labelled as light, watery, and low on alcohol content, turning Chinese consumers toward local craft beers in search for better quality and various flavors.
“The idea that something needs to be a 100% percent imported to be good, is insulting to the Chinese consumer,” says Carl Setzer, Founder of Beijing’s popular microbrewery Great Leap Brewing, which offers an alternative to the big Chinese brands as well as imported beer by adopting Chinese culture and tradition into its brewing practices.
Great Leap Brewing brews and sells its own beer, but with a special twist that includes using a range of local Chinese ingredients. “All of our recipes are based on the idea of local. Whether we use local hops, local malts, or local adjuncts like spices, teas, sugars, honey, and coffees, we source everything here,” Setzer explains. As a result, the Beijing microbrewery is home to a wide range of unique beers, including Cinnamon Rock Ale, Angry Boy Brown Ale, Banana Wheat, and its most popular Honey Ma Gold, an ale made of date honey with Sichuan peppers.
Taking the Leap into Brewing
The story of Great Leap Brewing’s success can be traced back to 2004 when Carl Setzer, a 33-year-old Cleveland-native with German ancestry, travelled to China for the first time. After spending a year and a half, Setzer headed back Stateside for graduate school, only to return in 2008 when he married Liu Fang, a Shandong native whom he had met during his first trip. For the couple, the idea of brewing their own beer came about after travelling through Northern Europe and Southeast Asia seven years earlier. The trip exposed Setzer and his wife to the rich culture of craft beer and helped them realize the potential that quality beer could generate among Chinese consumers.
For Setzer, brewing beer had always been a hobby, until October 2010 when he made the decision to turn it into a business thanks to growing interest in his homemade beers. “There was a demand, it was really popular!” the brewer explains.
The decision to become an entrepreneur was not without risk; Setzer and Liu Fang resigned from six-figure jobs in order to dedicate their energy to the enterprise, an unconventional choice in a society that values stable incomes. But the opportunity to pursue this passion of excitement was too great to miss. “The idea of creating a product that everybody wanted and making people happy through it, that was a little bit more interesting than working in risk mitigation,” says Setzer.
Armed with $17,000 in savings and the name “Dàyuè Píjiǔ” (Great Leap Brewery) given by Liu Fang’s grandfather – a name that carries a meaning of strength in Chinese culture – Setzer opened the first brewpub in Beijing’s Dongcheng District. Fast-forward to today and Great Leap now operates three brewpubs, the second of which is located in the Dongcheng District and the third in the Chaoyang District.
Challenges of Entrepreneurship in China
As a foreign entrepreneur in China, Setzer was exposed to a number of challenges beyond those that were specific to running a business such as his, such securing proper equipment and quality ingredients; he was confronted with regulatory controls, linguistic barriers, and issues that stem from operating a staff from a different culture. “The main difficulty is that you are never going to be Chinese,” Setzer says.
But he is also quick to dismiss the strategy of partnering with a local to lighten the burden and explains that Great Leap Brewing is currently a wholly foreign-owned entity. “The idea that you need to have a Chinese partner to make things easier is a bit of a myth because you are putting too much responsibility and too much pressure on one person,” he says.
How then, did he overcome the challenges of operating as a foreign entrepreneur in China? By understanding the language, culture, local regulations and laws, and by treating his 109 employees equally regardless of whether they are foreigners or Chinese.
“I don’t think there is anywhere in the world where being an entrepreneur doesn’t have a lot more challenges than a normal career,” he says. “China doesn’t have more or fewer challenges than anywhere in the world. It really comes down to understanding the market and realizing that you need to have very professional support team including lawyers and accountants.”
Tips for Success
Today, Setzer’s deliberate strategy has won Great Leap huge success in Beijing. The brewing company records an average of 800 daily customers between their three locations from Sundays through Thursdays and 1,100 to 1,200 customers daily on Fridays and Saturdays. Though the majority of initial customers were predominantly expats, today, 60% of them are Chinese.
In spite of this success, Setzer currently has no plans to expand to other cities or districts in Beijing. “When you’re the producer and seller of your goods, it better to localize your production and sales,” he explains, adding that Great Leap will instead focus on adding new recipes and new types of beer to their menu.
For many an entrepreneur, the dream of starting an enterprise in a growing country like China is both wonderful and elusive. Even as they are spurred by the success stories of companies such as Great Leap Brewing, many are daunted by the challenges they might face and find it difficult to translate their dream into reality. The key, Setzer advises, is simple, “Learn the language, learn the culture, and hire a lawyer.”