In 2019, Heineken transferred its assets in China to state-owned China Resources, which in return received a licence to brew and sell Heineken’s beer brands. The state-owned company sources its hop from farms in Xinjiang, where it appears that involuntary labour practices are involved. This partnership generates hundreds of millions for Heineken.

This article in 1 minute

What is the news?

  • In 2019, Heineken sold its Chinese operations to state-owned China Resources, giving it a licence to brew its beer. In return, Heineken got a sizable stake in China’s largest brewer, CR Beer. The two companies are working closely together in China.
  • The Chinese company sources hop for its beers from Xinjiang, where minorities are subject to big-scale repression − including on the farms where the hops come from.

Why is this relevant?

  • In Xinjiang, human rights violations are committed on a large scale, even to the extent that several bodies – including the Dutch House of Representatives – now argue genocide.
  • When Heineken entered into a partnership with CR Beer, these human rights violations had been a well-known fact for some time.
  • After questions by Follow the Money, Heineken states that ‘none of the raw hops and barley used in the Heineken pilsners brewed by CR Beer comes from China; these ingredients are 100% imported’. But according to Chinese media, partner CR Beer does indeed source hop from Xinjiang.
  • Heineken believes that as a minority shareholder, it is not responsible for what CR Beer does. However, experts argue that as these two companies’ operations are highly interconnected, Heineken does bear responsibility. Moreover, CR Beer’s practices are at odds with its own human rights policies.

How did we investigate this? 

  • Follow the Money investigated Chinese publications and public reports, and presented those to Xinjiang experts. They confirmed that those publications contain strong evidence of forced labour.
  • We also presented the partnership of Heineken and CR Beer to experts on corporate responsibility.
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The people who represented Heineken in Shanghai in April 2019 were not small fry either. On behalf of the brewer, Richard Raymond Weissend, chief executive of Heineken Management China, Dolf van den Brink, chief executive of Heineken Asia at the time, majority shareholder Charlene de Carvalho-Heineken and her husband took to the stage. They sat down at a boat-shaped table featuring the green Heineken logo with the red star.

That Freddy Heineken’s daughter made an appearance is remarkable; she tends to keep a low profile. But this was an important event: the Strategic Cooperation Ceremony between Heineken and its former competitor China Resources Beer took place in this packed venue. The Chinese partner also had four of its top brass in attendance. One of them was Fu Yuning, the chief executive of China Resources Holding, CR Beer’s parent company.

The eight people on the stage waved to the audience, holding a beer bottle in their hands. Behind them was a huge image of a bottle of Heineken and a bottle of Snow – CR Beers’ top brand – toasting together against a backdrop of green fireworks.

In its publications about the ceremony, Heineken praised the opportunities the partnership with CR Beer presented. There was no mention of risks. Remarkable, as the company has close ties with the Chinese Communist Party (CCP) and sources its hop from huge farms in Xinjiang province, where coerced labour occurs, according to international investigators.

For example, in December 2019, Xinjiang investigator Adrian Zenz concluded, based on Chinese government documents, that coerced labour involving Uyghurs and Turkish minority groups is widespread in Xinjiang. The fact that the Chinese government is imprisoning Uyghurs on a massive scale has been known since September 2017 (see the frame below).

Repression in Xinjiang

On 10 September 2017, Human Rights Watch published a report stating that China has detained ‘thousands of people’ in institutions for ‘political education’ since April 2017. A day later, Radio Free Asia announced the existence of re-education camps.

In May 2018, more information came to light about the scale of the operation. Investigator Adrian Zenz then published an estimate in the magazine China Brief based on Chinese government documents he had found: the camps were said to hold hundreds of thousands, perhaps as many as a million people. That same month, the existence of those camps was also proven by a Canadian student using satellite images.

Conducting independent investigations in Xinjiang is almost impossible

In November 2019, based on 400 internal Chinese government documents, The New York Times described how all-encompassing the surveillance and repression system was. In May 2022, an international consortium of journalists published the Xinjiang Police Files, a vast collection of internal government documents relating to the camps.

Conducting independent investigations in Xinjiang is almost impossible. For years, China has refused to allow independent investigators and NGOs. Journalists who want to investigate the allegations are severely hindered in doing their job. That is why investigators, NGOs and media, such as Follow the Money, are forced to rely on Chinese public sources (media reports, tender documents) and/or leaked documents and satellite images, and why we can only speak of ‘signs’ or ‘indications’: no one can gather hard evidence.

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‘Striking gold’

The strategic cooperation with CR Beer is a big deal for Heineken. Although Heineken has been operating in China since 1983, it has never managed to establish a strong distribution network in that country.

In its 2017 annual report, Heineken stated that sales in China and Vietnam were ‘under pressure’. That year, their share of the Chinese beer market was just 0.5 per cent; their US rival Anheuser-Busch did considerably better at 16 per cent. If Heineken wished to conquer China, something would have to change. But what?

Defeating the Chinese on their own soil seemed impossible. Then why not team up, the Amsterdam headquarters must have reckoned. On 3 August 2018, Heineken announced its plan to form a cooperation with China’s largest brewer with a comprehensive presentation given by chief executive Jean-François van Boxmeer.

The news was picked up all over the globe. Dutch newspaper AD wrote that Heineken had ‘struck gold’. Hardly anyone reported that Heineken had secured the deal with a state-owned company that faithfully aligns itself with the CCP.

In its 2021 ESG annual report, CR Beer noted that the CCP’s leadership is embedded in their organisation. Important business decisions are discussed with the internal Party Committee. In 2021, seventeen top CR Bear managers attended training at the Central Party School, where party executives are trained. The ESG report also reported that of the two hundred young managers, 161 were members of the CCP; that amounts to 81 per cent.

CR’s logo, four white ‘roofs’ on a yellow background, symbolises their ‘consistent loyalty and reliability to the Party’.

Details of the deal

Heineken NV acquired a 40 per cent stake in CRH (Beer) Ltd, statutorily based in the British Virgin Islands. The remaining 60 per cent is owned by China Resources Enterprises (CRE), a wholly-owned subsidiary of the state-owned China Resources Group.

CRH (Beer) Ltd holds almost 52 per cent of the shares in China Resources Beer (Holdings) Co Ltd, listed on the Hong Kong stock exchange. Because Heineken holds only 40 per cent in the joint venture, the Amsterdam-based company’s ultimate indirect stake in CR Beer is 20.67 per cent.

This leaves Heineken with a remaining 20.67 per cent stake in a number of its former subsidiaries, which include three breweries. In addition, it now has a stake in CR Beer’s breweries. Heineken also granted CR Beer a licence to brew Heineken beer. Furthermore, Heineken and CR Beer signed an agreement that stipulates what CR Beer may do with Heineken’s other premium beers.

A significant part of Heineken’s profit comes from the deal with its Chinese partner

CRE, in turn, bought shares in Heineken NV for 464 million euros. That gave the Chinese a 0.9 per cent stake in the Amsterdam-based brewing company.

At the end of the day, the deal cost Heineken almost 2 billion euros, an investment the company expects to recoup over the coming years through royalties and (mainly) dividends.

It is unknown what the deal will yield Heineken on a yearly basis. Its annual reports only show the net profit of all joint ventures and partnerships combined. In 2021, it was 250 million euros, dropping to 223 million in 2022. Heineken writes that the share of the joint venture with CR Beer is ‘material’, meaning that a significant part of the profit comes from the deal with its Chinese partner.

Heineken negotiated the deal directly with China Resources Enterprise. CRE is the incubator of China Resources Group, founded by the CCP, and has developed into one of the biggest companies in the world. CRG consists of a conglomerate of companies, eight of which are listed on the stock exchange. One of them is CR Beer.

State-owned China Resources was granted a ‘state-owned investment company’ status in July 2022. That year, only five companies were given that status, which aims to strengthen competitiveness and industrial structure whilst focusing on the economy and national security.

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Win-win in a growth market

The partnership agreement was signed on 4 November 2018. In short, it comes down to Heineken and CR Beer taking a stake in each other’s companies, the Amsterdam-based brewer selling its three Chinese breweries and CR Beer brewing Heineken beer under licence. After obtaining approval from regulatory and legislative bodies in both countries, the partnership was concluded on 29 April 2019.

It is clear from Heineken and CRE press releases that they both see the partnership as a win-win. Heineken top executive Jean-François van Boxmeer spoke of a ‘long-term strategic partnership’. CR Beer’s widespread distribution network will ensure that Heineken’s beer brands are henceforth available everywhere in China. Additionally, Heineken can benefit from CR Beer’s knowledge of the Chinese market.

Chen Lang, CRE’s chairman, stressed that his company now has premium beers that were previously missing from their range. The Chinese want to explore with Heineken what other premium beers they can brew. ‘In Heineken, we have found the perfect partner to achieve our ambitions in China and − as an international partner − to support us in growing our business outside China,’ Chen commented.

Three years after the partnership started, the expectations of both chief executives have come true. Despite the corona crisis, CR Beer managed to grow. In 2022, sales were up 5.2 per cent compared to 2021.

After Heineken and Heineken 0.0, CR Beer also started brewing Amstel and Heineken Silver. The latter beer, with a low alcohol content (4 per cent), was first launched in Vietnam and soon after on the Chinese market, with great success.

Heineken reported a higher-than-expected profit for 2022. This was mainly related to the strong recovery of the business in Asia. According to Heineken, its economic interest – based on its equity stake in CR Beer – was almost 4.4 billion euros at the end of 2022. Heineken expects that the market will keep growing in the coming years. While some traditional beer markets, such as the European ones, are already quite saturated, there are plenty of growth opportunities in Asia, particularly in China – especially with the support of a partner like CR Beer.

Hop from Xinjiang

But who exactly is this partner, and where does CR Beer get its raw materials from? In recent months, Follow the Money investigated the links between CR Beer and the Chinese government, especially those in Xinjiang province. According to numerous academics, investigative journalists, human rights organisations and most recently, the United Nations Human Rights Council, serious human rights violations are being committed there. On 25 February 2021, the majority of the Dutch House of Representatives concluded that Uyghur genocide was occurring in China.

In its annual reports, CR Beer states that it buys hop from foreign and domestic parties from China’s ‘northwest’. The company does not specify whether that involves Gansu or Xinjiang, the two Chinese provinces where most of the hop is grown. But from what Chinese sources report, it appears that CR Beer sources its hop from state-owned farms and go-betweens in Xinjiang.

In September 2020, a reporter from Tianshan Net News travelled to Xinjiang to cover the hop harvest. At the Xinjiang Agricultural Academy, he learned that 20 thousand mu are planted with hop in that region. In his article ‘Xinjiang hop harvest: the hop is fragrant and intoxicating’, he writes about the harvest in Yuanhu village, located in Hutubi County. The cooperative that manages the hop fields there has a contract with CR Beer. According to him, that ‘guarantees’ the sale of the hop.

Labour transports, surplus labour and ‘poverty alleviation’

Follow the Money found seven areas in Xinjiang that directly or indirectly supply the Chinese brewer. For example, a party official of a hop company in the agricultural Yanqi Reclamation Area says on a local government website that his company has a long-term contract with Chinese brewers, including CR Beer. In the same news report, a CR Beer purchasing manager outlined how the purchased hop goes to their 96 breweries throughout the country.

Sales of hop from Xinjiang sometimes go through a go-between. For example, Junhu Farm supplies CR Beer with hop through the Japanese-Chinese joint venture Sanbaole. Junhu has been growing hop for 15 years on farms owned by the Xinjiang Production and Construction Corps (XPCC), a conglomerate comprising a paramilitary organisation, local governments and (state-owned) companies.

The same XPCC operates camps in Xinjiang where an estimated one million Uyghurs and members of other muslim minorities have been detained. In July 2020, the US government put the XPCC and some of their top executives on a sanctions list for their involvement in human rights violations.

The XPCC and local authorities in Xinjiang are also involved in forced labour on hop farms. Chinese articles on these farms discuss labour transports, surplus labour and ‘poverty alleviation’.

These articles were submitted to Xinjiang experts Darren Byler, a lecturer in international studies at Simon Fraser University in Vancouver, Canada, and Rune Steenberg, a Danish anthropologist working at Palacky University in the Czech Republic.

Byler notes that the terms used point to the unfree, coerced labour seen in almost every sector of the economy in Xinjiang. Steenberg argues: ‘Participation in these labour programmes […] indicates very close cooperation with the Chinese state. This entails a connection to the whole camp system, surveillance system, and repression and discrimination against Uyghurs and minoritised people.’

Follow the Money further found sources that Xinjiang experts say contain hard evidence of coerced labour on those farms. In a follow up, Follow the Money will elaborate on both the relationship between CR Bear and the XPCC and indications of coerced labour.

Many questions, few answers

What does Heineken know about its partner’s relationship with the XPCC and possible forced labour in hop farming? When Follow the Money asked Heineken whether the company has ever investigated – or inquired about – CR Beer’s suppliers, a spokesperson sent a short email on 17 February 2023 saying that Heineken is a minority shareholder of CR Beer. He further referred to CR Beer’s ‘supplier code of conduct’. But this only states that the company requires its 4,300 suppliers to comply with Chinese law.

On 30 March 2023, Follow the Money sent Heineken an email with a detailed summary of our investigation into hop farming in Xinjiang; we asked whether Heineken was aware that CR Beer sources its hop from there..

Four days later, Heineken again replied that it was only a minority shareholder of CR Beer. The spokesman added that CR Beer ‘is listed on the Hong Kong stock exchange and is subject to regulation and governance under the rules for listed companies’.

However, he did report that for the production of ‘Heineken and all our other international brands sold in China, none of the raw hops and barley come from China; these ingredients are 100% imported’. Not a word on our findings on CR Beer’s links with the XPCC or the strong indications of forced labour.

CR Beer did not respond to a series of emails containing questions in Chinese and English. Several phone calls to numbers listed on their website yielded nothing: the numbers were not in operation, or there was no answer. When we asked Heineken if it could provide contact details for a spokesperson or press office at partner CR Beer, it did not respond.

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Heineken maintains that the raw materials for Heineken beers brewed in China do not come from Xinjiang. Moreover it claims that, as a minority shareholder, it is not responsible for what its Chinese partner does in Xinjiang. But is the latter true?

Percentages or principles

Official documents from Heineken and CR Beer itself, such as annual reports, press releases and the previously mentioned presentation by former top executive Van Boxmeer, indicate that the two companies have close ties. In a press release dated 4 November 2018, Heineken characterised the partnership as ‘highly complementary’. Both companies invariably speak of a ‘strategic partnership’ that is very important to both of them.

Heineken says it has sold all its operations in China, but that is not true. In Shanghai, it still owns Heineken China Management, a company with around 75 employees, which, according to CR Beer’s 2022 annual report, supports the Chinese brewer in marketing, communications, production and product development. The head of this Heineken subsidiary is the Canadian Richard Raymond Weissend, who is also a supervisory director at CR Beer and a director at both the parent and a subsidiary company of CR Beer.

Marcel Pheijffer, professor of forensic accountancy

Heineken bears a moral responsibility. It is not a question of the percentage of shares in a joint venture, but of ethics

Lastly, Heineken NV holds 40 per cent of the shares in CRH (Beer) Ltd, and CRE holds a 0.9 per cent stake in Heineken NV.

‘It is quite simple: the two companies are highly interconnected,’ concludes Marcel Pheijffer, professor of forensic accountancy at Nyenrode Business University. At the request of Follow the Money, he reviewed the relationship between Heineken and CR Beer: ‘Their interconnectedness is such that it is not sufficient for Heineken to merely refer to the operating companies in which it is a minority shareholder.’

‘Heineken bears a moral responsibility, especially when it comes to possible human rights violations. It is not a question of the percentage of shares in a joint venture, but of ethics.’

‘Respect for human rights’

‘At Heineken, we do business with respect for people’s fundamental dignity and their human rights.’ This is the first sentence in the Human Rights Policy posted on Heineken’s website. In this policy, the brewer states that it expects its employees, management, people working for Heineken through third parties, suppliers and business partners to subscribe to Heineken’s human rights policy.

Pheijffer believes Heineken’s involvement as a shareholder in possible human rights violations is at odds with the company’s principles formulated in its Human Rights Policy

Likewise, at the request of Follow the Money, Tara Scally, policy adviser at Amnesty, and Channa Samkalden, human rights lawyer at the firm Prakken d’Oliveira, reviewed Heineken’s discretion codes and the company’s involvement in CR Beer.

In its Human Rights Policy, Heineken commits to the guidelines of the OECD for multinational enterprises. ‘The company therefore also has a duty of care. It must identify the risks of human rights violations, including forced labour, to prevent such violations and remedy them where necessary. Companies are responsible for examining the impact of their activities on human rights. The same applies to those of their business relationships,’ Scally argues.

Compliance with guidelines such as those of the OECD is voluntary. But many companies do not comply. Scally: ‘This is why Amnesty is calling for legislation to ensure that companies are obliged to take human rights and the environment into account.’ She hopes Heineken will still investigate whether CR Beer is involved in forced labour.

Samkalden previously represented four Nigerian farmers and the Dutch NGO Milieudefensie in their lawsuit against Shell concerning oil pollution in Nigeria. She finds it particularly interesting that Heineken itself says it is closely involved in CR Beer, that Heineken plays an advisory role in China, according to CR Beer, and that a Heineken board member is on the board of the Chinese beer companies. ‘That implies a big degree of involvement and thus influence on the business operations locally. Ultimately, that is the deciding factor as to whether Heineken is legally culpable.’

She also refers to Heineken’s Human Rights Policy and the fact that the company says it adheres to OECD guidelines. ‘That, of course, emphasises their responsibility even more.’

Given the relationships between Heineken and CR Beer, Samkalden says Heineken has an obligation not only to counter human rights violations but also to prevent them and repair inflicted damage. ‘With all sides confirming that Heineken is in a position to influence the situation in China, the board cannot reasonably hide behind formal ownership.’

Meanwhile, Heineken’s expansion in China continues. Recently, the Chinese website Beer World Network reported that CR Beer is building a giant factory in Xiamen to bottle Heineken. The new factory, on which Heineken’s logo will be displayed prominently, is expected to produce 60 thousand bottles and 72 thousand cans of Heineken per hour.

The construction of this mega factory requires the expropriation of houses and land. The report does not say whether residents and owners will be compensated and whether new houses will be arranged for them.

How did we investigate this?

For this article, FTM examined Chinese public articles on hop farming. We used government documents, websites of local authorities, official WeChat accounts and local Chinese media. By following reports such as Until Nothing is Left, FTM has found articles with terms that could indicate forced labour. 

With the help of experts, FTM selected a number of key terms indicating coerced labour. We submitted the articles we found as a result of those terms to these experts for their review.

Are these Chinese media reports reliable?

Danish investigative journalism platform Danwatch published articles in March this year about beer giant Carlsberg, which has a stake in factories in Xinjiang. They conducted investigations the same way as FTM and asked Jørgen Delman, Professor Emeritus of China Studies, about the reliability of these sources.

Delman argues that Chinese articles – although they always offer a certain interpretation of a story – are quite reliable. Authors use propaganda and embellishments to some extent, but they will not easily publish untruths about companies.

Take the purchasing manager at the beginning of this article: if his statement were made up, it would create unnecessary confusion at the farm and CR Bear. We always gathered multiple sources before assuming anything to be true. In this case, that was another medium, which, in a different year, again referred to CR Beer as a long-term buyer.

Xinjiang investigators also use public sources to do research this way because they are not allowed into China.

(Local) governments in China often do present data more positively than it really is, especially when it comes to production volumes. Nevertheless, data from Chinese sources give us an indication of the actual intentions of the parties involved. That is why FTM has used that data – albeit with caveats – in several places.

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