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).

‘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’.

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.

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.

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.