IMPRESSIVE growth from its beverage unit saw Uni-President Enterprises Corp's revenue hit 14 billion yuan (US$1.75 billion) on the mainland last year, a double-digit increase from 2005, according to the president of its mainland subsidiary.

Taiwan's largest food and beverage maker saw sales from its beverage unit jump 30 percent last year, while its instant noodle business grew only three percent, due to a price war and consumers paying more attention to eating healthy foods, according to Wu Chung Lin, president of President Enterprises (China) Investment Co Ltd.

"The Chinese mainland market has not matured yet," Wu said in Beijing over the weekend. "Asia still has huge demand for instant noodles as the pace of living increases."

The Taiwan-listed company was the second largest maker of instant noodles on the Chinese mainland last year, holding 12.8 percent of market share, according to AC Neilson. Its biggest rival, Taiwan-based Ting Hsin International Group, held 35 percent of market share with its Master Kong brand.

President has been actively seeking mergers and acquisitions involving mainland partner for both its beverage and instant noodle units to accelerate its development, Wu said.

President agreed earlier this month to buy into Nissin Hualong Food Co Ltd for 300 million yuan. Nissin is the third-largest instant noodle maker on the mainland.

President hopes to benefit from a broadened sales network in second- and third-tier cities, allowing it to boost sales in northern and northeastern China.

The company has bought stakes into Wandashan Dairy Co Ltd, Jin Mailang Beverage (Beijing) Co Ltd and Jian Libao Trading Co Ltd to grab a bigger market share of the fruit juice, dairy and carbonic beverage markets.

President has invested US$42.6 billion in the mainland since entering the market 15 years ago, according to Wu. It currently has more than 50 mainland subsidiaries and manufacturing facilities.

US brewer Anheuser-Busch is to expand its Chinese distribution outlets as it looks to offset declining sales growth in its domestic operations.

The company joins a growing number of brewers who are looking to the dynamic Chinese beer sector to help buoy stagnant markets in Europe and the US.

YR Cheng, AB's managing director for China, told AP-Foodtechnology.com that the country has become a highly significant market for the group's global operations.

"As the largest-volume and fastest-growing beer market in the world, China is the most important market for Anheuser-Busch outside the United States," he said.

Cheng added that to cater for the demand the company will gradually expand distribution of its brands into the country's county level cities, with each boasting a minimum population of one million people.

"Anheuser-Busch will begin expanding to county-level cities in 2007 with the expansion being completed over the next five years," he said. "In addition to Budweiser, Anheuser-Busch will continue to introduce Harbin premium brands into 33 new markets this year."

Along with increasing its position in the country, Anheuser-Busch added that it was also working to increase the profitability of its brands in the country.

In particular the company believes it is finding success in encouraging the country's consumers to switch their palettes to the group's more premium brands.

"We've been committed to a strategy of developing a profitable business in China, and we've been successful," added Cheng. "That sets us apart from other international brewers."

The move could prove to be prudent for Anheuser-Busch, which had a moderate profit growth of 3.1 per cent in its key US market during 2006.

Howver, the company is not the only major brewer to take notice of the opportunities in the country.

In its latest third quarter results rival SABMiller announced that emerging markets like China had helped the group overcome disappointing performances of its brands within North America and South Africa.

Beer sales growth of more than 30 per cent in China during the quarter reflected SABMiller's determination to out-gun rival brewers through its joint venture there, China Resources Snow Breweries.

After the initial gold rush, the race is now on in China to build a truly national beer brand, and Cheng is confident that Anheuser-Busch is in a strong position to do it.

"While China remains a challenging market, we believe Anheuser-Busch has the right combination of product quality and taste, brand positioning, and long-term commitment to continue our success," he added.

A possible move by the Chinese government to repeal tax incentives for foreign investors could prove a massive setback to the country's food industry, warns an expert on Asian affairs.

Dr Willem Van Der Geest, director of the European institute for Asian Studies told AP-Foodtechnology.com that any potential move to review or change current tax rules could decrease stability across the entire market.

"China's point of view is of great concern," he said.

"The possibility of removing these incentives could throw further doubt over the sustainable growth of China's economy and business."

Any potential cessation of tax breaks will be particularly significant to the food industry, which as one of the biggest investors in the country has played a significant part in driving economic success in China.

According to Lyndsey Anderson, a senior analyst with Business Monitor International, China's food industry is one of the country's most dynamic sectors for both foreign and domestic investors.

"Multinational food and drink firms are investing so heavily in China because there is simply no other opportunity like it at present," she said.

"Strong economic growth is rapidly expanding the size of the country's middle class, which can now afford to spend its improved disposable incomes on non-essential food and drink items."

Van Der Geest suggests that any moves to restrict incentives, besides setting back enthusiasm amongst foreign investors, could also have a negative impact on domestic food companies in china as well.

China saw its stocks drop by nine per cent during the course of last month, and the added uncertainty over future investment could continue to hinder the industry and the wider economy.

"Any moves by the government to decrease liberalism on investors will only serve to reduce the attractiveness and growth of the country's markets," he said.

"Discouraging foreign investment counters the officially stated policy of open door trading and technological transfer."

The comments come amidst speculation within the local media, that authorities may look abolish the current incentive plans at China's annual legislature session to be held this week.

The issue has been driven by criticism from local companies that tax breaks offers an unfair advantage to foreign companies and needs to be changed.

Despite fears over the possibility of economic decline in the country, some parties at the talks see the removal of tax breaks as an important part of increasing the security of domestic food production in China.