(Yicai Global) Oct. 13 -- Sichuan province's 'exhibition king' Deng Hong, who was previously imprisoned for financial crimes, has gone on a spending spree with his recently founded Huanqiu Jianiang Wine Co., buying out a number of producers as the price of Chinese liquor baijiu continues to soar.

However, insiders told Yicai Global that they're cautious about the takeovers.

"Huanqiu Jianiang's investment in the sector aims to open up the entire industrial chain," said Cai Xuefei, a baijiu analyst. "However, it lacks experience in producing, promoting and distributing baijiu products. The company has bought some little-known liquor makers that have no well-known or core products. It will be quite difficult for it to consolidate firms along the industrial chain by controlling upstream and downstream resources. I'm not very optimistic about that."

"The liquor industry remains a safe haven, as baijiu products' value is set to stick or even increase further," Xiao Zhuqing, general manager of Shandong Wenhewang Wine Group, told Yicai Global. "Though not many mergers or acquisitions have happened yet, there are plenty under discussion."

Deng is very market-savvy, and what he's doing now is more symbolic than substantive, Xiao said. "His company is still crossing the river. It's stepping on the stones and cultivating talent. Real, major acquisitions won't happen for another two or three years. However, it should still be listed baijiu makers carrying out the mergers and acquisitions."

Huanqiu Jianing recently set up a liquor maker in Maotai, in China's southwestern Guizhou province, and took another local distributor.

The company holds a 70-percent stake in Guizhou Province Renhuai Maotai Town 1915 Wine Co. and a 51-percent stake in Guizhou Province Renhuai Maotai Town 1915 Wine Sales Co., according to the National Enterprise Credit Information Publicity System. Zhang Jiahao, general manager of Huanqiu Jianiang, is the legal representative of the two companies.

Zhang has previously publicly stated that the company is committed to becoming a consolidation platform in the liquor industry, featuring interaction between industry players and investors.

Huanqiu Jianiang first cropped up earlier this year, after Luzhou municipal government in Sichuan province signed investment contracts worth CNY8 billion (USD1.21 billion) with the firm and 1919 Wine & Spirits Platform Science and Technology Co. [NEEQ:830993] on April 24.

Under the agreements, Huanqiu Jianiang will build an entertainment park based on China's liquor culture in Luzhou, and a strong-flavor liquor production base in Longmatan, also in Sichuan.

Since then, reports of the company taking over liquor makings have kept coming in. In just two months, the company bought Luzhou Guocui Wine Co. and Qionglai Linqiong Wine Co.

Yueyang Economic and Technological Development Zone (YETDZ) also invited Zhang and his team to visit Hunan province, where the zone is located, on Sept. 26, its website said. Wen Chunfang, the YETDZ's work secretary, said he hopes that Huanqiu Jianiang and Hunan Yueyanglou Wine Co. can partner up to promote the latter's famous liquor products.