China-based liquor brand Swellfun has suspended its $370m project of the construction of a Chinese liquor brand industrial park in Chengdu.

The company’s decision follows the recent anti-graft campaign initiated by Chinese President Xi Jinping that involves the targeting of political parties, government, military and state-owned company officials suspected of corruption.

The decision will affect US-based Diageo that produces popular alcoholic beverage brands including Guinness, Johnnie Walker and Smirnoff as Swellfun is a 100%-owned subsidiary of Diageo.

The struggling Swellfun had been acquired by Diageo in 2013, following which, its sales reportedly decreased by 78% during 2013-2014. The company also had deficits of CNY154m ($24.83m) and CNY418m ($67.4m) during the two years respectively.

Diageo’s sales in the country further decreased by 14% in 2014, for which the company held the government’s anti-graft campaign and accompanying frugality drive responsible.

Additionally, Diageo’s policy of focusing on the production of Western brands was also cited as a reason for the bad sales as Swellfun was an established indigenous liquor brand.

According to Want China Times, Swellfun had planned to construct a distillery with annual capacity of 28,000 tons and a storage facility with 100,000-ton capacity in Qianglai.

The increase in the awareness of consumers and Diageo’s refusal to subsidise sales channels are also believed to have led to the dip in demands in the country.

However, Diageo CEO Ivan Menezes is still hopeful that China’s huge gross domestic product, its emerging middle class and its urbanisation trend will pull the company up.