Liquor and gold are a heady combination and it is claimed there are health benefits to imbibing the expensive concoction, too.

According to Compendium of Materia Medica, a Chinese medical work by Li Shizhen in the Ming Dynasty (1368-1644), gold calms nerves, has a positive effect on bones and treats coldness.

The fashion of drinking gold liquor started in early 2000 in Southeast Asia countries and arrived in China around 2003. The alcoholic beverage is a combination of 0.12-micron pure gold flakes and baijiu, or white liquor.

The major production area for such liquor in China is Linglong township, Zhaoyuan, Shandong province, known as "Chinas' Gold Capital".

The factory started to produce gold liquor in 2003 and currently makes 200 tons every year. That's 10 percent of its total production.

Bing Zhanzheng, who is in charge of sales at the company, says most customers buy the gold liquor as a gift.

"This year, we gave Tsinghua University 240 bottles of gold liquor as gifts for the 100th anniversary of its founding," Bing says. "Some of the liquor was used at a banquet."

Most gold liquor from the factory has a gold-plated ornament inside the bottle.

Though gold liquor is a simple combination of gold flakes and alcohol, its production is complicated. The company has a special workshop for processing gold flakes and another factory in Guangdong province makes the gold-plated ornament.

The next step uses a special glue to stick the ornament and base together. Then, workers wearing white cotton gloves put the pure gold flakes into the bottle very carefully, as the flakes can easily turn into powder.

A bottle of 500 ml gold liquor (55 percent alcohol) sells for 588 yuan ($92) in Zhaoyuan markets. But the price goes up to 1,000 yuan or more in restaurants in Beijing and Shanghai.

Drinking gold liquor is popular in countries such as India, Indonesia and Austria.