Chinese "Economic Reform and Opening up" policy was started in 1978; in the same year, the Coca-Cola Company returned to the Mainland market, becoming the first foreign enterprise who entered Mainland China after 1949. Therefore, its 30-year exploration can be regarded as an epitome and reflection of foreign direct investment in China. In the following chapters, I would like to focus on three aspects: Coca-Cola's return journey; its strategies in Chinese market and the competition against local players. As we already had the example of KFC in China I found it interesting to focus on the example of another international company in China, especially because Coca-Cola is the first one to enter Mainland's market.
In 1927, the Coca-Cola Company made its Chinese presence with two bottling plants established in Shanghai and Tianjin. Three years later the third plant was added in Qingdao. The Shanghai plant ranked as the largest Coca-Cola bottling plant outside the United States in 1933 and became the first plant outside the United States to sell one million cases annually in 1948.
With the foundation of People's Republic of China (PRC), all foreign companies were asked to leave. The Coca-Cola's plants in the Mainland were nationalized and the equipments were used for the production of local soft drink.
[...] To sum up, one can assert that foreign competitors such as Uni- President and Kirin Brewery Company are already implementing many means to grab as many market shares as they can and especially in the booming tea- drink oriented market. This constitutes a main threat for Coca-Cola as the tea-drinks market is progressively overcoming the carbonated-drinks market. A domestic competitor “Future Cola” produced by Wa Ha Ha: Future Cola is manufactured by Hangzhou Wahaha Group. This group holds market shares in China, and constitutes the third-largest manufacturer of fizzy soft drinks in China behind Coca-Cola and Pepsi Cola. It is even distributed abroad (by Reed's, Inc. [...]
[...] (Source Euromonitor) The first step of this strategy is the launch of an already existing brand in their range: Minute Maid, which is specialized in fruit juices. The second step has recently hit the headlines: The Coca-Cola Company's made $ 2.3 billion bid in September for premier juice maker China Huiyuan Juice. China is Coca-Cola's fourth largest market, and the proposed transaction would be the company's largest overseas acquisition. If the deal goes through, it could strengthen Coca-Cola's stranglehold in one of the world's fast growing beverages market. [...]
[...] Coca-Cola holds a 12.5 percent share in both companies and has agreements with them in the areas of plant management, sales, and distribution. Raw materials (carbonic acid, granulated sugar, etc ),and packaging are purchased locally, thanks to local suppliers The supplies Coca-Cola requires to run its business in China include packaging materials, drink ingredients, bottling-line equipment, construction services, and business and financial services. Since it opened its first joint-venture bottling plant, the company has worked to build a fully domestic network of suppliers. [...]
[...] In 2005, The Coca-Cola Company had equity positions in 51 unconsolidated bottling, canning and distribution operations which produced approximately 58% of volume: 36% of Coca-Cola Enterprises which produces (by population) for 78% of USA of Canada and 100% of Great Britain (but not Northern Ireland), continental France and the Netherlands, Luxembourg, Belgium and Monaco 40% of Coca-Cola FEMSA, S.A. de C.V. which produces (by population) for 48% of Mexico of Brazil of Colombia of Guatemala of Costa Rica, Ecuador, Nicaragua, Panama, Peru and Venezuela, and 30% of Argentina 24% of Coca-Cola Hellenic Bottling Company, S.A. [...]
[...] Coca Cola Company Strategy in China Reminder: Coca-Cola Company's international strategy Maintain brand image The company has always done its best to maintain high brand image and product quality. It has mainly been focusing on advertising and sponsorship. As a result, the Coca-Cola drink has a high degree of identification with the United States itself, being considered by some as an "American Brand" or to a small extent as an item representing America. Coca-Cola's advertising is frequently credited with the "invention" of the modern image of Santa Claus as an old man in red-and-white garments; however, while the company did in fact start promoting this image in the 1930s in its winter advertising campaigns, it was already common before that. [...]
Online readingwith our online reader
Content validatedby our reading committee