A PepsiCo Inc employee delivers beverages in a grocery store. The company said if its deal with Tingyi is approved, it will not change the employment contracts at its bottling operations. Paul Taggart / Bloomberg

BEIJING / FUZHOU - PepsiCo Inc on Tuesday said that its proposed strategic alliance with Tingyi (Cayman Islands) Holding Corp will not mean changes in employment contracts at its bottling operations in China, after protests against the deal broke out at five bottling plants on Monday.

"We are a responsible employer and are highly committed to protecting the interests and benefits of our employees," the company said in an e-mailed statement.

"If the deal is approved, there will be no change in employment contracts at our bottling operations."

On Nov 4, Tingyi, which owns the Master Kong brand, said it would swap a 5 percent stake in its beverage business for PepsiCo's entire bottling operations in China.

In exchange, PepsiCo will transfer equity interests in all of its 24 bottling operations in China to Tingyi.

There are about 20,000 employees at PepsiCo's bottling operations in China, according to industry experts.

The deal has yet to be approved by the government.

At PepsiCo's plant in Fuzhou, capital of East China's Fujian province, workers asked for two days off on Tuesday to show their displeasure over the possible alliance.

Out of 1,300 workers at the factory, "about 1,100 did not show up on Tuesday", a worker who declined to be identified said.

"PepsiCo agreed to keep everything in the contract unchanged in the next two years, but we are worried that when the new employer takes over the business, some of us will be laid off," said an employee in the procurement division who has worked at the factory for seven years.

For some senior workers, the takeover might mean bitterness.

"I've been working in the factory for 37 years and the sudden change of employer makes me feel desperate. I am afraid I won't be able to adjust to the new rules of the company," said a 55-year-old worker surnamed Zhang, who drives a bus for the factory.

Hundreds of employees at PepsiCo's bottling plant in Pixian county in Chengdu, the capital of Southwest China's Sichuan province, demonstrated to express opposition to the alliance and calling for the protection of employees' rights, according to Jiang Hai, an official with the county bureau of justice.

Scores of staff marched at the site, holding banners to rally public support, said Jiang, whose colleagues were sent to the site to keep order.

Protests were also reported at bottling plants in Chongqing, Nanchang and Changsha, the Economic Observer reported.

A public relations manager at PepsiCo Greater China, who declined to be identified, said on Tuesday: "This is not a strike. Our employees didn't stop working and our production didn't stop."

PepsiCo, the world's second-largest food and beverage maker by revenue, said in May last year that it expected to invest $2.5 billion in its operations in China during the coming three years.

Tingyi reported a net profit of $130.5 million in the third quarter, down 35 percent year-on-year. Revenue for the beverage business dropped 8 percent to $1.16 billion, according to company documents released on Monday.

Hong Kong-listed Tingyi's shares have gained about 10 percent so far this year, compared with a roughly14 percent decline in the benchmark Hang Seng Index.

Tingyi's shares rose 2.75 percent to HK$22.40 ($2.88) on Tuesday. PepsiCo fell 0.76 percent to $62.80 in early New York trading.

China Daily

(China Daily 11/16/2011 page14)