Coke to invest $4b in China
Updated: 2011-08-19 07:57
By Liu Jie (China Daily)
Coca-Cola Co's Chairman and Chief Executive Officer Muhtar Kent during an interview in Shanghai on Thursday. The company's sales in China topped 1 billion units in the first half. Provided to China Daily
The US drinks maker may list on Shanghai's international board
SHANGHAI - Coca-Cola Co, the world's largest maker of beverages by sales, announced on Thursday that it will join with its bottling partners to invest $4 billion in China between 2012 and 2014.
The US-based company's Chairman and CEO Muhtar Kent also said that Coca-Cola is interested in a possible listing on the proposed international board on the Shanghai Stock Exchange. Kent said that the new investment will focus on innovation, infrastructure and expansion of production capacity, partnerships, brand-building and sustainable development programs.
The new commitment follows Coca-Cola's three-year $2 billion-plus investment plan, which was announced in 2009. The plan is now "ahead of schedule, $1 billion ahead", according to Kent.
The Atlanta-based beverage maker and its China bottling partners, Swire Beverage Ltd and COFCO Coca-Cola Beverages Co Ltd will invest more in China over the coming three years than they did in the entire period between 1979 and 2009, when the company's investment totaled $2 billion.
Coca-Cola opened five plants in China in 2009 and 2010. The facilities are situated in the Xinjiang Uygur and Inner Mongolia autonomous regions, and the provinces of Jiangxi, Hubei and Henan.
This year, it has already opened a new plant in Sanshui, Guangdong province. The company will launch another in Yingkou, Liaoning province, and break ground on a third facility in Shijiazhuang, Hebei province.
The company's business in China has, directly and indirectly, created about 500,000 jobs in the country. "The plants that we have inaugurated in recent years in China are doing very well, flourishing and are hiring more people than we originally estimated," said Kent.
The Shanghai Stock Exchange is set to launch an international board that will allow foreign companies to list on the Chinese mainland. "We have been in discussions with Chinese authorities, and I believe that when the time is right, when the regulatory framework is clearer, and the opportunity arrives, Coca-Cola will be interested in being a part of it," said Kent.
HSBC Holdings Plc, Unilever Plc and Standard Chartered Plc have also expressed an interest in listing on the board.
"I think it will be good for Chinese investors to be able to invest in global companies and companies like my own, which has a global reach, the best-known trademark in the world, and is the best-known brand in the world. It will be of mutual benefit," he added.
Coca-Cola reported solid results in the second quarter, as global beverage sales rose 6 percent in both the quarter and year-to-date periods. Meanwhile, the company's business in China grew 21 percent in the first half as sales topped 1 billion units, equal to a full-year delivery for the company five years ago.
"Our (orange) juice brand Minute Maid Pulpy is the No 1 juice brand in China and continues to grow in double digits, ahead of our targets," said Kent. Minute Maid Pulpy is the first billion-dollar brand the company has originated outside of the United States.
China is Coca-Cola's third-largest market after the United States and Mexico. The beverage company now has more than 48,500 local employees and more than 40 bottling plants in China.
China's soft drinks market has maintained annual double-digit growth on average for more than 10 years. Sales of soft drinks, including soda, juice, tea and bottled water, almost doubled to 270 billion yuan ($41.5 billion) in 2010, according to the market researcher Euromonitor International.
At the end of 2010, Coca-Cola had market share of 17 percent in China, while the Tianjin-based food producer and distributor Tingyi Holding Corp held 13 percent and the Hangzhou-based food and beverages maker Hangzhou Wahaha Group Co Ltd was at 7 percent. Coca-Cola's US rival PepsiCo Inc was fourth in the list with 6 percent, said Euromonitor.
In 2010, Coca-Cola initiated its global "Vision 2020" target of doubling system revenues and servicing by the end of the decade and Kent said he sees China's role as a pillar of that strategy. "Some of the plants we are building in China are the most productive, most modern factories Coca-Cola has in the entire world," the CEO said.