This year marks the 80th anniversary of Coca-Cola's entry into China, now its fourth largest market after the US, Mexico and Brazil.
The world's largest beverage company, which recently launched an $80 million global research center and new China headquarters in Shanghai, is planning to boost investment in sales infrastructure and product range in the country, a market that could become Coca-Cola's largest, the company says.
Doug Jackson, who became president of Coca-Cola China in April, talks with China Daily reporter Zheng Lifei about his company's goals and strategy in China.
Q: As the new head of China operations, what's your short-term goal and long-term vision for the Chinese market?
A: Our goal in the next few years is to sustain the current strong growth momentum. The non-alcohol drink market grows by 14 to 15 percent a year in China, and we hope we can outdo the average market performance to increase our sales volume and market share. We are also planning to expand our product range and provide more choices for our customers.
We believe that China could become the largest market for Coca-Cola, however, it is hard to predict when it will happen, but it certainly will. Our long-term vision is to make China our largest market.
Q: What will be your priority in the coming years, especially in the next two years? You said recently that you are going to put a significant investment in infrastructure. Can you be specific about the plan?
A: Yes. I think in the next few years we will continue to invest in the vendor equipment area. We'll continue to increase our cool drink equipment across China very aggressively.
While we grow those areas, our bottler is also going to invest in trucks and distribution facilities and sales people. So we have a huge increase in the number of sales officers in some of smaller towns and cities as we open them up or increase their infrastructure.
Of course, we will also invest in our R&D center. We will have about 200 people, up from the current 40. And we will make significant investments in the next two years in research and development. These are principally some of the areas where we will be aggressive.
QCoca-Cola has carried out some major acquisitions in America. Does the company have a similar plan for China, and will the recent dispute between the French food and beverage company Danone and Wahaha have any impact on your acquisition plans in China?
A: well, I think in terms of our acquisition plans, we would always continue to look at everything that happens in the marketplace. There are many companies involved in our business in China and the non-alcoholic drink business is very big in the country.
But we are still growing organically. Our sales grew by 18 percent in the second quarter (in Chinese market). This is huge in terms of volume and a big organic growth.
If such growth slows then perhaps we would look at acquisitions more closely, and then look at everything and see if the opportunities stay.
We would certainly keep watching the developments between the companies you mentioned, Danone and Wahaha.
Q: What kind of companies will you target if you are going to make such acquisitions? Will the bottling companies or local beverage makers be your priority?
A: I think we will just make sure that we understand everything in the industry. We wouldn't specifically target anyone. I think currently we have wonderful partners, a strong partnership with COFCO, with which we have just opened, a new bottling factory in Jiangxi Province. And we have a very strong partnership with Swire, another longstanding partner. So we don't see any change to that partnership.
Q: What do you perceive will be the major challenges for you to grow your business in the Chinese market?
A: I think there are quite a number of challenges. The first is trying to calculate the speed of our investments. The challenge is try to estimate how will this growth continue in the next 3, 5, 10 years. So what will be required on our investment capabilities in factories, bottling lines, infrastructure and people.
Secondly, it's a very competitive market. Everybody knows China is a huge potential market and you should compete fast and aggressively to win in the market. Thirdly, the pace of change in the Chinese market is very quick. Obviously if you are not on top of your consumers and competitors, and have the R&D capacities to launch new products, then you'll fall behind very quickly. You need to make sure you're running faster than others, or you will get behind, so these I think are major challenges.
(China Daily August 7, 2007)
