Page 288 - 2017 White Paper
P. 288
7 White Paper on the Business Environment in China
announced its first developmental licensee, Kunming “The beverage market is quite competitive right now
North Star Group, what will help the brand expand on the and Coke is going to have to do a lot more acquisitions
Mainland (Li 2011a). rather than growing through organic growth”,
commented a Shanghai-based analyst. Nevertheless,
McDonald’s, like Yum!, also reported lower China market data indicates that “Coca-Cola is still the leading
same-store sales in 2012 but only for October (Burkitt drinks maker in China [and] held 16 percent market share
2012). by total volume in 2012” (Reuters 2013).
More recently, Reuters reported that the growth of Danish brewer Carlsberg, meanwhile made headlines
McDonald’s, Yum! and others had been hit as “Chinese by expanding its ownership of the domestic Chongqing
consumers are increasingly opting for healthier Brewery for a total stake of 60 percent. “As majority
alternatives in food and drink” (Reuters 2013). shareholder it will be easier for Carlsberg to implement
efficiency programs to increase profitability, and integrate
Yum!’s sales also fell after CCTV ran a report accusing the business with its existing breweries in China”, Reuters
some of the firm’s poultry suppliers of misusing antibiotics observed (Jensen and Jourdan 2013).
as well as the April 2013 outbreak of bird flu. Significantly,
The Shanghai Food and Drug Administration investigated “The Chinese beer market is estimated to be worth
the chicken contamination incident. It did not bring a around 451 billion yuan ($74 billion) in 2013 with a
case against Yum! China and did not assess a fine—see volume of 53 billion liters”, analysis agency Euromonitor
below for on CCTV’s apparent editorial campaign against said (Jensen and Jourdan 2013).
foreign enterprises in China (Baertlein and Jourdan 2013).
Finally, international coffee behemoth Starbucks was
Sugared beverage manufacturer PepsiCo is also attacked on apparently political grounds in a high-profile
investing heavily in the PRC, but in infrastructure and CCTV broadcast accusing the company of unfair pricing.
R&D. A total of $2.5 billion amount is reported to be
going toward building additional production capacity “The 18-minute Starbucks report, which appeared to
in four provinces by 2012, in addition to a research use hidden cameras, showed CCTV reporters in Beijing,
and development center tasked with developing new Chicago and Mumbai asking people on the street what
products for the Asian market, agricultural production they thought about the price and value of Starbucks
and spending on branding (PepsiCo. 2010). coffee”, writes Reuters. “It criticized the Seattle-based
company for charging higher prices than in others
In late November 2011, China Daily reported the markets, which it said helped Starbucks earn ‘fat’ profit
company’s plans to open 10 to 12 new manufacturing margins given its costs in China were not very high”
plants across a greater number of Mainland provinces (Rajagopalan 2013).
over the coming three to five years (Li 2011b).
The piece was reportedly instigated by a non-editorial
Meanwhile, The Coca-Cola Company opened three executive and appeared to be part of a series of attacks
bottling plants in 2010 (in Inner Mongolia, Henan and on foreign brands which also included attacks on Apple,
Guangdong), which brought the total number to 42 Samsung Electronics, Yum! Brands’ KFC restaurants and
in the PRC alone (Ding 2010), and in September 2011 GlaxoSmithKline in addition to carmakers Audi, Subaru,
announced a planned investment of $4 billion before Jaguar and Land Rover (Rajagopalan 2013).
2014, most of which will be spent on improving its
bottling and distribution infrastructure (Wei 2011). It was quickly criticized for its unprofessionalism.
“Internet users chided the network for tackling a minor
Following up on its 2011-2014 investment plan, in late issue compared to China’s many challenges. Economists
2013 Coca-Cola announced its intent to an additional said CCTV had failed to grasp the concept of supply and
$4 billion to build more manufacturing plants in China demand, noting it was normal for a company to charge
between 2015 and 2017 (Reuters 2013). different prices for its products in different countries”
(Rajagopalan 2013).
A Coca-Cola spokeswoman noted that the company
“is also open to deals with local firms” (Reuters 2013).
288
announced its first developmental licensee, Kunming “The beverage market is quite competitive right now
North Star Group, what will help the brand expand on the and Coke is going to have to do a lot more acquisitions
Mainland (Li 2011a). rather than growing through organic growth”,
commented a Shanghai-based analyst. Nevertheless,
McDonald’s, like Yum!, also reported lower China market data indicates that “Coca-Cola is still the leading
same-store sales in 2012 but only for October (Burkitt drinks maker in China [and] held 16 percent market share
2012). by total volume in 2012” (Reuters 2013).
More recently, Reuters reported that the growth of Danish brewer Carlsberg, meanwhile made headlines
McDonald’s, Yum! and others had been hit as “Chinese by expanding its ownership of the domestic Chongqing
consumers are increasingly opting for healthier Brewery for a total stake of 60 percent. “As majority
alternatives in food and drink” (Reuters 2013). shareholder it will be easier for Carlsberg to implement
efficiency programs to increase profitability, and integrate
Yum!’s sales also fell after CCTV ran a report accusing the business with its existing breweries in China”, Reuters
some of the firm’s poultry suppliers of misusing antibiotics observed (Jensen and Jourdan 2013).
as well as the April 2013 outbreak of bird flu. Significantly,
The Shanghai Food and Drug Administration investigated “The Chinese beer market is estimated to be worth
the chicken contamination incident. It did not bring a around 451 billion yuan ($74 billion) in 2013 with a
case against Yum! China and did not assess a fine—see volume of 53 billion liters”, analysis agency Euromonitor
below for on CCTV’s apparent editorial campaign against said (Jensen and Jourdan 2013).
foreign enterprises in China (Baertlein and Jourdan 2013).
Finally, international coffee behemoth Starbucks was
Sugared beverage manufacturer PepsiCo is also attacked on apparently political grounds in a high-profile
investing heavily in the PRC, but in infrastructure and CCTV broadcast accusing the company of unfair pricing.
R&D. A total of $2.5 billion amount is reported to be
going toward building additional production capacity “The 18-minute Starbucks report, which appeared to
in four provinces by 2012, in addition to a research use hidden cameras, showed CCTV reporters in Beijing,
and development center tasked with developing new Chicago and Mumbai asking people on the street what
products for the Asian market, agricultural production they thought about the price and value of Starbucks
and spending on branding (PepsiCo. 2010). coffee”, writes Reuters. “It criticized the Seattle-based
company for charging higher prices than in others
In late November 2011, China Daily reported the markets, which it said helped Starbucks earn ‘fat’ profit
company’s plans to open 10 to 12 new manufacturing margins given its costs in China were not very high”
plants across a greater number of Mainland provinces (Rajagopalan 2013).
over the coming three to five years (Li 2011b).
The piece was reportedly instigated by a non-editorial
Meanwhile, The Coca-Cola Company opened three executive and appeared to be part of a series of attacks
bottling plants in 2010 (in Inner Mongolia, Henan and on foreign brands which also included attacks on Apple,
Guangdong), which brought the total number to 42 Samsung Electronics, Yum! Brands’ KFC restaurants and
in the PRC alone (Ding 2010), and in September 2011 GlaxoSmithKline in addition to carmakers Audi, Subaru,
announced a planned investment of $4 billion before Jaguar and Land Rover (Rajagopalan 2013).
2014, most of which will be spent on improving its
bottling and distribution infrastructure (Wei 2011). It was quickly criticized for its unprofessionalism.
“Internet users chided the network for tackling a minor
Following up on its 2011-2014 investment plan, in late issue compared to China’s many challenges. Economists
2013 Coca-Cola announced its intent to an additional said CCTV had failed to grasp the concept of supply and
$4 billion to build more manufacturing plants in China demand, noting it was normal for a company to charge
between 2015 and 2017 (Reuters 2013). different prices for its products in different countries”
(Rajagopalan 2013).
A Coca-Cola spokeswoman noted that the company
“is also open to deals with local firms” (Reuters 2013).
288
