Coca Cola In China Case Study

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Market Entry Strategies Case Study


Case Title:

Coca-Cola in China

Publication Year : 2005

Authors: Sushma, Souvik Dhar

Industry: Beverages

Region:China

Case Code: MES0021

Teaching Note: Available

Structured Assignment: Available


OR



The history of sugar in the Caribbean can be traced back to the 17th century when the Dutch introduced sugarcane to these islands in the 1640s. Since then, the sugar industry had been the backbone of the Caribbean economies. In 1965, the Caribbean region, with its ten sugar exporting countries, had a peak annual sugar production of 1.4 million tons. However, in just thirty years, by 1995, the Caribbean sugar production had dropped to 0.8 million tons per annum and the region was left with only six sugar exporting countries.

  • To highlight the strategies adopted by the company to become the leading soft drinks manufacturer in China
  • To discuss whether Coca-Cola would be successful in holding on to its leadership position in the Chinese soft drinks industry.

Coca-Cola; Soft drinks industry in China; Carbonated and non-carbonated drinks; �Open door� policy; Growth Strategies Case Study; Technological development; Bottling and distribution activities; Joint ventures; Retail distribution network; Growth strategy; Marketing and promotion activities; Domestic competition


Soft Drinks Industry in China
Coca-Cola in China
Coca-Cola in Total Soft Drinks Demand

 

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Background Note

In the early 1920s, Coke made its entry into China with bottles imported from its plant in the Philippines. In an effort to localize production, two bottling plants were opened in 1927. These plants were located in Shanghai and Tianjin, and in 1930 another was opened in Qingdao.

Coke faced setbacks during the World War II when the Japanese occupied China and took over its plants. However, in 1946, after the war ended Coke opened a bottling plant in Guangzhou. The Shanghai plant had the distinction of being the most up-to-date and fastest bottling line in China, and in 1948 became the first overseas plant to make annual sales of more than 1 million cases. This was great progress for Coke, even though the customers in Shanghai were mostly expatriates. When the People's Republic of China (PRC) was formed in 1949, all foreign companies were asked to cease operations and leave the country. Coke shut down operations in China and its bottling plants were nationalized by the government.


State owned companies were formed to produce beverages and some of these companies used the former Coke plants to produce soft drinks. In case of the Shanghai plant, the equipment was shipped to Beijing to be re-installed in a factory there.

For almost 30 years after the PRC was formed, foreign direct investment and direct production activity by a foreign company were not allowed. Only the state-owned foreign trade corporations were allowed to have contact with foreign businesses and to carry out exporting and importing of goods.

Coke's Re-Entry in China

In December 1978, Deng Xiaoping (Deng)7 announced the 'open door policy'. This policy was part of Deng's larger plan for economic reforms in China. An open door policy meant that China would allow foreign trade and investment...

Excerpts >>



7] Deng Xiaoping was the Vice-Chairman of the Central Committee. The Central Committee is the highest authority within the Communist Party of China, the sole political party in the People's Republic of China. He was also the Vice-Premier of the State Council, which is the chief civilian administrative body of the country. The State Council is chaired by the Premier and consists of the heads of each governmental department and agency. There are about 50 members in the Council.

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