Coca-Cola Pours More Big Cash into China
Coca-Cola stands as one of the world's most recognizable corporate brands. Nearly everyone from all reaches of the earth has drunk a coke at some point in their lives. With a population of over 1.3 billion people, China is a pivotal market for the brand. The company has already invested over $5 billion U.S. dollars in the nation since 1979 and will soon embark on more ambitious programs to raise its market share in the country's soft drink sector.
In August, Coca-Cola announced that it would pour another four billion U.S. dollars into China from 2012 to 2014, just after an investment of three billion U.S. dollars in the country from 2009 to 2011 ... Coca-Cola has opened 41 plants in China with 48,000 people employed directly.
The multinational corporation opened its second global innovation and technology center in Shanghai in 2009 to focus its future on China. Coca-Cola has utilized a ground-breaking marketing campaign that follows the motto: "Think local, act local." Part of the strategy involves donating significant sums of cash to Chinese charitable organizations, as well as engaging in nationwide environmentally friendly projects.
As CRI reports, "Coca-Cola's social responsibility is fully embodied in its business. In its Shanghai Innovation Center, the ecological system allows fish to swim in recycled wastewater. The company has also donated more than 150 million yuan ($23.44 million U.D. dollars) to Project Hope."
The China Youth Development Foundation has coordinated with Project Hope to provide subsidies to students from impoverished rural families and to train primary school! teacher s. Coca-Cola has funded the construction of primary schools in agricultural areas.
On August 19, the 100th primary school sponsored by Coca-Cola was completed in Chongqing, southwest China. Tu Meng, secretary-general of CYDF, told the China Daily, "Coca-Cola is the first multinational company to join with us and has donated the most to Project Hope of all transnational corporations up to now."
Tian Wenhong, the sustainability director of public affairs and communications of Coca-Cola Greater China, added, "we are more inclined to focus on establishing a sustainable development model for these schools than dwell on how much we have donated."
The schools in China's rural communities have been built to meet the high standards and are fully equipped with computers, Internet, multimedia classrooms and libraries. Without donations from Coca-Cola, local governments could not afford to provide the students with such high-quality facilities.
Coca-Cola played a pivotal role in the recovery efforts after the devastating 2008 earthquake in Wenchuan in southwest China by disbursing 20 million yuan towards the rebuilding of schools.
As reported by the China Daily, "with 100 schools in operation now, great efforts are required to manage them well in a sustainable manner, not just in capital investment, but also through the investment of other resources, she added. By the end of the year, more than 50 schools will have been constructed after the disaster in quake-hit areas, expanding the total of Coca-Cola-sponsored schools under Project Hope to 118."
Coca-Cola's generosity to Chinese charities may likely reap big dividends for its bottom line, while the corporation is planning to strengthen its distribution network system in the nation.
During an interview with Bloomberg News on September 3, Martin Jansen, regional director of the company's bottling business in China, Singapore and Malaysia, explained that his company can exploit a "huge opportunity" for even bigger sale! s in the domestic market.
He added, "Coca-Cola plans to invest $4 billion U.S. dollars with its Chinese bottling partners Swire Beverages Ltd. and COFCO Coca-Cola Beverage Co after three years from 2012 to widen its lead over rival PepsiCo. Inc. Most of that will be spent to build more bottling plants, buy trucks, expand distribution, infrastructure and add coolers."
Coca-Cola has been negotiating with the Chinese government to issue its publicly-traded shares on the Shanghai Stock Exchange. The corporation may soon enhance its multi-pronged approach to dominate its market presence in the soft drink industry of China. Hence, well-respected stock analysts have offered favorable views of the corporation.
Esther Kwon, a Standard & Poor's analyst, awarded a five-star buy rating on Coke's shares. She forecasts the company's sales to surge by 33 percent this year, which would get boosted by higher prices, global volume growth and dollar weakness.
Newsmax quotes Kwon as writing, "we still see KO (Coca-Cola) having an attractive relative international footprint, particularly in faster-growing emerging markets, and capability to generate strong free cash flow, which we believe will be returned to shareholders through dividends and stock repurchases."
Nowadays, China is Coca-Cola's third-largest market for sales following the United States and Mexico, and is poised for even greater growth. Consequently, China may capture the number one position for global sales. If so, Coca-Cola would sustain its bright outlook and investors could anticipate more high-flying quarterly reports from the company in the future.
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