Coca-Cola's Re-Entry and Growth Strategies in China

In sharp contrast to its strategies in the past (in China and other countries as well), initially Coke did not own any bottling plants in China. It imported the concentrate and sold it to bottling plants. The bottling plants (that it sold the concentrate to) had been built by Coke and handed over to the Chinese government. The first of these plants was built in Beijing and was operational in 1981. According to an agreement between Coke and the state-owned China National Cereals, Oils, and Foodstuffs Import and Export Corporation (COFCO) in 1980, Coke agreed to build a plant and hand it over to the government in exchange for approval to expand distribution and sales in China. The second bottling plant was built in Guangzhou and was also handed over to the Chinese government in 1982...

In terms of volume, China was Coke's second largest market in Asia in 2003 (Refer to Exhibit II) and Coke estimates that China will beat Japan to the top position in 2004. Encouraged by its success in big cities and towns, Coke wants to reach more customers in rural areas. "We'd grown well by reaching the top 100 cities, but how many people were we reaching? Rather than continuing to focus solely on those highly competitive urban areas, Coke must push aggressively into the rest of China and India", said Patrick Siewert, Coke's East and South Asia group president. In early 2004, Coke announced plans to build two new bottling plants in China's western provinces to tap the market potential of China's rural areas...