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Coca Cola in China

Coca-Cola in China, development and competition with Pepsi

Coca Cola in China

Marketing Strategy of Coca Cola in China

Coca Cola, as the world’s largest beverage company, has a history of over 110 years. The brand opened its first bottling plant in China in 1927 in Tianjin and Shanghai. It continued its development in the Middle Kingdom until Shanghai became, by 1948, the first market, beside the United States, to reach more than one million cases of Coca-Cola on a per year basis. 

After the cultural revolution and the period of ultra-protectionism in China, which forced Coca-Cola to left this market, the firm was the very first international company to reenter China’s market in 1979.

Strategy of pricing

At this period, Coca Cola struggles to profit more than 10 years. According to the market report in China Coca Cola company enters China market in 1979, when China was in the period of planned economy, income was very low and the product was too expensive for Chinese consumer. Still Coca Cola insists on keeping the price on the same stage, believing on the nearly development of Chinese economy and mainly willing to maitain its Branding position higher than local brands. Thus, with the steadily increase of standard of living make it now easy to buy for a normal-stage income Chinese.

Second, strategy of advertising.

Coca Cola ‘s former CEO Wood Ralph had a famous saying:” Coca Cola is a carbonated water and sugar syrup, 99.61%. Without advertising, who will drink it?”. Therefore, the advertasing fee has always been the main investment of the brand to buid a strong brand strategy. In 1886 Coca Cola’s turnover was about 50 dollar only, well the advertising fee was $46; in 1901 turnover has increased to $120,000, and the advertising fee was $100,000. Nowadays, Coca Cola’s advertising fee was more than $600,000,000.

Marketing Strategy of Pepsi Cola in China

Unlike Coca-Cola, Pepsi was not present in China in the early years of the 20th century. Its presence in China started at the beginning of China’s reform and opening. In 1981, in response with Coca-Cola etablishment, Pepsi signing a deal with the China’s authority, and to set up a first manufacture in Shenzhen, in the South of China. It was the very first firm resulting from a partnership between Chinese and American players. Today, Pepsi has established all over the country and has now more than 35 firm.
Under the big pressure from Coca Cola, Pepsi should strengthen the cooperation with local enterprises, make full use of the advantages of local enterprise resources, improve its popularity, the perfect sales network; In addition, Pepsi need to reduce the management cost and operation cost. The aim is to become a national favorite brand in China.

Amy Wang, Online Consulting China

Source : Official website of Coca-Cola / Reuters