Why Coca-Cola is spending $4 billion in China
The world's most popular beverage maker is facing increasing competition within the Chinese market.
The $4 billion will be spent between 2015 and 2017, as the world's most popular beverage maker is facing increasing competition within the Chinese market. The company has already committed to investing $4 billion in the country through 2014.
"The beverage market is quite competitive right now and Coke is going to have to do a lot more acquisitions rather than growing through organic growth," Shaun Rein, a Shanghai director of China Market Research Group, told Reuters.
Coca-Cola maintains a 16 percent market share by total volume in 2012, down from 16.6 percent five years ago. Chinese consumers are beginning to shun international brands like Coca-Cola, while embracing domestic brands such as JDB, whose signature Jia Duo Bao Red Can outsells Coca-Cola in many provinces, despite being twice the price.
Coca-Cola's investments in China should not come as a surprise. According to Market Research, the Chinese carbonated soft drink market is expected to appreciate at a compounded annual growth rate of 3.5 percent throughout 2012 to 2017.
Coca-Cola's competitors are also heavily investing in the Chinese market. PepsiCo (PEP) plans to open 10 to 12 new plants in China over the next few years with a $3.5 billion investment.
Coca-Cola joins the ranks of many American beverage and food companies that are looking at China to fuel future earnings. Starbucks (SBUX) considers China one of its fastest and most important markets with over 3,000 stores. Yum Brands (YUM) is the largest restaurant chain in the Chinese market through its thousands of KFC and Pizza Hut stores across the country.
Shares of Coca-Cola were unaffected Friday, trading up 0.2 percent.
Read more from Benzinga
How many plants will coke close in the U S to divert the funds into the booming Chinese market?
Will the Chinese competitors steal coke's formula and intellectual properties the same way they do to so many U S products? Will the Chinese produce poisonous soda to sell to the U S citizens who bought the poisoned dog treats that have killed hundreds of beloved U S pets? Why are so many U S companies getting in line to kiss china's ****. Is our economy so doomed that all the forward thinking U S companies want to get the hell out of America and move to China to keep the money rolling in?
China has proven that they only let you compete in China until they don't need you anymore and domestic supply can sustain demand at roughly the same price. This generally happens after domestic companies usually through a silent wink and nod from the government steal your product design and formula. The Chinese consumer will be happy to sell the foreign company and their investors right down the river the first chance they get. And the government will assist in domestic competition getting that chance, through tariffs, import restrictions, and other regulations.
THE COCKROACHES ARE COMING IN!!!!!!!!
Hey, they need something to wash down all that smog!
They get our jobs, along with poison water and Coke.
LIKE COKE IS SHOVING THEIR PRODUCT DOWN YOUR THROATS!!! WHO MADE THEM A GIANT????? I CAN CLEARLY SEE HOW WE ARE IN SUCH A MESS - AND RIGHTLY SO!!!!
WHY DON'T A BUNCH OF YOU SUE COKE FOR MAKING YOU MAKE BAD DECISIONS???!!!
HELL- WHY DON'T YOU SUE OBAMA FOR MAKING YOU BELIEVE A LIAR???!!!
I am old enough to remember when Coke was really delicious. But those days are gone.
You really aren't too logical about the article or discussion about Coke and China...
WTF does all that gibberish bullshidt, you wrote mean...??
Do you invest in, or buy or drink Coca Cola...?
I think the company should leave it's product here. We the people should have the jobs here and take care of our own problems. They are suppose to be so far advanced in education,electronics let them deal with their soft drinks. The product it's self doesn't make you fat, it's how much the person or persons consume. It's called self control and most of the problems could be avoided at a early age!! The yes and no game we are all taught when you are growing up.
Econ 101. If you mandate that companies manufacture stuff in the U.S. and pay union wages then a foreign company will make a competing product and export it to the U.S.
AND IF YOU ARE HONEST, if that happened you would scream bloody murder that the U.S. company which was screwing you trying to charge two or three times more than the competing foreign product. They you "Buy American types" would buy the foreign product because it is cheaper. YES YOU WOULD!
In conclusion, that U.S. company would go out of business and every American worker in the business would be unemployed. NICE! At least when competitive pressure necessitate that a company manufacture stuff overseas, they remain in business and people in marketing, distribution, admin, etc. still have those jobs in the U.S. So sure, scream bloody murder, and drive U.S. companies out of business by requiring in some shape or form business to manufacture in the U.S. and try hopelessly to complete against cheaper imports and loss even more jobs.
Stop being angry for the sake of being angry and engage the brain. Please try. Economics are really pretty straight forward.
Copyright © 2014 Microsoft. All rights reserved.
Stocks are facing some serious resistance as the bears tear into the market's respite.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.