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Coca-Cola to invest $4 bln in China from 2012 to 2014

(Xinhua)

10:09, August 19, 2011

SHANGHAI, Aug. 18 (Xinhua) -- Coca-Cola, the world's top soft drink producer, will pour in another 4 billion U.S. dollars into China from 2012 to 2014, announced its chairman and CEO Muhtar Kent Thursday in Shanghai.

"We are excited not only with our achievement in China but we are more excited about the prospect of our business in China in the coming years," said Kent in an interview with Xinhua.

This enormous investment plan comes after Coca-Cola invested 3 billion U.S. dollars in the country from 2009 to 2011.

With this latest plan, Coca-Cola's total investment in the Chinese mainland since it returned to the market in 1979 is expected to reach 9 billion U.S. dollars in 2014.

Kent said the new investment will go mainly to expanding Coca-Cola's portfolio and packaging, to continue investment in its infrastructure and distribution system, to invest aggressively in cold drink equipment, and to enhance consumer experience.

In its second quarter 2011 financial results, Coca-Cola posted strong worldwide volume growth of 6 percent in both the quarter and year-to-date, with growth across all its five geographic operating groups. In the first half of 2011, sales in China topped 1 billion unit cases -- double the rate sold five years ago when the company first delivered 1 billion unit cases for a full year.

Consumption of Coca-Cola products in China now represents approximately 7 percent of its global volume.

The CEO said China had an outstanding performance in the latest quarter supported by strong growth in the Coca-Cola brand and Minute Maid Pulpy, the No. one juice brand in China developed by Coca-Cola's innovation center launched in Shanghai in 2009. The brand initially created for the Chinese consumers now has become popular around the world.

"The value of China for Coca-Cola is not only the fact that it is such a big growth market," said Kent," The value of China is that we would get a lot of innovation for the world out of our Shanghai innovation center."

"I see China not just as a large global market but also a source of talent for the Coca-Cola Company," he explained. At the end of this decade, some of the company's Chinese employees will have the opportunities to work in other parts of the Coca-Cola business around the world and "contribute measurably to Coca-Cola's global success."

Coca-Cola has opened 41 plants in China with 48,000 people employed directly.

Kent described China's role in Coca-Cola's Vision 2020 goal as "an important pillar" since "China is a great source of growth, innovation, and best practices."

Vision 2020 is an ambitious target aiming to double Coca-Cola system's revenues and servings within 10 years by 2020. The beverage giant's system revenue in 2010 was around 100 billion U.S. dollars.

Kent said it was "achievable" and "we are ahead of our targets." p The China market with robust demand and successful macroeconomic environment became even more essential as parts of the world such as Europe and the United States are facing macroeconomic volatility.

On the possibility of going listed on the international board of Shanghai Stock Exchange which is still under discussion, the Coca-Cola CEO said if the opportunity arrived, Coca-Cola would be interested.

He said Coca-Cola has been in discussions with Chinese authorities.

"I understand the mutual reasons why the Chinese authorities would want to create the international board in Shanghai," said Kent, adding that it would be good for Shanghai, for China, and for the companies that decide to list on that international board, and for Chinese investors to invest in global companies like Coca-Cola which has global reach.

"It will be a mutually beneficial action if we are listed," said Kent, adding that "it would be a good thing not just for the reasons of capitalization but also for reasons of being a stronger part of the Chinese community."

He said Coca-Cola has a very strong philosophy about it playing a meaningful role and helping to create a sustainable community in every market it operates in.

This Friday also marks the opening of the 100th Coca-Cola Project Hope school located in Dongjintuo, Chongqing Municipality in southwest China.

"We work hard to demonstrate our long-term commitment not only through our business investment, but also by supporting China's broader development goals," Kent said.

The Dongjintuo Project Hope School is part of the Sichuan earthquake reconstruction program in which Coca-Cola has donated 80 million yuan after the disaster struck the region.

"Having the opportunity to list on the Shanghai international board would also give us a closer link with the Chinese community," he said.

China is now the third biggest market undergoing the fastest growth for Coca-Cola following the United States and Mexico. Kent said he "is convinced" that China will become the beverage giant's largest global market.

Kent, who became chairman of the U.S. China Business Council (USCBC) in July 2010, will also lead a U.S. delegation to visit Beijing Friday to discuss mutual opportunities for further investment and further business ties with Chinese government officials and business counterparts.

He said the role of USCBC was to help facilitate investment in China and also bring more investment to the United States.

"We strongly urge those who are not yet present in China to come to China and urge those in China to continue to aggressively invest in China for the future. We are showing that with our own actions," he said.

"If they (U.S. companies) want to become global, they have to be successful in China. No company in the world going forward can say they are global and successful in China unless they have a successful business in China and a growth model in China," said the USCBC chairman.

"It (U.S.-China relationship) is a very young bilateral relationship that started back in the late 1970s. We are at the beginning of a journey -- a journey that will be very exciting in the years to come," said Kent.

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