Scenario 8
China has a large population, and its economy is
booming. However, in 2005 cola consumption in the
country were only 10 servings (8 oz. per serving) per
capita. For comparison, the consumption in the US in
the same year was 360 servings per capita. Apparently,
there is a huge potential for soft drinks in China.
Are there any cultural barriers that may become
hurdles in realising this potential? Discuss the nature of
these barriers, and explain how they could affect cola
consumption.
Index
 Current
Situation
 China general information
 Chinese culture
 Chinese diet culture & tea culture
 Beverage Market situation
 Solution & Marketing Strategies
 Cola & Other Soft drink Commercials
Current Situation

Rapid growth in beverage market in
the past 10 years

Foreign companies, such as Coca-Cola, Pepsi,
Tropicana, have succeeded in getting market
shares in China

Many of them cooperate with either domestic
traditional companies or Chinese overseas
companies who are knowledgeable about
Chinese market.
Current Situation

Most Chinese can afford an occasional soft drink
 a can of Coca-Cola costs around RMB 2.00
 Average Chinese incomes (2005) are around
RMB13,920 (USD $1740)

Despite the affordability of Coca-Cola's products
and their broad market presence, Chinese people
drank, on average, only 250-ml servings of CocaCola products in 2000--far fewer than the roughly
400 servings that Americans drank
China General information
Capital
Beijing (around 10 Million)
Largest city
Shanghai (around 12 Million)
Official language
Standard Mandarin
Government
Socialist republic
Area
- Total
9,641,266 km² (3rd)
Population
- 2005
1,315,844,000 (1st)
GDP
- Total
$8.859 trillion2 (2nd)
Currency
Renminbi Yuan (RMB¥)
Chinese culture

Collectivism and Confucian Tradition
 The Chinese culture has been perceived to be collective-
oriented characterized by a set of relationships defined by
Confucian philosophy
 including living properly, respect of authority, desire for
harmony, reduced competitiveness, contentedness,
conservatism, order and stability in society and tolerance of
others.

Chinese are hesitating to accept new culture and
new lifestyle
Chinese culture

Western lifestyle is finding its way to China via the
process of globalization

Despite the increasing westernization, the deepseated Chinese cultural values still remain distinct
and continue to have great influence on Chinese
people
Yin and Yang

The concept of yin and yang (ancient Chinese philosophy)

Yang----is happy, the brighter element, is active, light,
masculine, upward-seeking and corresponds to the day
Yin----- is sad, the darker element, is passive, dark,
feminine, downward-seeking, and corresponds to the night


Chinese believe that Human body is a balance of Yin &
Yang; Diet can have influence on the balance of the body
Chinese Diet Culture
In Chinese culture, cold beverages are believed to
be harmful to the digestion of hot food
 Items like ice-cold water or soft drinks are
traditionally not served at meal-time.
 Besides soup, if any other beverages are served,
they would likely be hot tea or hot water.
 Tea is believed to help in the digestion of greasy
foods;
 Cold drink (cola) does the opposite

Chinese tea culture
China has tea drinking culture as early as five to
six thousand years ago
 In modern China, every dwelling has a set of tea
utensils
 Symbols of welcome for visitors or friends
 For more than a thousand years tea drinking has
given the greatest pleasure in Chinese life.
 Tea is for more than just quenching of thirst!

Chinese Tea Culture
 Advantages
of Tea-Drinking
 In summer or warm climate, tea can dispel the heat and
bring on instant cool
 Medically, the tea leaf contains a number of chemicals
for anti-inflammatory.
 Tea with the aromatics in it may help resolve meat and
fat and thus promote digestion.
 Tea is also rich in various vitamins
 For smokers, it helps to discharge nicotine out of the
system.
Chinese tea culture

There are several special circumstances in which
tea is prepared and consumed.
 As a sign of respect:
 For a family gathering
 For apology
 To express thanks to elders mostly on wedding day

Therefore, Western beverage (cola) can
hardly replace the position of
tea consumption in China
Chinese Market Situation
Western style food culture has been customized in
in China, especially among younger generation.
Increasing consumption of cola, coffee, milk, and
juice
 Increase in living standards. Chinese are
becoming more sensitive to fashion and brand
items
 Media influence flexibility in accepting new culture

Beverage Market Situation

China's drinks market has a bright future. As the level
of income increases, it will push up the consumption

The position of traditional carbonated beverages (cola)
has already been challenged by bottled water, tea and
fruit juices

The demand for healthy, natural, low-in-sugar
beverages is increasing, which will promote the growth
of new types of beverages.
Current Market Situation
Current Market Situation
Current Market Situation
Solution & Marketing Strategies
Think locally, Act locally
 To match local preference in taste and culture
 Focus on Youth Market & next generation
 Developing Non-carbonated beverages, such as
cold tea, juice category, energy drink

Set up efficient physical distribution channels.
 Joint venture with local Chinese companies
 Use effective media and sales promotion.

Cola & Soft drink Commercials