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 Coca-Cola products in 2000--far fewer than the roughly 400 servings that Americans drank

China General informationCapital 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 deep-seated 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