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 far fewer than the roughly 400 servings that Americans drank

China General information CapitalBeijing (around 10 Million) Largest city Shanghai (around 12 Million) Official language Standard Mandarin GovernmentSocialist republic Area - Total9,641,266 km ² (3rd) Population ,315,844,000 (1st) GDP - Total$8.859 trillion 2 (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

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