PEPSICO is to invest US$350 million to open 10 bottling plants in largely untapped cities in China as part of an ambitious long-term strategy to turn itself into the largest soft drinks company on the mainland by the end of the century. The listed US soft drinks giant hoped that the expansion programme - which will increase the firm's production capacity from 65 million eight-ounce cases to 370 million cases within five years - would raise its market share from the existing seven per cent to 25 per cent by 2000, an official said. ''It's our intention by the year 2000 to be the leading soft drinks company in China and obviously these plans will go a long way in helping us do it,'' said James Lawrence, Pepsi-Cola International's president for Asia, the Middle East and Africa. The plants would produce Pepsico's flagship drinks - Pepsi-Cola, 7-Up and Miranda - and other carbonated and non-carbonated drinks, including some Chinese brands. The deal came after Pepsi signed a memorandum of understanding with the Chinese National Council of Light Industry in Beijing on Tuesday. Under the deal, the council will remove for Pepsi the restrictions imposed on foreign investments in the beverage market, in return for the US company's commitment to build a core business on the mainland. Pepsi's seven per cent market share works out at about 40 million cases. Arch-rival Coca-Cola is reported to have more than 10 per cent of the market. Pepsi's share represents just 1.5 per cent of the firm's yearly production of soft drinks worldwide. The US firm had chosen Changchun, Nanjing, Jinan and Harbin as sites for four of the 10 plants, it said. The other cities would be chosen within the year. These would mainly be in the inner and north-eastern industrial regions of China. ''We're basically, and hopefully, stepping a little ahead of other companies in terms of moving into those areas,'' said Miguel Ko, Pepsi president for China operations. Mr Ko said that as a rule of thumb, these new plants would take in Chinese partners, with Pepsi taking 60 per cent of the venture. Pepsi has 12 ventures in China with total investment of US$100 million. The US$350 million capital spending would centre on the transfer of its state-of-the-art technology and equipment and introduction of modern management and market systems to the new and some of its existing operations, the company said. Pepsi's products are made at joint-venture bottling plants in Shenzhen, Guangzhou, Fuzhou, Beijing, Shanghai, Nanchang, Guilin and Chengdu. It also has two concentrate plants and two recently concluded ventures, Pepsi Asia Beverage and Pepsi Tianfu Beverage. Donald Blair, the Asia-Pacific division's vice-president (finance), said the Chinese soft drinks market was growing at between 10 and 15 per cent each year. The growth potential was enormous, considering that per capita consumption was 13 eight-ounce servings a year, compared with Mexico's 500 servings and the 750 servings in the US. ''Today, China's share of Pepsi's total soft drinks turnover is relatively small. We would expect that in 10 to 12 years, China will be the largest soft drinks market in the world outside the US,'' said Mr Blair. Profits from Pepsi's existing operations on the mainland were re-invested to support its plan to be a market leader, the firm said. ''We have not taken a nickel out of China. We've only been putting money into China and will continue to do so in the next 10 years. Our returns will come in the next century,'' said Mr Lawrence.