MANY retailers underestimate costs of running a joint venture in China, and have unrealistic expectations of mainlanders' spending power, says Steve Chan, regional manager of Coca-Cola. But while other multinational companies were over-optimistic about quick returns, Coca-Cola had conducted wide research and pitched its product at brand-wise consumers, he said. Its marketing and research had made Coca-Cola the leading soft drink in the country. ''Effective marketing is very important in China because the country is experiencing rapid growth and is different to any other market in the world,'' Mr Chan said. Since the open door policy, which began in 1979, consumers had become more aware, and now focused on brand names, looking for quality and an image. ''Having an international brand is important, but Coke has gone a step further in providing a whole image that people can trust and rely on,'' he said. Coke had been voted China's favourite soft drink in two independent surveys. Disappointing sales, stiff competition, high rentals, overstocking and pilferage had affected many joint ventures in China, but Mr Chan said widespread marketing was one of the secrets of Coke's mainland success. Despite the introduction of a 17 per cent value-added tax in January, Coke has continued to broaden its sales base. ''The VAT has not affected our sales and we have been able to maintain our retail price without passing the cost on to the consumer,'' said Mr Chan, who is also the company's regional executive vice-president. ''The increase in volume of sales means we don't have to put up the price. ''Coke is a fast-moving consumer product - not like selling cars - and, after the introduction of VAT, we tried to keep a uniform price throughout the country because it was important that the retail price was not thrown into chaos.'' Before the VAT was introduced, a 1.25-litre plastic bottle of Coke cost 5.5 yuan (about HK$4.90) - and it had remained at that price, Mr Chan said. However, selling more Coke was not linked only to maintaining its price, he said. ''We have also held marketing programmes, which have increased sales, using some of the same techniques that Coke uses in all of the 195 countries in which it is sold,'' Mr Chan said. ''It's important to have a powerful image and brand name so people remember the product. That's why we chose to advertise where people congregate.'' In China, Coke advertisements are at train and bus stations and shopping centres. While some featured Western faces, many showed Chinese teenagers sipping a Coke while eating dim sum, Mr Chan said. Last year, the company launched the second phase of its Made in China television advertising campaign in all China's main cities. Called Making It, the two commercials went beyond the previous Coke Moments advertisements, and set new standards for China's local advertising industry, Mr Chan said. ''The sequel ads are aimed at teenagers and show young people drinking Coke at moments of success, such as graduating from high school,'' he said. ''Filming was done in China and we used local actors, which has touched on the empathy of Chinese consumers.'' But cashing in on localising the product was only one way Coca-Cola was promoting its brand in China, Mr Chan said. ''We also have worked hard to maintain our international heritage and show some of our American commercials in China,'' he said. ''International characteristics of the brand are strong selling features and have been successful in China.'' The company's marketing campaigns have paid off and, in June, Coca-Cola was voted the most popular soft drink in China's first independent national consumer survey to compare local, international and imported brands. Coke scored top marks in three categories - ''My ideal brand'', ''The brand I actually use'', and ''My first choice in 1994'', in the survey of 140 brands covering nine product categories. Other products that chalked up high ratings included National television sets, Lux soap and Zhong Hua toothpaste, which is a Chinese brand. More than 60,000 people in 30 cities responded to the poll conducted by the Chinese Entrepreneurs' Association, the Chinese Enterprises Information Exchange Centre and the Chinese Enterprises Management Association. ''Consumer response to our brand has been overwhelming, and we are confident our bottling factories in the country will be able to maintain their high performance,'' Mr Chan said. ''This is the second time Coke has been voted favourite soft drink in China.''