Bottling plant suspension has 'no real effect'

China's cap on new Coca-Cola Co and PepsiCo bottling plants is temporary and can be lifted once the companies fulfil their duties under previous contracts, a spokesman for Coke says.

Coke vice-president Lo Bing-chung yesterday refused to guess how long the ban on new carbonated soft-drink plants would last, but said Coke would not finish all 10 new bottling plants agreed to under a 1993 memorandum of understanding (MOU) until the end of next year.

'No one knows [how long the cap will be in place]. It will be quite a few years,' Mr Lo said. 'It does not affect us in any real sense.' Earlier this week, the deputy director of the China Soft Drinks Association, Yang Changzhao, said China would not allow any more carbonated drinks joint ventures other than the 40 already approved.

The association is a semi-official organisation under the government-run Light Industry Council.

Coke and Pepsi have each pledged to invest US$500 million in China by 1998.

Under the MOU, Coke and Pepsi also are required to assist in the development of China's domestic soft drink industry.

'That is very ambiguous,' Mr Lo said. 'We are trying, but we have not got there yet.' He said Coke had launched a brand, Tian Yu Di, and planned to begin marketing a second new Chinese soft drink in the next few months. The new drink would use Coke technology and mainland ingredients.

When Coke completed its next 10 plants, it would have 23 bottling factories and access to 900 million of China's 1.2 billion people, he said.

Mr Lo shrugged off worries that economic nationalism was growing on the mainland, saying the Chinese were concerned mostly with foreign imports, not domestically made consumer products carrying a foreign brand name.

'We are a multi-local company, not a multinational company,' he said, adding that 98 per cent of its ingredients were sourced in China.

'We are always one of the top 10 taxpayers in each locality.

'We always set aside a lot of money for community projects. We are a big employer. Local governments know that well.'