PepsiCo Looks To Bolster China Presence
PepsiCo (NYSE: PEP), the world's second-largest soft drink maker, said it plans to spend $2.5 billion over the next three years in China as it seeks to bolster its presence in the world's largest country. New York-based PepsiCo announced $1 billion in China investments in 2008 and that total will be spent by the end of this year.
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International markets helped the company's first-quarter profit jump by 26% and PepsiCo said snacks and soda revenue increased by double digits in China and India during the quarter. The $2.5 billion PepsiCo plans to spend in China over the next three years will help the company open 10-12 new production facilities, purchase five farms for growing potatoes and oats and build a new research facility.
The company currently owns 27 production facilities and five farms in China and employs 20,000 workers there, according to the Associated Press. PepsiCo's biggest rival, Coca-Cola (NYSE: KO) plans to open two new plants in China this year and start construction on another.
Wednesday, 26 May 2010 00:51
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Can You Hear Me Now? China’s Story Loud and Clear
It seems that many financial writers, bloggers and internet denizens are having trouble accepting the remarkable China growth story. When China announced that the nation’s first quarter growth had hit a blazing 11.9 percent annualized, many scoffed. How could it be, they wondered, that the American colossus would still be suffering and European flailing while China prospered? Beijing must be fudging the numbers, many concluded.
Now we have strong, reliable data from outside sources that bolster the ongoing China growth story. Taiwan has just announced stunning first quarter economic expansion numbers. They are the best in three decades. The island’s government says gross domestic product rose 13.27 percent in the three months of this year, the greatest expansion since 1978.
Who gets the credit? China, of course.
Global Insight also believes that China’s massive stimulus program boosted high-tech and other sales in the second half of last year. Taiwanese electronics and computer firms export their parts and components to China for assembly before they are re-exported around the world. One of the giants of the industry, Taiwan Semiconductor (TSM) the island’s biggest company, has forecast that revenues will rise this quarter to a record $3 billion, and permit the company to expand its workforce and production.
With more than a thousand Chinese missiles aimed at Taiwan's shores, the Taiwanese have little reason to polish China's growth statistics, although China's new president has been trying to cool previous warlike rhetoric between the island and the mainland. Taiwan is also heavily invested in manufacturing facilities on the mainland of China.
to Taiwan in the first quarter outnumbered Japanese for the first time…The statistics bureau said that Chinese visitors tripled in the first quarter from a year earlier.”
Chinese tourism has helped expand the service economy dramatically. The service sector surged
a very noteworthy 42 percent during the first quarter.
China’s wealth effect has also influenced other regional economies. Singapore’s GDP grew an annualized 38.6 percent from the previous three months in the first quarter. Japan’s economy expanded at the fastest pace in three quarters on stronger exports, although its domestic economy is still mired in stagnation.
Despite the long term trend of Chinese expansion, short term volatility caused by European and U.S. instability continues to roil the stock markets. That’s why I’ve recently recommended that subscribers to the
China Stock Digest purchase some hedging instruments to balance out current risk and volatility.
China’s world-beating growth story has once again proven to be real, although Chinese stocks are not immune to extreme global volatility.