The soft drinks producer, PepsiCo Inc., is still reported to be considering taking legal action against Coca-Cola over the latter's use of the image of basketball star, Yao Ming, in a sales promotion in China.

Yao has already initiated legal proceedings against Coca-Cola himself but it seemed that Pepsi was not considering legal action.

A source inside PepsiCo has been quoted as saying that the company is waiting to see the impact on its own promotions before it decides whether to take action.

However, Coca-Cola clearly believes that Yao's lawsuit and any action by PepsiCo would be fruitless. It believes its existing three-year sponsorship contract with the Chinese national basketball team, of which Yao is a member, entitles it to use the image of players from the team. The bottles in the promotion in question bear the image of Yao along with two other players from the team.

But Coca-Cola said that while it believes it has acted within its rights, the company's spokeswoman, Kelly Brooks, has also said it hopes the furore can be settled amicably.