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CHINA: PepsiCo tie-up opens door for local partnerships - study

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A coming “wave of consolidations” in China's domestic soft drinks industry, sparked by PepsiCo's Tingyi alliance, will allow smaller international firms to gain a foothold in the country, a new study suggests.

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PepsiCo signed a US$5bn deal with Tingyi earlier this year, leaving “second-tier” companies struggling to compete, according to the Rabobank study, released last week. Resulting mergers will offer overseas firms their own opportunities to find local partners with valuable know-how of the Chinese market, the study said.

As an example of a successful cross-border JV, the study highlighted Nestle's acquisition last year of 60% of Xiamen Yinlu Food to penetrate bottled water and RTD teas in lower-tier Chinese cities.

The study also said fast-growing markets such as herbal drinks are not covered by the PepsiCo-Tingyi venture, allowing smaller firms to grab a share. 

Last week, PepsiCo opened a US$40m R&D centre in Shanghai to cover the Asia-Pacific region.


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