Coca-Cola to Invest Over $4 Billion in China

Coca-Cola KO is planning to invest $4 billion in China and build new plants, according to Reuters.

The $4 billion will be spent between 2015 and 2017, as the world's most popular beverage maker is facing increasing competition within the Chinese market. The company has already committed to investing $4 billion in the country through 2014.

Retuers quoted Shaun Rein, a Shanghai-based director of China Market Research Group as saying, “The beverage market is quite competitive right now and Coke is going to have to do a lot more acquisitions rather than growing through organic growth.”

Coca-Cola maintains a 16 percent market share by total volume in 2012, down from 16.6 percent five years ago. Chinese consumers are beginning to shun international brands like Coca-Cola, while embracing domestic brands such as JDB whose signature Jia Duo Bao Red Can outsells Coca-Cola in may provinces, despite being twice the price.

Coca-Cola's investments in China should not come as a surprise. According to Market Research, the Chinese carbonated soft drink market is expected to appreciate at a compounded annual growth rate of 3.5 percent throughout 2012 to 2017.

Coca-Cola's competitors are also heavily investing in the Chinese market. PepsiCo PEP plans to open 10 to 12 new plants in China over the next few years with a $3.5 billion investment.

Coca-Cola joins the ranks of many American beverage and food companies that are looking at China to fuel future earnings. Starbucks SBUX considers China one of its fastest and most important markets with over 3,000 stores. Yum! Brands YUM is the largest restaurant chain in the Chinese market through its thousands of KFC and Pizza Hut stores across the country.

Shares of Coca-Cola are unaffected, trading up 0.2 percent.