Bottles up

Giving thumbs up and saying loudly "Ai Zhongguo" (Love China), Mike White finished his speech at a press conference held last month in Beijing and won a shower of applause.

As the CEO of PepsiCo International and vice-chairman of PepsiCo, White has reason to mean what he said, as China is currently the World Top 500 Company's largest beverage market outside its home nation, the United States.

And given its booming economy and huge population base, China is expected to continue to be the "most important growth opportunity" in both foods and beverages for PepsiCo, he says.

White's visit to China and meeting with the media was to promote PepsiCo's new global strategy of "Performance with Purpose" at the world's largest emerging market.

"I really do believe that China represents our industry's single greatest growth opportunity," says the CEO.

New strategy

According to White, the "Performance with Purpose" campaign covers a broad view of sustainability and is a holistic approach, comprising three sustainability themes: human, environmental and talent sustainability.

"Providing consumers with a broad range of convenient, great-tasting foods and beverages and continually improving the nutritional profiles of our products is the core of what we call human sustainability," he says.

As consumers are increasingly interested in their health and wellness, PepsiCo has and is taking great efforts on research and development to ensure safety, enhance nutrition, and to widen variety of its products.

For the second pillar of the strategy, the foods and beverages producer focuses on areas closely related to its business, like water, energy and agriculture.

"For years we have practiced sound environmental stewardship, but lately we have a much more comprehensive framework for driving progress," White says.

PepsiCo owns and operates 22 bottling plants in China. Over the past three years, the plants have reduced water and energy usages by 40 percent and 38 percent respectively.

The China Beverage Industry Association awarded honored nine beverages plants in China for water saving and environment conservation, seven of which are PepsiCo plants.

The company is building a "green" plant in Chongqing with world most cutting-edge advanced environmentally friendly practices, which will act as a testing ground for PepsiCo globally.

In line with the design, 80 percent of the building materials will be recycled. Every year, new cooling equipment will allow the plant to reduce 1,700 tons of greenhouse gases compared with ordinary facilities; 100,000 tons of water is to be recycled to irrigate landscaping,; and 4.5 million kilowatt hours of energy can be saved. If proved successful, the model is to be promoted worldwide in PepsiCo.

As a large buyer of agricultural commodities, such as corn, oats, oranges and particularly potatoes, PepsiCo says agriculture is another key element of its environmental sustainability agenda. Helping local farmers to farm in an efficiently and sustainable way and, at the same time, also increase their incomes are also what the company does hardly in China, the global CEO says.

He cites turning Inner Mongolian desert green with potato farms as an example.

"When we first began in 1998, the Inner Mongolian plot was a barren land surrounded by 10-foot high sand dunes. Today it's a highly productive farm with vegetation and serves as a 'classroom' for sharing modern techniques with farmers from across China," White says with pride.

Pivot irrigation technology used there can decrease water usage by 50 percent than compared to traditional flood irrigation. And PepsiCo is testing the next generation of water irrigation, drip irrigation as well as solar and wind energy methods.

"Solar or wind energy will be considered in our Inner Mongolia farm in this year. The drip irrigation will be launched in one of our other farms in southern China in 2008," White says.

The multinational is also devoted to helping farmers improve their lives in China. It contracts with farmers directly, so the company can be able to help shield farmers and their living standards from large fluctuations in the market place.

PepsiCo committed itself in 2007 to establish "PepsiCo Library" by donating library facilities and books to schools. So far, three libraries have been built with PepsiCo's donation of 360,000 yuan. PepsiCo China foods and beverages also plan to donate another 500,000 yuan to support the rural library project in 2008.

Moreover, the company kicked off "Better Tomorrow" project in Beijing on April 30. PepsiCo donated 1 million yuan to the Red Cross Society of China to support eight schools of the migrant workers' children in eight cities.

In addition, PepsiCo leverages its technical expertise to assist help ensure clean and safe water supplies in rural China via the philanthropic Mother Water Cellar Project. The project helps people in parched rural areas of central and western China to gain access to safe drinking water for their families and livestock.

So far, 15.6 million yuan from the PepsiCo Foundation, PepsiCo China and its employees have been donated to the project, with 1,500 water cellars built and more than 10,000 people helped. White himself also sponsored one last year.

Concerning the third aspect for "Performance with Purpose" talent sustainability, White indicates that the motivation here is simple.

"We depend on our employees. The better they are, the better we are," he explains. "If they are safe, healthy and fulfilled, they will be more effective in their jobs and they will stay with our company longer."

Three elements anchoring PepsiCo's talent sustainability are values, diversity and inclusion, and capability building.

In the last three years, females have represented more than 60 percent of the US-based company's international executives, while, the figure is 61 percent for its business in China.

In its China beverages sector, over 90 percent of the executives are local talents. "And we have aggressive plans to support this localization with recruiting programs at more than 40 Chinese universities," White says.

Consumer orientation

White says that the strategy is inspired by consumers' demands and the social needs.

"In today's world, consumers see their spending decisions as a way to make their own difference in the world, to make a statement about what they believe," says White, adding that consumers consistently rate three things companies do as important elements influencing what they buy.

The three elements are safe products, how well the employees are treated and how diligently a company provides safe products, how well it treats its people, and how responsibly it the company deals with the environment.

"Compared to a few years ago, we are being held to a higher standard, and, meanwhile, the world expects ever more of us," says the CEO.

Along with social and economic development, Chinese consumers have turned increasingly sophisticated.

And the government has strengthened regulations and supervisions to protect consumers' rights and social fairness equality.

The booming rise of non-governmental organizations, to some extent, also promotes the social supervision to a higher level, Mike says.

Amid the intensified market competition and higher social requirements of the society, a series of quality and environmental rumors and scandals, are exposed on media or Internet, which usually stir up hot debates and even lawsuits.

White says: "As a company, you have to be always listening to what is changing, what are the expectations, what are collaborated and instructive from all of these different groups, and make sure that you respect different opinions and work in a constructive socially responsibile way."

(China Daily 05/12/2008 page7)