Pepsi Plants Potato in China
1. What market opportunity and challenges did Pepsi face in China?
Opportunity: high potential development in food process industry; big and growing snake market.
Challenges: underdeveloped agribusiness; traditional agriculture; importing potato and potato seeds are banned; underdeveloped infrastructure for logistics;
2. What supply chain challenge did the face?
Enough replenishment of raw material, potato.
Underdeveloped infrastructure for logistics.
Not enough qualified supplier.
Supply cannot balance with demand.
3. What role did the Chinese government play in helping/ hindering Pepsi’s efforts?
Hinder: importing potato and potato seed are banned.
Help: launch 5-year national program to restructure China’s food processing industry, and targeted potato processing industry as one of the key industries under the program; signed numerous cooperative agreements with international agricultural research institutes on potato research and development;
4. As the Chinese economy grew and markets developed, what restructuring of supply chains occurred?
Restructuring food process industry; restructuring infrastructure, such as development of energy, and transportation.
5. What approach has Pepsi used to meet the supply chain challenges for supply of potatoes? Was their decision to bring in a US supplier a good one? Why or why not?
Grow potatoes by itself; seeking for more local supplier; bringing a US potato supplier into China.
The decision is not good.
Because China is an old country which is more than 10,000 years, which has its traditional way to plant potatoes, it is hard to change the traditional way in short time; US company does not really have a good knowledge about Chinese culture, and natural environment in China, they best way Pepsi should do it to develop the potato plant technology combined with the local farmer’s natural knowledge.
6. What strategies should they pursue for the future?
Encourage more individual farms
Opportunity: high potential development in food process industry; big and growing snake market.
Challenges: underdeveloped agribusiness; traditional agriculture; importing potato and potato seeds are banned; underdeveloped infrastructure for logistics;
2. What supply chain challenge did the face?
Enough replenishment of raw material, potato.
Underdeveloped infrastructure for logistics.
Not enough qualified supplier.
Supply cannot balance with demand.
3. What role did the Chinese government play in helping/ hindering Pepsi’s efforts?
Hinder: importing potato and potato seed are banned.
Help: launch 5-year national program to restructure China’s food processing industry, and targeted potato processing industry as one of the key industries under the program; signed numerous cooperative agreements with international agricultural research institutes on potato research and development;
4. As the Chinese economy grew and markets developed, what restructuring of supply chains occurred?
Restructuring food process industry; restructuring infrastructure, such as development of energy, and transportation.
5. What approach has Pepsi used to meet the supply chain challenges for supply of potatoes? Was their decision to bring in a US supplier a good one? Why or why not?
Grow potatoes by itself; seeking for more local supplier; bringing a US potato supplier into China.
The decision is not good.
Because China is an old country which is more than 10,000 years, which has its traditional way to plant potatoes, it is hard to change the traditional way in short time; US company does not really have a good knowledge about Chinese culture, and natural environment in China, they best way Pepsi should do it to develop the potato plant technology combined with the local farmer’s natural knowledge.
6. What strategies should they pursue for the future?
Encourage more individual farms