A domestic soft-drink maker is suing the Chinese unit of Pepsi because the company says its former joint-venture partner is illegally using its brand and business secrets.
Chongqing-based China Tianfu Cola Group also said yesterday it is preparing additional legal action charging the beverage giant with contract breaches that caused the joint venture to go into debt.
The relationship between Tianfu group and Pepsico China Investment began in 1994 when they set up Chongqing Pepsi-Tianfu beverage to produce soft drinks under both the Tianfu and Pepsi brands.
Tianfu group contributed land, factories and production facilities valued at about US$7.32 million and took a 40% stake in the JV.
But the venture failed to turn a profit, and in 2006 the Chinese company sold its stake to Pepsi for RMB130 million ($19 million). Now it wants its product back, so it can resume making the brand on its own.
Qian Huang, general manager of Tianfu Cola Group, said, "Pepsi increased the production of its own products while cutting the output of Tianfu beverages. Pepsi turned the venture into its own bottling plant."
Shanghai Daily reports the Tianfu Group was one of China’s leading beverage makers in the early 1990s and had a strong presence in south China. It owned 108 plants nationwide and turned out 200,000 tons of soft drinks a year. But most of the plants have been shut down. The illustration is a 1920s Coke advertisement. Our apologies to Pepsi.