Just when we thought corporate America was on its knees, two heavyweights – PepsiCo and General Electric (GE) – weigh in with some big numbers. If we wanted to be cruel, we might suggest that Pepsi’s pledge to spend US$1 billion in China is an attempt to wrestle the initiative back from Coca-Cola, following the latter’s bid for local juice maker Huiyuan. In reality, though, Pepsi and Coke are in much the same position: Looking for ways to capitalize on the fizz in emerging markets as the effervescence ebbs away at home.
There is nothing effervescent about China’s jet manufacturing industry, which has big ideas but is barely off the ground. Nevertheless, GE is poised to buy five Chinese regional jets, with an option to purchase 20 more, in a deal that could be worth up to US$750 million. As it happens, GE is supplying engines for the very aircraft it has agreed to buy.
Before you start thinking that all foreign companies are bullish about China, spare a thought for Rio Tinto CEO Tom Albanese, who believes the country’s economic slowdown is worsening. Taxi drivers in Chongqing are also feeling the squeeze. While Albanese opened his heart to Bloomberg, the cabbies went for the more direct option of a violent strike. This angst may soon be mirrored in diplomatic circles as US officials fret about a surge in Chinese textile imports once the quota regime winds down at the end of this year. Mild currency appreciation in 2009 – just 1-2%, according to a couple of think tanks – won’t help their mood.