Just after Yingde Lu took over as CEO of PepsiCo, she was confronted with the "Cokegate" incident in India.
In her home country of India, many cotton farmers bought Coke in large quantities to kill bugs. Because these cotton farmers tried and found that the pesticide mixed with cola, the killing effect is much better than the use of chemical pesticides alone. Coke became an insecticide, and when the news broke, Coke began to be banned throughout India.
On August 2, 2006, the Indian Center for Scientific and Environmental Research (ICSER) released a test report on the toxicity of Coke that attracted widespread international attention, claiming that Coca-Cola and Pepsi products in India contained three to five pesticide ingredients at levels far exceeding the required standards. Although, the Indian government quickly came out to clarify that "the pesticide content is within the permissible range". But the incident made Lu Yingde more determined to "make Pepsi healthy," and made a decisive decision: more than half of the company's innovation and investment must be used in healthy food.
Lu Yingde "can't say that we're going to drink only carbonated beverages and then switch to non-carbonated beverages when consumption peaks. Our philosophy is completely different. Our idea is to offer a variety of beverages and at the end of the day let the consumer decide what to buy and what to drink."
Lu Yingde began leading PepsiCo's big push into products other than carbonated beverages. at the end of 2010, PepsiCo's 2010 sales of nearly $60 billion lifted its full-year net income to $6.32 billion, up 6 percent from the previous year. At the same time, Lu Yingde accelerated the pace of PepsiCo's overseas expansion. on May 21, 2010, Lu Yingde announced in Shanghai: in the next three years, PepsiCo invested an additional $2.5 billion in the Chinese market.
This figure not only exceeds the total amount invested in China since the birth of the first can of Chinese-made Pepsi in 1981, but also surpasses the $2 billion investment plan for the next three years announced in 2009 by its biggest rival, Coca-Cola.
China has become PepsiCo's No. 1 market outside the United States. RCM: What do you see as your company's main competitors in China?
Lu Yingde: On the business side, I think some of the local Chinese food and beverage companies are doing very well, but we can't define ourselves as competitors because there's still a lot of room for growth in the Chinese market, and there's room for all of us to grow. But there are some very good, incredible food and beverage companies in China, such as Topsy, Master Kong and other local companies, which are great Chinese companies. If China is not a country where local companies are stronger than multinationals, then China is at least a country where local companies and multinationals are evenly matched.
Rui Chenggang: Do you see a trend in the food and beverage industry toward healthier eating? Traditionally China's food and beverage industry has not been as advanced as abroad, and it could be argued that we are a step behind, with some of China's most recognizable beverages, for example, still containing high levels of sugar, which may not be the case in more developed economies. Have you noticed this feature in China?
Lu Yingde: I think it's a change, it's a shift, it's a transformation.
RICHARD: How does this affect PepsiCo's business? To what extent does PepsiCo need to be innovative?
Lu Yingde: We're a food and beverage company, so it's important to know how we can be a global company and at the same time adapt to the local needs of each country, and we're trying to be both globalized and localized, and how do we make Pepsi meet global standards and be localized in each country? The answer lies in supporting agricultural development and producing products that meet the tastes of the local people. Learning from the local and producing for the local is essential. The third challenge is how to transfer the knowledge gained locally to overseas, for example, Chinese medicine, which contains a lot of science and ways of thinking, we can apply Chinese medicine to local products in China, but how can this knowledge be transferred overseas? So we learn knowledge to take to countries, we learn it locally in those countries and apply it locally, and then we take that locally gained knowledge and promote it overseas, which is a very rich development model, and as a food and beverage company, it means that we can get to the consumer very quickly, and that's an area that has a lot of promise.
On January 17, 2011, a bright "China Red" lit up Times Square in New York City, USA, and six electronic displays simultaneously broadcast China's first national image propaganda film, "People". China's national image propaganda film - "People" in the known as the "crossroads of the world" in New York Times Square.
A little more than a week later, the 41st annual meeting of the World Economic Forum was held in Davos, Switzerland. In the Swiss town of Davos, posters promoting India's image as one of the world's most important emerging economies are everywhere, and the country wants to show its best side through a stage like the WEF.
[Namara, host of India's New Delhi TV] "We are showing that India is growing strongly by doing image campaigns in Davos, and in that India is very similar to China ."
As the world's two largest developing countries today, China and India attract global attention. One is the world's factory and the other is the "world's office". India and China's battle of the dragon and the elephant has been widely watched by the world. 2010, China's GDP exceeded Japan's officially become the second largest economy. India's economic growth is expected to reach 8.6% in the current fiscal year and is expected to continue to accelerate. The comparison of the two development models of "China Model" and "India Model" has become a hot topic in global politics, business and academia. So how does Mr. Lu look at the competition and cooperation between China and India?
Rui Chenggang: What kind of image do you think India is presenting to the world business community?
Lu Yingde: The issues we are discussing in China and India are quite similar. I think India is showing its high-tech progress at Davos, but one of the significant differences between China and India is that when you go into India, you go into an Indian city like Mumbai or Delhi, you see a different side of India that seems to come out of your face, and that's not the case in China, and you need to explore that for yourself. Because what you witness when you enter a big city in China is the best of China, whereas in India you are surrounded from all sides by poverty, beggars, penniless people, so one of the striking differences between China and India is the extent to which you are able to see the true state of society.
Rui Chenggang: The world's expectations of China are getting higher and higher, even sometimes subconsciously thinking that China no longer belongs to the developing world, what is your view?
Lu Yingde: China is arguably the most talked about country in the world today for several reasons. First, China is the most talked about country in the world because it has risen to the top of the world with remarkable confidence, and is a must-invest market and the world's biggest engine of development today. But we should not forget some of the basic facts of China, China's per capita GDP is only equivalent to one-eighth of the United States, one-ninth of Europe, is still at a relatively low level, the problem is that China's population is huge, this lower per capita GDP multiplied by China's large population, it will come to a very large total economic output, and so people sit down and marvel at the fact that China is a strong market force, but we can not just look at the numbers, but also focus on the numbers behind the numbers, so it is the most talked about country. But we can't just look at the numbers, we need to focus on the facts behind the numbers, and there are still millions of people in China who desperately need to improve their living standards.
Rui Chenggang: About China and India, in my opinion, the two countries compared to each other, watching the "dragon and tiger battle" who won, etc., is simply a conspiracy of the Western media. But in fact, China and India have a strong economic complementarity. What do you think is the problem and why is the world positioning China and India as rivals?
Lu Yingde: I don't know what the reason is, I think China and India is a great topic, but ......
Rui Chenggang: For example, some people have questioned China's "getting old before it gets rich" and India's extremely dynamic labor force. ......
Lu Yingde: India's population age structure is indeed more dominant today, but if China wants to talk about population age structure, go ahead and do so, I can only observe all this with a shrug of the shoulders and say, "These are just words", but at the end of the day, China and India are not the same. At the end of the day, China and India are two large countries with a combined population that exceeds that of even some continents, and the development of both countries is of pivotal importance to the direction of the world in the future, with the growth of industrialization and economic development in both countries being one of the determining factors in the future trends of the world. We need to pay attention to these two countries, learn to work with them, compete for them and think about how to start a win-win cooperation that meets the interests of the East and the West, which is the key.
When it comes to the relationship between China and India, in addition to the "dragon and elephant", another term that comes to mind is "BRICS", the concept of "BRICS", which was first proposed by Goldman Sachs in 2001. In 2001, Goldman Sachs first proposed the concept of "BRICS". The term "BRICS" quotes the initials of Brazil, Russia, India and China, and because the term is similar to the English word "brick", it is called "BRICS".
With the gradual formation of the BRICS cooperation mechanism, the international influence of the BRICS countries as representatives of the global emerging economies is also growing. "In December 2010, the BRICS welcomed a new member: South Africa, and from 2008 to 2014, the four BRICS countries - China, India, Brazil and Russia - contributed to more than 60% of the total global economic growth. As the first tier of emerging powers, the expanded BRICS still lead global growth.
[Zhu Min Special Advisor to the Managing Director of the International Monetary Fund] "This year we are experiencing a three-track recovery, with developed countries' GDP (Gross Domestic Product) at 2.5% to 2.8%, emerging market countries' GDP (Gross Domestic Product) at around 6.8%, and in the middle is the U.S., whose GDP (Gross Domestic Product), which is at about 3%, has been relatively strong."
[Azim? Premji Chairman, Vibro Software Development Ltd, India] "The current reality is that the stagnant growth in the West and the rise of the emerging market countries, which is rebalancing the distribution of power in the global economy, is determining where the consumer power lies. Over the next ten years, all emerging market countries will have an economy totaling $20 trillion, equaling or even surpassing the current U.S. economy."
In December 2010, PepsiCo made a high-profile announcement that it planned to buy Russian dairy giant Vim-Bir-Dan Foods for $5.4 billion, an acquisition that would make PepsiCo Russia's largest food and beverage producer. The deal is PepsiCo's second-largest acquisition since 2001, second only to its purchase of the U.S. Quaker Oats Company that year. The acquisition boosted PepsiCo's profits from its nutritional and "functional" products from $10 billion to nearly $13 billion.
In addition to its investments in China, India and Russia, PepsiCo invested $300 million in Brazil over four years from 2008 to 2012.
Rui Chenggang: China is hosting the next BRIC summit, but of course BRIC is a concept that originated in the BRIC metaphor. It's a concept that originated as a metaphor for the BRICs, and it's not as popular nowadays. But as this small group of countries has become the center of attention in the world, I would like to ask PepsiCo if BRIC is viewed as a separate group?
Lu Yingde: Our world is divided into groups of countries, and China is a group, and India is also a group, because these two countries have large populations, even more than the combined populations of other groups of countries. Russia, the CIS countries, the Eastern European countries and the Central European countries are divided into a group with a total population of about 400 million, and we divide the world into groups of countries which in turn define population groups. In the case of PepsiCo, we do not use the "Commonwealth of Independent States of the Former Soviet Union" or the "BRICs" as a criterion, but rather the world is divided into country groups. Thus, while Indonesia is important, it belongs to the Indonesia-Singapore-Malaysia group, and while Brazil is an important country, it belongs to the Brazil-Argentina-Peru-Chile and other South American countries group. We see the different groups in different ways.
RICHARDSON: So does this signal that a lot of future growth depends on emerging markets?
Luyende: There's no question about that, emerging markets are a disproportionate part of the growth. But our business in the West is just as substantial, just as growing, but purely on a small scale, emerging markets can be growing in the high teens, low 20s, whereas developed markets are growing in the single digits. That's the difference.
In this era, the West has seen a gradual slowdown in economic growth, while at the same time the East is rising, with high GDP growth and lower unemployment than in the West. This is arguably a confluence of factors that has triggered people to look at the world in a different way than they have in the past, and with little knowledge of the newly industrialized parts of the world making them uncomfortable, people are looking for answers. I think the discomfort that will continue over the next four to five years as people try to figure out how to compete in the East, how to accept this new dispensation, which is not a shift but a redistribution, and as they go through this transition, it is inevitable, and it will take time for people to be at peace with it, but it has to be accepted as an inevitable trend.
Over the past year, the U.S. unemployment rate has continued to hover at high levels, and the U.S. economy has been called a "jobless growth recovery". Obama's economic policy has been questioned by all sides. 2010 September, Intel CEO Steve O'Denney had also slammed the Obama administration's handling of the economic recovery. February 28, the U.S. manufacturing giant 3M Chairman of the Board of Directors and CEO George Buckley (George Buckley), who is also the chairman of the board of directors of the U.S. manufacturing giant, said the Obama administration has been working on the economic recovery. Buckley (George Buckley) interview with the Financial Times, accused the U.S. president of "anti-business", said Obama did not take any measures to improve the relationship between the White House and the U.S. big business, and claimed that to remain competitive, manufacturing companies such as 3M may have to move production to other countries.
So what does Lou Yingde think of Obama's financial policies and the U.S. economic situation?
Rui Chenggang: Because people have been traumatized by the so-called "risks" of the past, and people are beginning to pay attention to the potential risks of the future, and perhaps the biggest risk that people are talking about is the U.S. fiscal deficit, are you worried about that?
Lu Yingde: Risks often start from within, and we're a U.S. company, based in the U.S., and we want the U.S. economy to be in a very healthy state, first and foremost, to reduce unemployment and to deal with the deficit, which is of course worrisome to us. We want to be part of the discussion to ensure that this is realized, and that the solution of the American problem has an impact on the rest of the world and the region. We are closely following developments in this area because our company operates in 160 countries around the world and we do not want to deviate from the policy frameworks and economic conditions in those countries, so the situation in the U.S. and Western Europe is also of close interest to us. But in general, as U.S. GDP grows, we may have reason to pause and say, "Things may be getting better, maybe.
Richmond: You're the media's favorite to break into Washington and enter politics, so what do you think about the love/hate relationship that the U.S. business community has with President Obama?
Lu Yingde: President Obama's new initiatives are amazing, and in the first two years of his term he faced a lot of chaos, and he had to take some tough policy steps to stabilize the situation, and I don't think he was ever "anti-business," but he just wasn't overtly pro-business for the first two years because there were a lot of more pressing issues that needed to be addressed, and I think that's what he's trying to do. I think he was never "anti-business," but rather not overtly pro-business in his first two years because there were more pressing issues to focus on. And even presidents are limited in what they can accomplish in the first two years of their term. And now, two years later, with domestic conditions stabilizing and GDP on the rise again, he needs to shift his focus to how he can work with the business community*** to get the U.S. economy back to where it was before. If I were the President of the United States, I would take the same approach. So I think highly of him for reaching out to the business community and adopting a more supportive stance toward businesses and working with them **** to restore the U.S. economy. I'm very optimistic about the future movement.
RICHARDSON: But the first two years of a term tend to be the most effective for any country's president, because that's when support and influence are at their highest, and after that it gets tougher and tougher.
Lu Yingde: President Obama has already accomplished the toughest task, and the one that must be accomplished, in the first two years of his term. If he had reached out to the business community two years ago instead of embarking on rebuilding the financial system, there would be no financial system today. So I don't think it's wise to dwell on what he hasn't done and complain about how he should have done it.
Richmond: Most people would agree that the number one political and economic issue in America today is jobs.
Lu Yingde: Yes.
RICHARD: In that context, do you think that the growth of U.S.-China trade is a good thing because of the flow of Chinese outbound investment into the U.S., which is helping to create jobs, or is it still causing fear and anxiety?
Lu Yingde: I think the cooperation between China and the United States plus India is critical, and we often see China and India as two countries with the same breath of **** destiny, and it's very important that these two large, fast-growing economies collaborate with the United States **** on how to capitalize on the opportunities for the United States to grow because the United States remains one of the major engines of growth, but that collaboration should create jobs in the United States, so we're focused on that. U.S. jobs, so we're focused on net job growth. So it's very important that the conversation between us is not about one-way job exports, but it's about exploring ways that businesses between our two countries can create jobs for both sides in a more responsible way.
From a native Indian girl to the head of a Fortune 500 company, Lou has led PepsiCo from a food company specializing in carbonated beverages and snack foods to a "new Pepsi" with a balanced portfolio of carbonated beverages, health foods and functional beverages. 56 year-old Lou has a strong track record with PepsiCo. The 56-year-old Lu Yingde is known as the "Iron Woman" and the "Queen of Coke" because of her brilliant record at Pepsi.
Lu Yingde used her confidence and courage to create a new Pepsi, but she was always up for more challenges. Louinde's friend Henry Kissinger predicted that Louinde would be the queen of Pepsi. Kissinger predicted that there would be more to her career, and that in the future she would march on Washington and take her place in the U.S. Cabinet. Despite her career success, Yingde Lu was still at heart a traditional Oriental woman. She is a successful businesswoman, a mother of two daughters, and a devout Hindu. She has always believed that the core pillars of her business are family, friends and faith.
Rui Chenggang: Last question, you have been the only female CEO attending these world's top business and economic events, and you are taller than many of your male colleagues, are you tired of this situation?
Lu Yingde: I'm not tired of it, and I hope there will be more female CEOs because I think the world is ready for women in power. I hope that in the next three to four years there will be more women in CEO positions, so that when we comment on it, we don't see it as a special case but as the norm. As for the height issue, I can't help it.
Richmond: Thank you very much, Indy Lo.
Lu Yingde: Thank you very much, and you have a very pleasant exchange.