Companies Still Believe in China

China's still the place to be.  Just look at PepsiCo's announcement today of its $1 billion investment in China over the next 4 years.  That's a big stamp of approval from one of the best beverage and food giants, no, make that one of the best run companies around.

PEP's been in China for almost 30 years already.  They're not exactly new to the scene, so by making this strategic investment PEP must recognize opportunities.  At the very least, PEP is deploying money that it could've used to repurchase shares or boost its dividend...this tells us that PEP's expected rate of return of its China investment is higher than either options.

Obviously, it helps that PEP is one large company that has the wherewithal to spend a chunk of money on market research.  The key will be in finding out what products appeal to the Chinese - Frito Lays may not do as potato chips are not a snack food staple in Chinese diets.  It would not surprise me that PEP will spend some of that money buying into an already established Chinese company...as KO is attempting with its bid on a Chinese juice maker.

Giving yourself 4 years to invest $1 billion is a nice, tight timeframe to work with since by then the credit markets should be thawed.  China's middle class should be more established than it is in today's jittery market.  And, PEP should have a better sense of what China needs and fill that need.