Although Nestlé had opened a sales office at Shanghai in 1908, it was only in 1979 that the firm started
discussing partnerships with local companies in China. By 2011, 90 per cent of Nestlé products sold in
China were being manufactured locally, including dairy products, ice cream, coffee & beverages, and
infant nutrition. R&D centres were established in Shanghai and Beijing. Having recorded annual sales of
$2.67 billion in 2012 in China, Nestlé was projecting China to grow quickly to become its fourth largest
market, overshadowed only by the United States, France and Brazil. Longer term, China was expected to
be the second largest market by sales.19
China had traditionally been a tea-drinking country; however, China’s retail sales of coffee had grown
rapidly, and was valued at $1.14 billion in 2012 (see Exhibit 8). Nestlé was, by far, the largest coffee
company operating in China with retail market shares of 69.0 per cent, 70.4 per cent and 72.7 per cent for
the years 2010, 2011 and 2012 respectively.