Japan & China: Suntory continues to aim for expansion in China despite geopolitical risks

Japanese beverage maker Suntory continues to aim for expansion in China, although it acknowledges geopolitical risks, Nikkei Asia reported on November 11.

The Chinese market remains attractive due to its promising momentum, and the country is one that Suntory wants to establish strong relations with, said CEO Takeshi Niinami in an exclusive interview with Nikkei Asia on the sidelines of Nikkei's Global Management Dialogue, held on November 7 and 8.

"[China] is a country economically growing at that scale, and plus at a rate of 4% - it may be 3.5%, depending on the circumstances," Niinami said. China is four times bigger than Japan in terms of GDP, even if it is lower in terms of income per capita. "It is growing at a massive scale of money, so we would want to capture this market at whatever cost," he added.

But he acknowledged the geopolitical risks and said Suntory must carefully analyze how much to invest in production facilities.

Niinami said the keywords for business going forward include inflation and geopolitics, referring to the situation in the Middle East, U.S. elections and China's economy.

Mentioning that "global geopolitics and our economy are inseparable," the CEO pointed out that Japan has approached an era in which each company must "raise its antennae" and look more closely at the world.

Niinami described the current geopolitical situation as "anxious but thrilling."

"Regarding management, these are exactly the times when we see differences in management skills, analytical skills and action -- it has become that kind of era," he said.

Suntory is using its global networks to gather information regarding sustainability technology and food technology, according to Niinami.

"Maybe [people] could create an atmosphere of drinking in a bar at home by using the metaverse," he said while describing some of the possibilities that new technologies could provide. He said he is having his employees research how things like digital devices and the metaverse could be used, for example, to revive home drinking practices in the U.S., which have not recovered to 2019 levels.

AI is becoming increasingly visible in the beverage scene. Generative AI will most likely permeate company advertisements going forward, Niinami said, noting that there will likely be a polarization between AI and human media personalities. Among other beverage makers, Ito En used a model created by generative AI for a tea commercial starting in September.

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