Sanjeev Chadha, CEO of PepsiCo Asia, Middle East and Africa. Courtesy of PepsiCo

Connecting with local consumers is the effervescence of sustainable growth in China, according to Sanjeev Chadha, CEO of PepsiCo Asia, Middle East and Africa.

"We are very committed to ramping up on innovation," said Chadha at the annual Boao Forum for Asia in Hainan province last Wednesday. He exemplified the establishment of Asia R&D center in 2012, which is the largest research and development center of PepsiCo outside the US. "It is going to really help us in terms of further developing products and packages, both foods and beverages, which are closer to the hearts of our Chinese consumers," Chadha said.

After committing two billion dollars to its China operations over the last three decades, PepsiCo is now looking to win favor with new flavors in the world's fastest growing beverage and snack market. 

PepsiCo has a portfolio of brands that include 22 brands with annual retail sales over $1 billion each, more than any food and beverage company in the world. Chadha attributes this success to PepsiCo's continuing efforts to connect products with local consumers.

"One of the key reasons why we are loved by consumers around the world and in China is because of the innovation and the key element of innovation is locally relevant," said Chadha. "Local relevance is a very critical factor, and that has been the key factor for success, and we want to bring upon that further as well."

In 2012, PepsiCo announced the opening of product research and development center in Shanghai. The state-of-the-art facility serves as a hub of new product, packaging and equipment innovation for PepsiCo's businesses throughout Asia. The facility is equipped with an advanced culinary center and test kitchens focused on developing and tailoring PepsiCo food and beverage brands for distinct, locally relevant taste preferences throughout the region. The R&D center aims to better cater to the tastes of Chinese consumers, with flavors such as hot-and-sour fish soup for Lays, China's top-selling potato chip brand.  In 2013, PepsiCo also introduced to the Chinese market a new snacks series known as Pick & Mix, offering a variety of snack choices in different flavors, as well as Quaker high-fiber oats dairy drink.

In addition, the facility houses a pilot manufacturing plant that will allow researchers to quickly test new product ideas and support efforts to significantly accelerate the pace of PepsiCo's innovation in China and other growing Asia markets. According to Cathy Tai, Corporate Affairs Vice President of Greater China Region, the strategically-placed pilot plant significantly shortens the R&D process by eliminating months of back and forth with its US headquarters.

PepsiCo is also making new inroads with marketing strategies. Last year the company's Lays campaign, entitled "Do us a flavor", encouraged consumers to vote for the flavors they liked best. The campaign saw thousands of participants and resulted in new local flavors, such as cucumber and seaweed.

Their efforts are paying off; PepsiCo's food and beverage lines in Greater China Region saw double-digit growth in 2013.

According to Chadha, innovative products and marketing alone do not build a billion-dollar brand. 

Corporate social responsibility also contributes  to sustainable growth, an idea reflected in PepsiCo's corporate vision and strategy  "Performance with  Purpose," "Performance" driven by sustainable business growth, and "Purpose" aimed at benefitting not just shareholders, but society at large.

"Wherever there is collaboration, the progresses are stronger, faster and greater as well," said Chadha. "And we are very keen and welcome any suggestions and opportunities to collaborate for the betterment of China going forward."

In January 2014 PepsiCo Greater China Region launched its "Bring Happiness Home" campaign with the theme "Family knows no boundaries and love knows no limitations."

The campaign followed up their blockbuster Chinese New Year initiative in 2012 and 2013; a star-studded online campaign which garnered over 1.4 billion views so far in 2014 alone.

A key initiative of this year's campaign is "Happiness Giving," the belief that charity is a gift of happiness and has a 'snowball effect,' namely, the more happiness we give, the more society will benefit.   PepsiCo partnered with China Women's Development Foundation (CWDF) and China's leading e-commerce company Zhejiang Tmall Technologies Co., Ltd (Tmall) to launch the online charitable campaign "Bring Happiness Home - Mother Post Parcel - A New Year's Gift for Poor Mothers."  As a result, more than 64,000 people have donated online to help families in poor and rural regions of China, generating a total of RMB 3.3 million, the equivalent of 16,350 mother post parcels for the rural poor mothers in 11 provinces.

Such innovation in business practice has been driving the sustainable growth for PepsiCo in its Greater China Region.