---
title: "Devoured by Foreign Capital: Who Remembers Its Glory and Desolation?"
description: "In 1980, Li Peiquan, director of Chongqing Beverage Factory, decided to develop a Chinese cola using traditional Chinese medicine, leading to the creation of Tianfu Cola. After initial success and expansion, the brand was eventually taken over by PepsiCo in a joint venture, losing its market share and brand, only to be revived later but never regaining its former glory."
author: "华商韬略"
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published: "2023-02-13"
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# Devoured by Foreign Capital: Who Remembers Its Glory and Desolation?

> In 1980, Li Peiquan, director of Chongqing Beverage Factory, decided to develop a Chinese cola using traditional Chinese medicine, leading to the creation of Tianfu Cola. After initial success and expansion, the brand was eventually taken over by PepsiCo in a joint venture, losing its market share and brand, only to be revived later but never regaining its former glory.

**Registration details: click "Read Original" at the bottom**
**Source** | Hua Shang Tao Lue
**ID** | hstl8888

In 1980, Li Peiquan, director of Chongqing Beverage Factory, saw a news report: the State Pharmaceutical Administration issued a report stating that the national stockpile of traditional Chinese medicine white peony root was incurring annual losses of 400 million yuan. The central government then issued an instruction to research the development and utilization of traditional Chinese medicine. At that time, the fixed assets of Chongqing Beverage Factory were only 1.59 million yuan, but Li Peiquan decided to take a gamble.

**A Star Is Born**
**Li Peiquan had an idea: use idle traditional Chinese medicinal materials to develop a cola of our own.** At that time, Chongqing Beverage Factory had two workshops: one produced soda, and the other produced maltose. Although it was called a beverage factory, it could only produce 1 million bottles of soda per year, each selling for 8 cents, with an annual output value of no more than 100,000 yuan. The factory's main profit source was supplying maltose as a semi-finished product to candy factories. Around 1980, China was in the era of reform literature; the literary image of "Manager Qiao," who dared to break the rules, pushed many factory directors and managers to strive for breakthroughs. After tasting Coca-Cola once in Beijing, Li Peiquan could never forget its taste. Therefore, after seeing the news, he immediately thought: since Coca-Cola is a formula product created by a pharmacist, could white peony root be used to develop a cola? Among the eight research institutes nationwide tasked with studying white peony root, Li Peiquan quickly contacted the Sichuan Provincial Institute of Traditional Chinese Medicine. The two units reached an agreement to form a scientific research and production consortium, with the institute responsible for pharmacological research and the beverage factory for production. Li Peiquan set three goals for the research team: **first, to use domestic Chinese medicine with genuine health benefits that could withstand testing; second, to achieve the taste and flavor of international cola-type beverages; third, to use only domestic raw materials to avoid being controlled by others.** After spending 1.3 million yuan and a full year, and undergoing four stages of toxicological and health function tests, in December 1981, the research team finally developed a new cola beverage with white peony root as the main ingredient, supplemented by 11 other Chinese herbs such as Rehmannia and Angelica, which had health benefits and met international standards. At that time, the whole country was in the throes of economic reform. Leaders of Sichuan Province personally named the new cola "Tianfu Cola" and approved a loan of 1.6 million yuan as support. To showcase national sentiment, Li Peiquan also sought the famous calligrapher and painter Zhou Boxi to write the characters for Tianfu Cola. In 1982, after passing the final appraisal organized by the Chongqing Science and Technology Commission, which included renowned Chinese medicine experts and authorities in the food and beverage field, Tianfu Cola was officially launched as China's first domestic cola brand. Once Tianfu Cola hit the market, it stirred up a cola storm in the domestic beverage market, prompting the emergence of many "local colas" such as Shaolin Cola, Huangshan Cola, and West Lake Cola. The response among peers was enthusiastic, but the market reaction was different. In the early stages of launch, Tianfu Cola's sales were mediocre, and the market response was lukewarm, far from the expected immediate success. For Chinese people at that time, cola was a relatively unfamiliar beverage. In 1979, Coca-Cola re-entered China, but the public had experienced a 30-year gap. After Coca-Cola's return, it was initially only sold to foreign tourists at specific scenic spots, so most Chinese had never tasted cola. Fortunately, Li Peiquan had another plan: he also led the factory in developing chocolate champagne and rue soda, which were very popular and profitable. Before opening up the market, Tianfu Cola survived thanks to the "blood transfusion" from these two products. However, soon a signal that boosted Li Peiquan's confidence appeared. In April 1982, Tianfu Cola received high praise from the American newspaper "Overseas Chinese Daily": **"This beverage, after being tasted and appraised by 18,000 foreign tourists, is considered to be both like Coca-Cola and with Chinese characteristics; it will be in short supply in China."** Li Peiquan was overjoyed after reading the report, believing it meant that the taste of Tianfu Cola had been recognized by the international community. Starting from 1982, Tianfu Cola won a total of 14 awards at municipal, provincial, ministerial, and national levels, one important reason being the recognition and affirmation of Chongqing Beverage Factory's contribution to pioneering Chinese herbal cola. In 1984, the former Ministry of Light Industry conducted a "product quality evaluation" of colas on the market. **At that time, Coca-Cola's score was 0.52 points lower than Tianfu Cola, and the other six global colas scored even lower than Tianfu Cola.** As its popularity grew, Tianfu Cola's sales gradually improved, and it quickly became popular in Sichuan and Chongqing, becoming a local famous drink. In 1985, then national leaders visited Chongqing and praised Tianfu Cola after tasting it. After returning to Beijing, the State Council's Government Affairs Administration, after strict inspection, designated this local specialty that had captured the leaders' taste buds as the only cola beverage for state banquets.

"A famous drink of a generation, Tianfu Cola" thus broke out of Sichuan and Chongqing, swept the nation, and reached the peak of its brand reputation, becoming a national beverage of an era. Li Peiquan also took the opportunity to rename the company Chongqing Tianfu Cola Beverage Industry Company.

**Going International**

From 1985 to 1988, Tianfu Cola reached a glorious new height.

Du Jinliang, a worker who had worked in the factory's supply and marketing department, recalled that trucks coming to the factory to pick up cola lined up from the gate to a kilometer away. Distributors from all over chased Li Peiquan for allocation slips to get cola, and the workshops operated 24 hours a day in three shifts but still couldn't keep up.

At its peak, the annual shipment of Tianfu Cola to Beijing alone filled 120 train cars. Such a surge in demand naturally required advance capacity preparation. At that time, soda was all in glass bottles, which, due to production and filling processes, couldn't be transported long distances, leading to the peculiar phenomenon of "one city, one soda" in the domestic beverage market. To expand sales coverage, Li Peiquan learned from Coca-Cola's advanced production model and set up bottling plants across the country. The Chongqing headquarters provided the concentrate, and local plants bottled and sold it. In fact, before Tianfu Cola was officially launched, Li Peiquan was already planning the construction of branch plants. Initially, they were in Miyi County and Nanchong City, and then expanded beyond Sichuan. **By 1988, Tianfu Cola had established 102 beverage production cooperative enterprises in 27 provinces, municipalities, and autonomous regions, along with 6 cooperative units for research, machinery manufacturing, and raw material bases, forming a vast research and sales network with 108 member units.** From Xinjiang in the west to Hainan in the south, except for Tibet, Hong Kong, Macao, and Taiwan, Tianfu Cola's factories covered almost the entire country at its peak. Li Peiquan also decisively took out loans to introduce 7 advanced canning production lines from the United States, France, Italy, the German Democratic Republic, and the Federal Republic of Germany. This exponentially increased production efficiency, from an initial 30 bottles per minute to 500 bottles, and finally to over a thousand bottles per minute. At its peak, Tianfu Cola's annual output reached over 60,000 tons, equivalent to more than 100 million bottles. While expanding branch plants nationwide, Li Peiquan also led the company to boldly expand Tianfu Cola's business territory overseas. In 1990, Tianfu Cola established a bottling plant in Moscow. Japan's Kazama Corporation proactively acted as an agent, allowing Tianfu's products to enter the "home" of cola-type beverages, the United States, and even set up a branch office in the World Trade Center in the U.S. to exclusively sell Tianfu Cola. In the late 1980s, China was still in the era of a planned economy; to sell beverages abroad, one had to go through the government-owned China National Cereals, Oils and Foodstuffs Import and Export Corporation (COFCO), and only with COFCO's approval could one export to earn foreign exchange. At that time, the other seven of the "Eight Major Soda Factories" were content with their regional dominance, and the only domestic carbonated beverage brand that successfully entered the international market was Tianfu Cola. In its most glorious years, Tianfu exported its products to more than 20 countries and regions, including the United States, Japan, the former Soviet Union, and Singapore. In its most prosperous year, 1988, Tianfu Cola's production and sales ranked among the top five in the national beverage industry, and in the domestic cola segment, it held a 75% market share, unquestionably the leader. **The steadily rising sales brought the company an annual output value of over 300 million yuan, annual profits and taxes of over 60 million yuan, and net profits of 10 million yuan. With its high output value, Tianfu Cola climbed to second place among the "Eight Major Soda Factories," becoming the beverage company second only to Laoshan Soda.** With the rise of Tianfu Cola, in 1986, Li Peiquan was awarded the "May Day" Labor Medal and the honorary title of "Determined Reformer" by the All-China Federation of Trade Unions. In 1988, with the approval of the former Ministry of Light Industry and the State Administration for Industry and Commerce, Li Peiquan officially renamed the company China Tianfu Cola Group Company. It became the only beverage enterprise in the country to be prefixed with "China." From then on, Tianfu Cola Group became an absolute powerhouse in China's food and beverage industry. Li Peiquan, who had turned a small workshop with fixed assets of just over 1 million yuan into a nationally renowned enterprise in just 8 years, became a famous entrepreneur praised by the outside world. However, amidst the fame and glory, Li Peiquan felt inexplicable anxiety. In a casual conversation with a reporter, he suddenly mentioned: **"I feel it's very difficult to take another step forward now; I'm trapped by an invisible net."**

**The Calamity of Pepsi**

Facts proved that Li Peiquan's anxiety and concerns were not unfounded.

In fact, starting from 1986, Tianfu Cola began to fall into some troubles. For example, the Sichuan Provincial Health Department believed that adding white peony root to Tianfu Cola violated the Food Hygiene Law, resulting in 800,000 bottles of Tianfu Cola being returned and destroyed.

At the same time, the shortcomings of the state-owned system began to show. Under the state-owned system, there were many constraints and unscientific practices in the allocation of funds, management, and personnel. Tianfu Cola also suffered greatly from this. Although Li Peiquan was the factory director, his power was limited, and he could do nothing about these drawbacks. These problems were like underwater reefs; as long as the tide of rapid progress continued, they would not be exposed. But what worried Li Peiquan more was that, starting from the 1990s, China began actively introducing foreign investment. Many industries showed a phenomenon of favoring foreign capital over domestic capital. **In his view, the real enemies of Tianfu Cola were actually the foreign giants eyeing the Chinese market.** 1989 was the turning point when Tianfu Cola went from prosperity to decline. At that time, to adjust domestic inflation and overheated investment, the state implemented macroeconomic controls, making the national economy suddenly chilly. Tianfu Cola's performance was also severely hit, with national sales plummeting. That year, the number of products Li Peiquan shipped to Beijing dropped sharply from 120 train cars the previous year to 30, a decline of over 70%. During the same period, sales of all domestic soda brands went from prosperity to decline, while the market share of foreign Coca-Cola and Pepsi-Cola grew larger and larger. Watching the market share of the brand he had created being gradually eroded by "outsiders," Li Peiquan felt heartbroken but was powerless to fight back. What he didn't expect was that China's re-entry into the "General Agreement on Tariffs and Trade" would become a death warrant for Tianfu Cola. In 1993, officials from the former Ministry of Light Industry judged that the country would inevitably further open its market in the future. Domestic beverages, which only knew a comfortable environment, would be unable to withstand the "dimensional reduction" attack of foreign giants that had fought through international markets. So they decided to "use foreign capital to reform state-owned enterprises" and used administrative orders to require the "Eight Major Factories" to form joint ventures with the "Two Colas." It was also in this year that Li Peiquan was subjected to a "review" targeting him personally. Although no problems were found, the following year, he effectively lost control of Tianfu Cola through retirement. In 1994, Tianfu Cola reached a cooperation agreement with Pepsi-Cola, establishing Chongqing Pepsi Tianfu Beverage Company. This was a completely unequal joint venture. At the establishment of the joint venture, Pepsi contributed $10.7 million in cash, while Tianfu invested its high-quality assets such as factory buildings, equipment, and land, valued at $7.3 million, into the joint venture, with a shareholding ratio of 60:40. Pepsi also carefully selected 430 key workers from the original Tianfu Group's 1,100 workers, while Tianfu was responsible for taking the "leftover" 700 workers and over 60 million yuan in debt, struggling to survive with the help of subsidies from higher authorities. The two sides agreed that in the future production of the joint venture, the output of Tianfu Cola should not be less than 50%. But in reality, in the first year of the joint venture, Tianfu Cola's output accounted for 74%, the second year 51%, and the third year it plummeted to 25%. By 2006, before it was completely sold to Pepsi, it was only 0.5%. Before the joint venture, Tianfu Cola was profitable every year, with annual profits and taxes of tens of millions. After the joint venture, even with debt stripped away, it began to lose money year after year. From a loss of 12.8 million yuan in the first year, it lost money for three consecutive years, reaching a loss of 50 million yuan. **In the twelve years of the joint venture, Tianfu received no dividends, but instead accumulated debts of over 140 million yuan, and was rated as a "special hardship enterprise" by Chongqing for eight consecutive years.** Faced with this obviously abnormal loss, Zou Zhenhuang, chairman of the joint venture, protested many times. However, in the board of directors, Pepsi had 4 votes, while Tianfu had only 2, with no say at all. Although he had left, Li Peiquan always cared about Tianfu Cola. "I thought I'd go back and see what they had done to Tianfu Cola, and see how the old employees were doing." After repeated invitations from the joint venture, Li Peiquan agreed to return as a consultant, but the result disappointed him. "Pepsi not only didn't produce much Tianfu Cola, but also treated the old employees poorly. I always argued with them, and eventually had to leave." Finally, Tianfu Cola fell into a debt quagmire and sold all its shares to Pepsi for 130 million yuan in 2006. At that point, Pepsi held 94.4% of the shares, and Tianfu Cola was completely devoured by foreign capital. In this cooperation that should have been a win-win, Tianfu Cola lost its formula, its brand, and its sales, while Pepsi not only gained Tianfu Cola's sales channels and production lines but also successfully eliminated Tianfu Cola's brand influence. Similar to the fate of Tianfu Cola, the other seven of the eight major domestic soda factories were successively swallowed up by the "Two Colas" through joint ventures and acquisitions, and were almost wiped out. Years later, Li Peiquan, who had retired, still felt indignant when mentioning this matter:

**"When we first opened up, we naively thought foreign companies were coming to help us grow and develop. We didn't expect they were coming to occupy the market and eliminate national brands."**

**The Legend Ends**

**"This is my place of sorrow. After eight years of research and development, it was taken away for nothing!"**

In 2010, Li Peiquan returned to Tianfu Cola Group. In front of the dilapidated and abandoned factory, he picked up a bottle cap and lamented.

In 2008, Tianfu Cola, which was about to be forced into bankruptcy proceedings, filed a rights protection lawsuit against Pepsi, arguing that the "Tianfu" brand and technical secrets had not been valued as shares during the original joint venture. At this time, Li Peiquan was over 70 years old and had been retired for many years, but he still paid close attention to Tianfu Cola. He was ready to do his part when Tianfu Cola needed him. Upon learning of the lawsuit, he stepped forward without hesitation. Despite his age, he ran around calling for help, contacting many old employees and technical personnel who had left years ago to provide evidence and testimony. During the trial, more than 80 old Tianfu workers gathered in the court every day to observe. They were all eagerly hoping to reclaim the brand and revive Tianfu Cola. "I thought my heart was dead, but now I seem to have passion again. Seeing everyone working so hard, I feel energized." Li Peiquan was filled with mixed emotions; he realized he was not alone. Finally, in 2010, Tianfu Group regained the formula and production process of Tianfu Cola. In 2013, it also got back the trademark usage rights. In March 2016, with Li Peiquan's eager anticipation, Tianfu Cola officially announced its comeback after more than 20 years of silence. The revival of Tianfu Cola should have added a perfect final touch to Li Peiquan's life. However, after its comeback, Tianfu Cola struggled in market competition and never regained its former glory. In 2018, Tianfu Group, which had shown no improvement in performance, underwent mixed-ownership reform, and Tianfu Cola (Chongqing) Beverage Co., Ltd. was established. However, just a year later, Li Peiquan passed away due to illness. His greatest regret was that he never witnessed Tianfu Cola return to its peak. **Li Peiquan once said that he regarded Tianfu Group as his own child, and he had truly worried about this "child" all his life.** In his later years, Li Peiquan was blind in one eye and stayed at home, but he still kept Tianfu Cola's development in mind. He insisted on writing in small regular script every day, and the notebooks he practiced calligraphy in were neatly filled with his summaries and reflections from his time as director and general manager of Tianfu Cola, believing these could help future managers. He even often used his "sorrowful experience" to warn enterprise managers who came into contact with him not to repeat the same mistakes. Don't forget: **"National brands must be self-reliant and self-strengthening, and be wary of risks in foreign capital mergers and acquisitions!"**

References:
[1] "40 Years of Happy Water" Zuo Ye
[2] "Li Peiquan: Difficult 'Recovery' of Tianfu Cola" Economic Information Daily
[3] "Tianfu Cola Sales Surge: What's Going On?" Quwenku
[4] "Tianfu Cola, After 20 Years of Storms, Returns with Honor! Tribute to Li Peiquan!" Chongqing Evening News

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