ATLANTA, Georgia – When John Pemberton poured the first cup of Coca Cola in Jacob's Pharmacy just a few blocks from the current Coca-Cola headquarters in Atlanta, Georgia, 125 years ago, the inventor of the carbonated drink surely never thought it would become a drink enjoyed in more than 200 countries and regions.

In 1978, Coca-Cola Company became the only company allowed to sell packaged cold drinks in China. So far, it has invested more than $1.3 billion in the Chinese market, with an additional $2 billion more planned as part of its 2020 global vision. The company wants to double its revenue and its bottlers by 2020.

Today Coca-Cola has 500 brands and 3,500 beverage products sold worldwide. It considers China - its third-largest market after the United States and Mexico - has the greatest potential in the world.

In China, Coca-Cola employs more than 30,000 local people.

Last year it opened its 41st China bottling plant in Hohhot in North China's Inner Mongolia autonomous region.

Shaun Rein, managing director of the China Market Research Group in Shanghai, said Coca-Cola has done well in penetrating the Chinese market.

"However, for it to grow, it is going to have to launch more China-focused drinks or acquire local brands," Rein said.

Julian Chang, executive director of Asia programs at the Ash Center, which is part of the Harvard Kennedy School, thinks the company's strength has been to be sensitive to local market needs.

"As a company, they can move quickly to respond to local conditions … look at the success of Minute Maid Pulpy in China," Chang said.

Minute Maid Pulpy was introduced in China in 2005, and it reached $1 billion in global retail sales in five years, becoming the company's first brand developed and launched in an emerging market to reach that sales figure. The brand is now among the premier juice drink brands in more than 15 countries and regions, including Indonesia, the Philippines, Thailand and India

Muhtar Kent, CEO of Coca-Cola, has confidence in emerging markets and thinks the company's long-term plan in China is on the right track.

The company's sales in China rose 6 percent year-on-year in 2010 but fell 3 percent year-on-year in the fourth quarter against the same period last year.

However, Kent said he was happy with the projections about the Chinese market.

"The first billion-dollar brand we have emerged out of China. So, that gives you the signal of progress in China which we are very happy about," he said, adding he cannot predict when China might become the largest market for Coca-Cola, but said it will happen eventually.

China's soft drinks market has maintained double-digit growth for more than 10 years. However, some experts predict growth may slow down in the future because of increasing market saturation.

In 2006-2010, sales of soft drinks in China , including soda, juice and bottled water, almost doubled to 270 billion yuan ($41.5 billion), according to Euromonitor International, a market research firm.

At the end of the year, Coca-Cola had 17 percent of market share while Tianjin-based food producer and distributor Tingyi (Cayman Islands) Holding Corp., had 13 percent. Hangzhou-based food and beverages firm Wahaha had 7 percent, and PepsiCo Inc being fourth with 6 percent.

"Fifteen years ago, foreign brands were really all there were but now Chinese companies are competing head to head against foreign brands," Rein said.

Wang Laoji – a herbal tea drink from Guangzhou Pharmaceutical Holdings Ltd that produces traditional Chinese medicines and health drinks – is dubbed the "Chinese Coke" and is gaining popularity in China.

John Farrell, vice-president in strategic planning at Coca-Cola, recognizes the competition in the Chinese market but he does not see it as a negative element.

"The great thing about China is it has a lot of competition which helps create the industry. When you are building non-alcoholic ready-to-drink beverages, which are commercial beverages, the more competition you have, the better, as far as developing industry growth in more consumer-participated, high-quality beverages," said Farrell, one of the creators of Diet Coke.

Coca-Cola has put a lot of effort into advertising in China and is heavily involved in China's festival celebrations such as those during Chinese New Year. It was also the first international company to sponsor both the Beijing Olympics and Shanghai World Expo.

But Rein thinks marketing is not enough. Coca-Cola should catch up on localizing its products more in China, he says.

"Chinese generally are more concerned about health than Westerners and prefer tea-based products," Rein said.

"Going forward, the trend is away from carbonated beverages and more towards fruit juices, herbal teas and other drinks consumers feel are healthier. Coke needs to get into this market if it wants to continue to grow fast," Rein said.