Recruiting in China

SHANGHAI (Reuters) - Former China president of mobile phone maker Motorola Inc. Daniel Shih has joined PepsiCo Inc. to help the U.S. company to sell its cola products in China, industry sources said on Thursday. Shih is now the president for Pepsi's beverages business in China, two sources familiar with the situation told Reuters, a market where Pepsi is facing tough competition from its U.S. rival, Atlanta-based Coca-Cola Co.

Shih, a Taiwan-born Amercian, joined Pepsi before the week-long Chinese National Day holiday last week and will report to Zhu Huaxu, current China chairman of Pepsi, the sources said.

"Shih will be working very closely with Zhu and finally Shih will take over all Zhu's posts, becoming his successor," said one Beijing-based source close to Pepsi.

Shih, who left Motorola late last year, will take over Pepsi's China operations in the second quarter of 2007, when Zhu plans to retire after working for Pepsi for nearly a decade in China, the second source said.

Multinational corporations, from global banks to toy makers, have poured tens of billions of dollars in the past few years into China, the world's fourth-largest economy where personal savings have reached a total of roughly $2 trillion.

Global chief executives have long complained that a shortage of senior industry talent may be the biggest challenge that companies face in China. Foreign firms see China work experience and language skills as vital when hiring senior executives.

The first source said Pepsi's Zhu first brought up the idea of retirement with management late last year, after which Pepsi began to cast around for a successor.

"Pepsi is a big multinational corporation in China, so it needs some time to assure the handover ... will be done very smoothly," said the source, adding that profit margins in China's beverage sector may be larger than in its electronic industry.