The Hot Zone
China's newly announced air defense identification zone over the East China Sea aims to shore up national security
Current Issue
· Table of Contents
· Editor's Desk
· Previous Issues
· Subscribe to Mag
Subscribe Now >>
Expert's View
Market Watch
North American Report
Government Documents
Expat's Eye
Photo Gallery
Reader's Service
Learning with
'Beijing Review'
E-mail us
RSS Feeds
PDF Edition
Reader's Letters
Make Beijing Review your homepage
Hot Links

cheap eyeglasses
Market Avenue

American Beverage Giant's
Merger Fails
Special> American Beverage Giant's
Merger Fails
UPDATED: March 30, 2009 NO. 13 APR. 2, 2009
Seeing the Big Picture

Coca-Cola's intended purchase of Beijing Huiyuan Beverage Group Co. Ltd., the biggest fruit and vegetable juice producer operating in China, has been aborted, after the Ministry of Commerce (MOFCOM) ruled that the plan contravenes China's Anti-Monopoly Law. This is the first and only case MOFCOM has blocked since the law went into effect eight months ago. During this time, MOFCOM has approved 24 other acquisition proposals originally filed for anti-monopoly investigation.

MOFCOM's rejection is based on its concerns that the buyout will likely cause an adverse impact on market competition and may restrict the healthy development of the beverage industry. Given the fact that both Coca-Cola and Huiyuan hold massive shares in the domestic market-Coke has some 50 percent of carbonated drinks and Huiyuan 46 percent and 39.8 percent, respectively, of the pure fruits and medium concentration beverages-it is believed that the deal would lead to market monopolies if permitted. This not only will create unfavorable conditions for other local beverage manufacturers, small and medium-sized ones in particular, but also will hurt the interests of both consumers and fruit farmers.

Ever since Coca-Cola disclosed its plan to purchase Huiyuan for $2.4 billion last September, there has been heated debate among the general public. Many have opposed the takeover, believing it would eventually deprive them of yet another well-known local brand. This is an understandable concern, considering that several local consumer products, including batteries, toothpaste, soft drinks, cosmetics and detergent, have disappeared one after another, in the wake of the mergers and acquisitions of local brands by some powerful foreign multinational competitors.

There are, however, other opinions regarding the planned acquisition. Some consider the deal a purely business move that will benefit both Huiyuan and Coca-Cola, while others believe it will by no means protect local brands. Regardless of their arguments, it is generally agreed that Chinese companies need to break up the existing bottlenecks in capital, technology, management and other areas, in order to build strong brands and stay competitive. To achieve this aim, relying on overseas resources still remains one of the most direct and possibly effective ways.

China's verdict on Coca-Cola's latest attempted buyout has also aroused intense concerns abroad. Some media reports saw it as a discriminatory action, or even linked MOFCOM's stand with practices of protectionism. This is, of course, an incorrect conclusion. Like many other countries in the world, MOFCOM is a market regulator carrying out its responsibilities, and its decision to ban the buyout is in line with China's Anti-Monopoly Law and hinges solely upon the ultimate goal of maintaining fair play in the marketplace and protecting the overall interests of all parties concerned.

Top Story
-Protecting Ocean Rights
-Partners in Defense
-Fighting HIV+'s Stigma
-HIV: Privacy VS. Protection
-Setting the Tone
Most Popular
About BEIJINGREVIEW | About beijingreview.com | Rss Feeds | Contact us | Advertising | Subscribe & Service | Make Beijing Review your homepage
Copyright Beijing Review All right reserved