The second reason is that if the acquisition had been approved, the controlling power of Coca-Cola over the juice market would be markedly increased so that other companies would be incapable of entering it. I think the drinks market is the first fully open competitive market after China introduced the reform and opening-up policy. People have never heard of a company that had wanted to enter the drinks market but had no access because the market was controlled. Over the past years, at least 100 Chinese companies have entered carbonated drinks market. Which one has failed because of monopoly by Coca-Cola?

The third reason is that if the deal had been approved, it would have squeezed the development space of domestic small and medium-sized companies and restrained other domestic companies from participating in the competition on the juice market. I think this is hard to understand. To form a monopoly on China's juice market, Coca-Cola would have had to meet one of two conditions: First, it would have monopolized raw materials for juice; and second, it would have monopolized juice sales channels. I cannot see any possibility of the two circumstances occurring.

Tong Dahuan, a financial commentator for sohu.com: Although Coca-Cola and Huiyuan have comparatively controlling power on the carbonated drinks market and juice market respectively, neither has fixed high monopolized prices that have hurt consumers, nor have they squeezed small and medium-sized companies, or even large companies such as Pepsi or Wahaha, out of the market. So why the decisions that the acquisition would certainly constitute a monopoly? Even if the acquisition did form a monopoly, how would it have influenced Chinese people's lives? Drinks, after all, are not necessities. When Coca-Cola first entered China, it was even sold as a luxury. Pure juice just came into people's lives in recent years.

(Source: Xinhua News Agency reports)

Facts About Coca-Cola and Huiyuan

Coca-Cola's business in China has been operating since 1979 and is well known for its sparkling beverage brands such as Coca-Cola, Sprite and Fanta. In the last few years, the company also has introduced a number of still beverage brands, including Guo Li Chen (Minute Maid Pulpy) and Yuan Ye (Original Leaf Tea), to give consumers a wide range of choices.

Established in 1992, Huiyuan produces fruit and vegetable juice and juice drinks. It is registered in the Cayman Islands. According to the Nielsen Co., Huiyuan was the largest pure juice maker in China in the first half of 2007 with 46 percent of the market share. On February 23, 2007, China Huiyuan Juice Group Ltd. was listed on the Hong Kong Exchanges and Clearing Ltd.

(Source: company websites)

The Ministry of Commerce has approved a total of 4,966 foreign acquisitions since 2003 when new provisions for foreign investors taking over Chinese enterprises were promulgated, according to Yao Jian, a ministry spokesman. At a recent news conference in Beijing, he said the country welcomes foreign companies to invest here and encourages them to participate in the competition on the Chinese market.

In recent years, the government has significantly reduced the threshold for foreign companies to enter the market, and more and more transnational companies are coming to China. Besides traditional greenfield investments, foreign companies have focused on acquiring Chinese enterprises as a means of overseas investment.

Yao said that the acquisition of Chinese companies by transnational ones has brought funds, technology and management experience to China and is conducive to China's economic development. But if such acquisitions give transnational companies control of Chinese market or eliminate or restrict competition, they would impede the country's economic development. The aim of the Anti-Monopoly Law is to effectively eliminate the possible adverse impacts of acquisitions while encouraging market participants to expand their business and enhance their competitiveness through fair competition and a freely established alliance, he said.