I remember back in the blue Mao suit days climbing a (small) mountain in central China and coming across s a battered old Coca-Cola vending machine, which no one could explain how it got there or why. At last month’s Olympics, Coca-Cola was everywhere, blanketing the games in Coke red. The American drinks company was arguably the big winner of the commercial games.
Now it is bidding $2.5 billion for China Huiyuan Juice Group, the Hong Kong listed holding vehicle for the China’s leading fruit juice maker. If the deal goes through, it would be the largest foreign acquisition in China, as well as Coca-Cola’s second largest ever.
The company, which has been operating in China ever since Deng Xiaoping reopened the economy in the late 1970s, is looking to expand its beverage business worldwide beyond cola as well as its presence in China. While Coca-Cola will bring production and distribution expertise to Huiyuan, the offer will need government approval — and that is far from certain.
Xinhua’s report points up two prospective difficulties: the potential monopoly position that the combined company would hold (though that is a bit rich in a country breeding national champions across 20 industries; that said this is will be the first significant test of last year’s new Anti-Monopoly Law); and the fact that Huiyuan is a famous domestic brand and thus worthy of protection. Much more to come here, this Bystander suspects.