Tag Archives: Coca-Cola

Companies’ Growing Role In Natural Disaster Relief

Multinationals are taking an increasingly prominent relief role in humanitarian disasters, including those in China. The Center for Strategic and International Studies, a Washington think tank, has put the subject under its microscope, finding that corporations have become a central component of the international response to natural disasters. The likes of Coca-Cola and Cisco were bigger contributors to Sichuan earthquake relief than the U.S. government (if not bigger donors than the general public). The Center sees the trend as part of an expanding notion of ‘corporate global citizenship’, though in the case of Chinese disasters, it notes, it may be as much smart local brand building.

The Center dates the trend to the 2004 Indian Ocean tsunami. It excites policymakers, for all the differences in values and organizational cultures that exist between the private and public sectors. Companies bring cash but also a new disaster assistance network through their globalized and local personnel, supply chains and customers–and a desire to protect all three. Policy makers should remain realistic in their expectations, however. Relief for both domestic and international disasters accounts for less than 3% of all corporate donations, the Center notes.

Each natural disaster is unique in its own way. Beijing had the resources to deal with the 2008 Sichuan earthquake, unlike, say the Haiti government in the wake of the 2010 earthquake there. Yet U.S. corporations still donated an estimated $110 million toward relief of the Sichuan disaster, even if they were seen as “driven by commercial calculation rather than by acute humanitarian concerns”, the Center says. Up to a further $30 million was given via the Red Cross. The U.S. government itself gave just $5 million. The Business Round Table and the U.S.-China Business Council were instrumental in corralling U.S. multinationals to give in Washington’s stead.

Here is a list of the four most generous U.S. corporate donors for the relief of the Sichuan earthquake, one of the five big disasters examined for the Center’s study. The numbers include cash, in-kind donations and employee contributions.

  • Cisco: >$45 million
  • Coca-Cola: $15.6 million
  • Procter & Gamble: $7.6 million
  • Johnson & Johnson: $5 million

Seriously generous numbers.

This is all evolving ad hoc. In the U.S., the Business Civic Leadership Center at the U.S. Chamber of Commerce is emerging as the coordination point between the corporate, governmental and non-governmental organization worlds. UN agencies and the Global Economic Forum (Davos) is tickling forward the global agenda. There is interesting cooperation going on between companies and disaster relief agencies to enable corporate management and organizational skills and technologies to be deployed in the field at the time of disaster and to raise the core capacities of relief agencies over the longer term. As was demonstrated in the U.S. after Hurricane Katrina, a retailer like Wal-Mart is much more practiced than government disaster management agencies in distributing large volumes of basic supplies to a lot of people quickly. This is all beyond our immediate remit but gone into in some detail in the Center’s report, though the examples are mostly U.S.-centric.

From the ash-gushing Icelandic volcano to the Fukushima nuclear disaster, natural disasters can readily disrupt global supply chains. Disaster risk reduction may not have the feel-good factor of disaster relief for corporate donors, but private-sector engagement in these areas, though still rudimentary, is just as vital. That is not just about social responsibility. It is also, as the report notes, “about economic risk management and the longer-term vitality of consumer societies”.

While business may not be in the business of disasters, it decreasingly stands by, if it ever did, when disaster strikes. For multinationals in China, preparation is understanding where a company can be helpful and at what points in the system it can make their offers of assistance. For Chinese companies abroad, it is something to understand that this is becoming yet another dimension of being a multinational.

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Filed under Environment, Politics & Society, Sichuan earthquake

Will Australia Retaliate For Coca-Cola’s Blocked China Bid?

As the dust settles on Beijing’s decision to block Coca-Cola’s $2.3 billion bid for Huiyuan Juice on antitrust grounds, how does Chinalco’s proposed $19.5 billion investment in Rio Tinto look?

Chinese officials have been quick to stress that the Huiyan decision, which stopped what would have been the largest foreign investment in China, was not protectionist, but it is not being seen that way by at least one Australian lawmaker. Sen. Barnaby Joyce, who has been pushing for a review of Australia’s foreign investment laws in the wake of the proposed Rio deal, says the Coke decision “shows that China is being protectionist but wants Australia to offer up its important assets for a quick sale.”

Australia’s Foreign Investment Review Board has already extended by up to 90 days its review of the deal, which would be China’s biggest overseas acquisition. A proposed $443 million investment by Hunan Valin Iron and Steel in Fortescue Metals has also had its review extended.

However open China remains to foreign direct investment in to basket-case companies and to greenfield FDI (and it does seem to be that), the perception that established brands and putative national champions are off-limits will only reinforce the forces of retaliation.

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Coca-Cola’s Bid For Huiyuan Nixed

China is at that stage of its economic development where it is developing indigenous brands. Huiyuan, the country’s biggest maker of fruit juice, is one, and sufficiently powerful a one for Coca-Cola to bid $2.4 billion last September to acquire the Hong Kong-listed business. But what would have been the largest takeover of a Chinese firm by a foreign rival has been blocked by the Ministry of Commerce, as we suspected it would.

This deal was always seen as the first big test of the new anti-monopoly law, and the proposed combination has been nixed on the ground that it would give Coke too dominant a market share; Huiyuan has 42% of the domestic fruit juice market. But, as the FT reported, Coke had been considering abandoning the deal because regulators were insisting that it would have to give up the Huiyuan brand as it was too valuable to fall into foreign hands.

That will have been noted far beyond Atlanta.

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Coca-Cola Bids For Huiyuan, But A Deal Is Far From Certain

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.

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