Posted by: Bruce Einhorn on March 6, 2009
For almost half a year, Coca-Cola executives have been waiting for China to give the OK to Coke’s proposed takeover of Huiyuan, the big Chinese juice company. Coke announced the $2.4 billion deal in early September, but it can’t go through without officials in Beijing agreeing that Coke swallowing Huiyuan doesn’t violate China’s antitrust law. Here we are in March, though, and they’re still waiting. One way or the other, the wait is going to end soon: Coke and Huiyuan agreed to a March 23 deadline for the deal.
With that date in mind, consider the news today from Coke that it plans to invest another $2 billion in China over the next three years. Coke’s announcement of its China plans seems like a straightforward message to the folks in Beijing: Pay no attention to critics of the deal in China who are angry at the idea of a big, bad American company taking over one of their favorite brands. Or, as Coke CEO Muhtar Kent said (according to a statement Coke released today), Coca-Cola’s “commitment and confidence in China never wavers.” Take that, opponents of the Huiyuan deal! Given the dicey state of the Chinese economy right now, I suspect that’s a message Beijing officials are eager to hear.
One other thing: I confidently predicted on Sept. 8 in this Eye on Asia blog post that Chinese officials would give this deal a green light. Letting Coke do a deal in China would make it easier for Chinese companies to do deals overseas, I said. Since then, Chinese officials have been decrying what they see as protectionist measures around the world targeting China’s companies. Stands to reason, then, that Beijing would be more interested in setting an example by showing how open China is. By March 23, we’ll know.