China defends denial of Coke bid for juice maker
March 23, 2009
China defended its rejection of Coca-Cola Co.''s attempt to acquire a major Chinese fruit juice maker, denying the decision was protectionist, according to the Associated Press. The Commerce Ministry denied Coca-Cola''s $2.5 billion bid to buy Huiyuan Juice Group. A brief report by the official Xinhua News Agency cited Commerce Ministry spokesman Yao Jian as saying Chinese policy on foreign investment would not be affected. Coca-Cola said in a statement it believed there were "no significant competition issues.” Foreign business groups are closely watching the case and say they want the government to disclose more information about the reasons for the rejection. No additional details of the reasons for the denial have been made. The American Chamber of Commerce expressed hope the ruling would not affect American and Chinese decisions to invest in each other''s countries. China''s own companies are stepping up investments abroad and some observers suggested the Coca-Cola rejection could jeopardize Chinese acquisition efforts. China has accused the United States of protectionism in its $789 billion stimulus, which includes measures that favor American steel, iron and manufactured goods for government projects. U.S. labor groups argue the measures are meant to ensure U.S. government money is used to the fullest extent to support domestic job-creation. Huiyuan''s founders and major shareholders endorsed the Coca-Cola deal as a way to improve marketing and product development. Creating profitable brands is a key element in the communist government''s development strategy, and officials hope to make Chinese companies more competitive during the economic downturn in preparation for the recovery of world growth. In a statement issued through the Hong Kong stock exchange, Huiyuan said Coca-Cola is barred from making another offer for the company for one year unless Hong Kong regulators grant an exception.