Outside of China, Coca-Cola’s $2.4 billion offer to buy Chinese juice maker Huiyuan Juice Group is being hailed as a China dealmaker’s dream come true.
But back home, what would be the largest acquisition of a domestic company by a foreign firm is inspiring more soul searching than cheers.
Sina reports (in Chinese here) that while some Chinese take an optimistic view of the proposed acquisition, others fear that the Huiyuan brand will disappear and that the purchase will mark the start of a worrying trend of takeovers of homegrown companies by multinationals. According to an online poll conducted by Sina, 82% of over 40,000 respondents opposed Coke’s purchase of Huiyuan.
Such concerns could spill over into the regulatory approvals process. Mei Xinyu, a researcher at a Ministry of Commerce-affiliated think tank, told the state-run Xinhua news agency that the acquisition is likely to face two major hurdles for approval.” One is the large size of the two companies, which will raise concerns about monopolies,” Mei said, according to Xinhua. “The second is that the brand of Huiyuan is considered to be protected as a famous domestic brand.” Huiyuan’s designation as a famous Chinese brand could serve as a rallying point for patriotic citizens who might see the deal as representing the potential loss of a national treasure.
That would be bad news for Coke, which has been doing business in China since 1979, well before Huiyuan was founded in 1992.
This year, Coke has gone to great lengths to come across as a friend to China through its sponsorship of the Beijing Olympics, which cost the company an estimated $400 million. Back in the spring, when Beijing’s global Olympic torch relay was under attack by protests in the West, Coke rolled on with marketing campaigns that celebrated China, and the company’s top executives even went on the attack against activists who said Beijing shouldn’t be hosting the Games. Inside China, a Coke caravan rode at the front of the torch parade through more than 100 cities, and the company played up its long-standing association with the color red ─ which also happens to stand for good luck, and the Chinese flag.
Sky Canaves / Geoffrey A. Fowler |
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