Coke-Huiyuan's Chinese Media Battle
While the U.S. press is grappling with the implications of its government's massive mortgage bailout, the pending Coke-Huiyuan deal is still getting a lot of attention in the China's state-run media. Not all of it is positive, and much of the reporting relies heavily on claims made by unnamed sources. In addition to the regulatory approvals and Internet chatter over the deal, the Chinese media may present another worry for Coke as it strives complete its purchase of China's largest juice maker.
Among the recent reports is the news of layoffs at a Huiyuan factory near Beijing, citing 'insiders' who claimed the job cuts were taken in preparation for the company's sale to Coke and unnamed staff expressing fears of future layoffs.
Coke says that it is committed to growing the Huiyuan business, which should provide enhanced opportunities for Huiyuan employees.
More damaging may be the allegations that Coke is trying to silence critics of the deal in China, which were published in this Chinese-language article from the Beijing Morning Post. The origin of those allegations appears to lie in some ill-advised statements made by lawyer Qian Weiqing in an Internet discussion last week, in which he offered a pessimistic opinion about Coke's chances of winning public and regulatory approval for the Huiyuan purchase. Qian is a senior partner at the Dacheng Law Firm, which counts Coke as a client, and within a few days all references to Qian and his statements were subsequently removed from the Web site where they had appeared. Coke has been blamed for pressuring Qian and his firm to retract the statements a charge that the company strongly denies.
'We had nothing to do with this,' says Kenth Kaerhoeg, group communications director for Coca-Cola Pacific Group. 'It's simply not true.'
The article also points to a drop in the number of negative comments about the deal showing up on Internet forums and implies that Coke may be involved in having such comments removed. (No mention of the role played by domestic Internet companies in monitoring online discussions, however).
'That's also not true,' says Coke's Mr. Kaerhoeg. 'Whenever we comment it would be through a Coca-Cola spokesperson and we would have full transparency.'
On Tuesday, the Hong Kong-listed Huiyuan submitted a clarification statement to the city's stock exchange in response to what Huiyuan called 'certain misleading reports in the Chinese press.' The statement reiterated several points that the Chinese media doesn't seem to have much faith in: Huiyuan's board believes the sale to be in the best interests of the company, 'its shareholders, its employees, consumers and the Chinese economy as a whole,' Coca-Cola is committed to 'further develop the Huiyuan brand,' and current chairman Zhu Xinli will stay on board as an 'honorary chairman' after Coke takes over.
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