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Coca-Cola's Huiyuan offer sparks concern

By Nie Peng (chinadaily.com.cn)
Updated: 2008-09-04 17:19

Optimists said if Coca-Cola's acquisition of Huiyuan went ahead, it was likely that food and beverage shares would rebound as Huiyuan was not the only target overseas investors were aiming at. More purchases would bring about opportunities for food and beverage enterprises to be reevaluated, they said.

But pessimists said the deal sent no good signal.

Kang Jingdong, an analyst with Cinda Securities, said the outlook for acquisitions like this one was not bright for the industry.  

In other fields like cereals, overseas investors were quickening their pace and spending more money on buying Chinese enterprises, he said.  

"The acquisition of a flagship enterprise like Huiyuan would deal a heavy blow to the whole industry," he added. 

An expert with the China National Food Industry Association said the deal reminded him of the overwhelming collapse of home-grown carbonated beverages when Coca-Cola first entered the Chinese mainland. 

The Coca-Cola business in China has been operating since 1979 and is well known for its beverage brands such as Coca-Cola, Sprite and Fanta. 

In late July, Johnson & Johnson (China) Investment Co Ltd announced it had won a bidding war with Avon and Unilever to buy Beijing Dabao Cosmetics Co Ltd for $337 million in a bid to further expand its presence in the Chinese market, arousing fresh concerns that China will lose more and more national brands in the future.

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