Soft-drink giants Coca-Cola, who recently agreed to pay $2.5 billion for China’s fruit juice company, Huiyuan Juice, must now take the deal to the country’s competition authorities and overcome the regulatory obstructions. This case will draw a great deal of attention as it is potentially the largest foreign acquisition of a Chinese company ever to take place, and the first case to be filed under China’s new anti-trust laws.
Coca-Cola clearly want to establish their brand in China’s quickly growing soft drink industry, and Huiyuan Juice currently has 43% of the juice market, which would be a step in the right direction. Furthermore, the high levels of economic growth in China give potential increases in income and health awareness; as a result, the juice market grew by 15% last year and is on course to match that rate this year.
While some are unhappy with the takeover, and fear Coca-Cola’s global dominance, the potential gains for the Chinese economy are high. The deal should bring increases in investment, as well as much needed jobs to China’s immense population. Coca-Cola’s best practice expertise will improve efficiency and quality in the industry at large, driving the market forward through healthy competition.