Coke offer for Huiyuan triggers widespread worry for famous domestic brand in China
4/9/2008 17:31
The public was reminded of the sore memories of lost domestic brands when
Coca-Cola announced its offer to take over China Huiyuan Juice Group Limited, a
Hong Kong-listed company that owns the Huiyuan juice business throughout
China.
While Coca-Cola and Huiyuan both seem satisfied with the deal, many
ordinary Chinese think otherwise.
In an online poll posted by major portal
Sina.com, more than 80 percent of the over 76,000 interviewees voted against the
acquisition of the leading domestic juice maker. A similar proportion held the
opinion that the acquisition, if successful, would verge on a foreign capital's
attempt to wipe out domestic pillar brands.
Established in 1992 in east
China's Shandong Province, Huiyuan spent years developing its nationwide network
and had raised its annual output capacity to 2.2 million tonnes.
Having just
been listed among the top 25 domestic brands last year by China Brand Union
Association, Huiyuan had the largest share in the Chinese juice market and was
the pride of many Chinese as an example of a domestic brand that competes
successfully among its international rivals.
"Huiyuan would become a brand
under Coca-Cola, which has achieved a major strategic triumph. It will get not
only the top brand in China, but also the market. It would take Coca-Cola back
to the top of the Chinese beverage market," said brand marketing expert Li
Guangdou.
"But it would mean a heavy loss to Chinese domestic brands, which
are under severe crisis now," said Li.
Though the global beverage maker said
it would keep the Huiyuan brand after the acquisition, analysts doubted whether
it would give support equivalent to its original juice brand Minute
Maid.
Their worries are not without reason -- seven years after being sold to
multi-national giant Procter and Gamble, the annual production of formerly major
domestic brand Panda washing powder was reduced from 60,000 tonnes to 4,000
tonnes, as its new owner set the brand aside and showed more interest in
promoting its own labels.
Three major shareholders of Huiyuan are said to
have accepted the offer. They held approximately 66 percent of the Huiyuan
shares. But the 2.4 billion-US dollar deal still waits government
approval.
The application has been sent to the Ministry of Commerce for
approval, but the detailed timetable or result has not been
disclosed.
According to DLA Piper UK LLP lawyer Liu Cheng, whether the deal
would get approval is closely related to its influence in the industry after the
acquisition, and whether the Chinese anti-trust law would include the juice
market under its regulation.
If the market share of Huiyuan and Minute Maid
together exceeds 50 percent, it might pose difficulty in winning approval, said
Liu.
Xinhua
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