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Forged in Purgatory

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The Honeymoon is Over: Death of the Coke-Huiyuan Deal

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For decades international investors have grown their businesses in China both organically and by mergers and acquisitions.  In 2009, Coca-Cola and Huiyuan, China’s largest juice company, agreed to combine. If consummated, it would have been the largest foreign acquisition of a Chinese company in history. The Chinese regulatory authority blocked the deal as having an anti-competitive impact on the market. Executives at both Coca-Cola and Huiyuan, and many professional financial and strategic investors, were shocked. Despite the widespread international consternation and surprise, Wang explains how the rationale of the local regulatory authorities was obvious to most Chinese professionals and nationals.  In the current stage of national development, Wang explains it is highly unlikely for a foreign player to gain control over a respected local brand with international potential.

 Populism and nationalism are complicating factors in large cross-border M&A transactions in China, according to Wang. While foreign direct investment is welcome in sectors where foreign players can bring new technologies and know-how to the local market or help rehabilitate underperforming local enterprises, foreigners seeking to acquire national “champion brands” or players in strategic industries will undoubtedly encounter regulatory scrutiny.

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About Wang Wei

Wang Wei Profile Photo
Wang Wei is adjunct professor of finance at Cheung Kong Graduate School of Business. He received his Ph. D. in economics from Fordham University (New York) in 1992. He is the chairman of the China Mergers & Acquisitions Association (CMAA) and founder of China M&A Group. He was the executive vice president of China Southern Securities Co. Ltd. (1992-96) and chairman of China M&A Management Holding, Inc. (1997-2006). He has given a... [Full Bio]
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