Source: Wall Street Journal by Andrew BrowneSHANGHAI—Coca-Cola Co., rebuffed by Chinese regulators in its bid to buy one of the country's leading juice makers, is now "totally focused" on organic growth in China and is on track to achieve its investment targets, said Chief Executive Muhtar Kent in an interview Friday.
Mr. Kent shrugged off the decision last year by regulators to reject on antitrust grounds the company's $2.4 billion bid to acquire China Huiyuan Juice Group Ltd.
"We are the No. 1 juice company with or without Huiyuan," he said. Coke says that it has now climbed past Huiyuan to become the largest juice company in China in volume terms, with its Minute Maid Pulpy brand taking off among consumers.
In China, "we are totally focused on organic growth," he said.
Coke's high-profile setback was seen as an especially bitter blow considering it had spent millions of dollars on sponsorship of the 2008 Beijing Olympics, including the torch relay. Yet that has not deterred Coke from spending heavily on the Shanghai Expo, which opens on Friday. Coke is one of a small number of foreign corporations to erect its own pavilion at Shanghai's showcase event.
Asked how Coke measured its business returns from its Olympic outlays, Mr. Kent said: "The only way to measure it is long term."
The decision to block Coke's purchase of Huiyuan sent a chill through the foreign investment community since it suggested that authorities were now sensitive about any kind of foreign acquisition, not just those in areas regarded as strategic to the economy.
Some U.S. businesses in China are growing worried about what they perceive as rising market protectionism. Mr. Kent acknowledged that "there is some concern" about the investment climate in China, but he argued for a conciliatory approach, saying: "We need dialogue —and to understand why things are the way they are."
Last year, Atlanta-based Coke said it would invest $2 billion in China over three years—as much as the company had pumped into China over the previous 30 years. That plan is now "fully on target, if not ahead of target," Mr. Kent said.
Last year, Coke opened three bottling plants in China, its third-largest market after the U.S. and Mexico in terms of volume sales, and plans to open another two this year. Also last year, Coke opened a $90 million research and development center in Shanghai.
Mr. Kent said that Coke's business in China has been growing at double digits over the past five years. "China offers the greatest opportunity for us in the world," he said. The company does not break out its China revenue or give any details about its profit margins.
With U.S. sales still declining, Coke's business has been increasingly driven by emerging markets like China. But Mr. Kent said he believes consumer sentiment in the U.S. is improving. "The doomsday scenario is much further away from the brains of the U.S. consumer than 12 months ago," he said.
0 comments:
Post a Comment