The Coca-Cola Company's $2.3 billion bid for premier juice maker China Huiyuan Juice may help the US company achieve dominance in China's beverage market. But analysts remain skeptical because of the many hurdles that could threaten to rock the marriage.
China is Coca-Cola's fourth largest market, and the proposed transaction would be the company's largest overseas acquisition. If the deal goes through, it could strengthen Coca-Cola's stranglehold in one of the world's fast growing beverages market.
The combined total sales of the beverage giant and Huiyuan would be 8 billion liters, lifting The Coca-Cola Company's share of China's soft drinks market from 16.3 percent to 18 percent, said Hope Lee, a non-alcoholic drinks analyst from Euromonitor International.
If the acquisition goes ahead, Coca-Cola will overtake France's Groupe Danone, which occupied a 16.3 percent share of China's soft drinks market in 2007, as the country's top brand with a 17.9 percent market share.
"Beset by shrinking demand for carbonated drinks in China, Coca-Cola has been held back by its unitary product line and has to come up with more diversified products to enhance its position, " said Teng Binsheng, a strategy professor from Cheung Kong Graduate School of Business.
The American company launched its Minute Maid juice in China last year as part of its aggressive expansion into the nation's fruit and vegetable drinks business, valued at $10.6 billion in 2007, while carbonated drinks only reached $7.4 billion, according to figures from Euromonitor.
The fruit and vegetable drinks market is set to grow 16 percent to $12.3 billion this year, much quicker than the 7 percent rise expected for carbonated drinks, Euromonitor estimated.
The deal "will enable Coca-Cola to greatly reduce its reliance on carbonated drinks," Lee said, and "still drinks' contribution to Coca-Cola's retail value sales will increase from 28 percent to 47 percent".
Huiyuan's strength is in pure fruit juice, where it has a 46 percent market share, according to ACNielsen figures.
"Coca-Cola will successfully convert its largest rival in soft drinks into its subsidiary," said Qu Honglin, a senior partner of Glocal Strategy Consulting Co.
Teng noted that it is a common move for foreign companies to purchase low- or medium-end brands when synergizing with local companies.
"Recent merger and acquisition activities between overseas and domestic enterprises, including Coca-Cola and Huiyuan, Johnson & Johnson and Dabao, and Schneider Electric and Delixi, all followed this trend," he said, adding that the acquisition would complete their product lines and meet Chinese customers' demand for medium-end products.
As for Huiyuan, analysts said that the company would also reap great benefits from the pending transaction, thanks to the rather attractive price offered by Coca-Cola.
"It's a good deal for Huiyuan, as a private company it has met a growth bottleneck due to a lack of financial support from banks and the government, " Qu said.
Teng said that Zhu Xinli, the founder and president of Huiyuan, "couldn't say no to such a price from Coca-Cola, particularly when China's equity market is suffering such a lean period", Teng said.
But how successful Huiyuan will be after the acquisition largely depends on strategies devised by Coca-Cola's top executives based in Atlanta, who will probably make the same mistakes as other multinationals synergizing with domestic brands, Qu said.
In addition, the two companies have to surmount several obstacles ahead of their marriage.
As it is the first major deal after the country's anti-monopoly law came into force on Aug 1, this transaction will be a major test of the new regulation, said Zhang Tao, a lawyer from Shanghai Zhongtianxin Law Firm.
"Regulators will probably subject the acquisition to very stringent checks," Zhang said.
Coca-Cola said in a statement that the success of the deal is subject to the approval of China's antitrust authorities.
Source: China Daily
Friday, September 5, 2008
$4b money laundering uncovered last year
China uncovered 89 cases of money laundering involving a total of 28.8 billion yuan last year, the People's Bank of China said.
A total of 350 financial institutions in 2007 were punished for violations of anti-money laundering rules and regulations, including 341 banks, four securities and futures firms, and five insurers.
Meanwhile, the police and the central bank launched more than 50 campaigns to clamp down on 43 underground banks and detained 180 suspects.
"The year 2007 marked the establishment of China's anti-money laundering system," said Su Ning, vice-governor of the central bank.
Last June, China joined the Financial Action Task Force, an international organization fighting money laundering. The nation passed its first anti-money-laundering law in 2006 and then required all lenders to report any suspicious transactions in a timely manner.
Since last October, all securities and insurance companies have been required to send data on dubious deals to the anti-money laundering monitoring center of the central bank.
The central bank has joined forces with the Ministry of Public Security to set up a network to check the identity of bank customers. By the end of last year, it set up anti-money laundering agencies in all of its provincial branches.
China's anti-money laundering efforts have also benefited the nation's lenders.
Last November, China Merchants Bank Co, got the green light from the US Federal Reserve Board to open a branch in New York.
The Fed later said it decided to approve the application as Chinese regulators had taken adequate steps to clamp down on money laundering, a key requirement for operating in the US.
Source: China Daily
A total of 350 financial institutions in 2007 were punished for violations of anti-money laundering rules and regulations, including 341 banks, four securities and futures firms, and five insurers.
Meanwhile, the police and the central bank launched more than 50 campaigns to clamp down on 43 underground banks and detained 180 suspects.
"The year 2007 marked the establishment of China's anti-money laundering system," said Su Ning, vice-governor of the central bank.
Last June, China joined the Financial Action Task Force, an international organization fighting money laundering. The nation passed its first anti-money-laundering law in 2006 and then required all lenders to report any suspicious transactions in a timely manner.
Since last October, all securities and insurance companies have been required to send data on dubious deals to the anti-money laundering monitoring center of the central bank.
The central bank has joined forces with the Ministry of Public Security to set up a network to check the identity of bank customers. By the end of last year, it set up anti-money laundering agencies in all of its provincial branches.
China's anti-money laundering efforts have also benefited the nation's lenders.
Last November, China Merchants Bank Co, got the green light from the US Federal Reserve Board to open a branch in New York.
The Fed later said it decided to approve the application as Chinese regulators had taken adequate steps to clamp down on money laundering, a key requirement for operating in the US.
Source: China Daily
Software pirates go on trial
Nine members of a gang alleged to have been involved in a multi-million-dollar counterfeit software scam went on trial here yesterday.
The gang, led by Shanghai native Ma Jingyi, is accused of selling 677,000 pieces of pirated computer software to buyers in the United States at a price of $10.48 million, the Shanghai No 1 Intermediate Prosecutors' Office said.
The men were arrested in July of last year following a joint investigation codenamed "Summer Solstice" that was launched in 2005 by authorities from China and the US.
Ma, 50, pleaded guilty to the charge but denied he had made such high profits, prosecutors said.
He told the Shanghai No 1 Intermediate People's Court that he went to the US in 1993 and co-founded a computer company with an American man named Wu Kai.
At that time, he was known as Ma Kepei. "In 2003, while I was in Shanghai visiting family, our business was raided for selling pirated software," he said.
Wu Kai received a suspended prison term and Ma was indicted on suspicion of distributing about $15 billion worth of pirated Microsoft and Symantec products over the previous two years.
Because of that, he changed his name to Ma Jingyi.
In July 2003, Ma set up three companies in Shanghai, selling software, most of it pirated, to only US buyers, prosecutors said.
Ma hired workers in Shanghai to advertise his cheap software on the Internet and others in the US to process payments and deliver products, prosecutors said.
"Our main customers were firms selling computer hardware and software, and our main product was Symantec's anti-virus program," Ma said.
He said he sold the pirated version for $15.
In the beginning, he said he bought most of his stock from a man in Los Angeles who identified himself only as Tyen. He paid $5 to $6 per piece.
From December 2003, Ma began to buy from Lu Yi, the second defendant in the case, at 12 yuan per piece, and sold it to Tyen.
In 2006, armed with information from the Ministry of Public Security and the FBI, Shanghai police began to investigate Ma's illegal business activities.
Officers conducted raids in both Shenzhen and Shanghai in July 2007, while at the same time police in Los Angeles conducted 24 searches at illegal distributors.
The Shanghai trial is expected to last for two days.
Source: China Daily
The gang, led by Shanghai native Ma Jingyi, is accused of selling 677,000 pieces of pirated computer software to buyers in the United States at a price of $10.48 million, the Shanghai No 1 Intermediate Prosecutors' Office said.
The men were arrested in July of last year following a joint investigation codenamed "Summer Solstice" that was launched in 2005 by authorities from China and the US.
Ma, 50, pleaded guilty to the charge but denied he had made such high profits, prosecutors said.
He told the Shanghai No 1 Intermediate People's Court that he went to the US in 1993 and co-founded a computer company with an American man named Wu Kai.
At that time, he was known as Ma Kepei. "In 2003, while I was in Shanghai visiting family, our business was raided for selling pirated software," he said.
Wu Kai received a suspended prison term and Ma was indicted on suspicion of distributing about $15 billion worth of pirated Microsoft and Symantec products over the previous two years.
Because of that, he changed his name to Ma Jingyi.
In July 2003, Ma set up three companies in Shanghai, selling software, most of it pirated, to only US buyers, prosecutors said.
Ma hired workers in Shanghai to advertise his cheap software on the Internet and others in the US to process payments and deliver products, prosecutors said.
"Our main customers were firms selling computer hardware and software, and our main product was Symantec's anti-virus program," Ma said.
He said he sold the pirated version for $15.
In the beginning, he said he bought most of his stock from a man in Los Angeles who identified himself only as Tyen. He paid $5 to $6 per piece.
From December 2003, Ma began to buy from Lu Yi, the second defendant in the case, at 12 yuan per piece, and sold it to Tyen.
In 2006, armed with information from the Ministry of Public Security and the FBI, Shanghai police began to investigate Ma's illegal business activities.
Officers conducted raids in both Shenzhen and Shanghai in July 2007, while at the same time police in Los Angeles conducted 24 searches at illegal distributors.
The Shanghai trial is expected to last for two days.
Source: China Daily
Party reps get more say under new rule
Representatives of the Communist Party in Guangdong will have more rights from now on, under a new regulation on the province's tenure system.
According to the regulation, Party representatives will be authorized to propose resolutions, make enquiries into the Party committee they belong to and even challenge Party leaders concerning their obligation implementation, deployment of officials and suspected bureaucratic behavior, the Xinhua News Agency reported on Wednesday.
Concerning the resolutions, targeted Party departments are required to respond to the representatives in written form within three months.
Related departments, once challenged, must respond to the representatives within one month and the departments must reply to the enquiries of the representatives in time, or at most 15 working days on the occasion that further investigation is necessary.
"The regulation empowers us to keep a close eye on the operation of a Party committee and do more for the committee during my tenure," Luo Kangda, a Party representative with the Huangpu town Party committee in the Pearl River Delta city of Zhongshan, said.
"I think a growing number of Party representatives would like to play a more active role in the Party work of our town," he said.
In the past, Party representatives just sat and listened to reports and raise their hands from time to time to vote for or veto a resolution during a congress, he said.
"It was a very passive role."
Ren Jiantao, a professor of public administration with Guangzhou-based Sun Yat-sen University, said the regulation is a great breakthrough in the reform of the Party system.
"As deputies to people's congresses supervise the government's work, Party representatives will play the role of additional eyes on the operation of a Party committee," he said.
"That will help prevent the operation and decisions of a Party committee from derailing and turn a Party committee into a more democratic and open body."
The province has carried out the pilot work of a tenure system for a Party representative in the city of Huizhou, county of Yangdong, and district of Bao'an in Shenzhen in the past decade.
A Party representative there has served a term of five years, who has been supervising and advising the local Party committee when the annual Party congress is closed.
Source: China Daily
According to the regulation, Party representatives will be authorized to propose resolutions, make enquiries into the Party committee they belong to and even challenge Party leaders concerning their obligation implementation, deployment of officials and suspected bureaucratic behavior, the Xinhua News Agency reported on Wednesday.
Concerning the resolutions, targeted Party departments are required to respond to the representatives in written form within three months.
Related departments, once challenged, must respond to the representatives within one month and the departments must reply to the enquiries of the representatives in time, or at most 15 working days on the occasion that further investigation is necessary.
"The regulation empowers us to keep a close eye on the operation of a Party committee and do more for the committee during my tenure," Luo Kangda, a Party representative with the Huangpu town Party committee in the Pearl River Delta city of Zhongshan, said.
"I think a growing number of Party representatives would like to play a more active role in the Party work of our town," he said.
In the past, Party representatives just sat and listened to reports and raise their hands from time to time to vote for or veto a resolution during a congress, he said.
"It was a very passive role."
Ren Jiantao, a professor of public administration with Guangzhou-based Sun Yat-sen University, said the regulation is a great breakthrough in the reform of the Party system.
"As deputies to people's congresses supervise the government's work, Party representatives will play the role of additional eyes on the operation of a Party committee," he said.
"That will help prevent the operation and decisions of a Party committee from derailing and turn a Party committee into a more democratic and open body."
The province has carried out the pilot work of a tenure system for a Party representative in the city of Huizhou, county of Yangdong, and district of Bao'an in Shenzhen in the past decade.
A Party representative there has served a term of five years, who has been supervising and advising the local Party committee when the annual Party congress is closed.
Source: China Daily
Sichuan heritage restoration begins
Restoration of ancient buildings and other cultural relics damaged in the Sichuan earthquake is under way. The central government has allocated 30 million yuan toward the restoration, Sichuan Daily reported yesterday.
The Sichuan provincial administration of cultural heritage said 79 of the province's 128 heritage sites under State protection were damaged in Wenchuan county.
It said 169 heritage sites under provincial protection were also damaged.
The sites contain museums, heritage protection and management institutes, archaeology research institutes, four historical villages, and 1,645 cultural relic items, the administration said.
Archaeological experts and technicians from the State administration of cultural heritage in Beijing, the provinces of Shaanxi and Jiangxi, and the Guangxi Zhuang autonomous region have been working since last month on the restoration.
"Our institute is restoring the ancient building of Qingcheng Mountain, which is listed as a world cultural heritage, and three other buildings at the State protection level - Langzhong Yong'an temple, Langzhong Wulgong temple and the Mianzhu Jiannanchun Tianyi wine cellar," Zhou Ping, director of the Shaanxi provincial ancient building design institute, told China Daily yesterday.
The restoration team has completed a survey of the buildings, and work will commence shortly, Zhou said.
Sichuan plans to restore and reconstruct the cultural heritage of the Qiang people within three years with the support from the central government and other provinces.
Source: China Daily
The Sichuan provincial administration of cultural heritage said 79 of the province's 128 heritage sites under State protection were damaged in Wenchuan county.
It said 169 heritage sites under provincial protection were also damaged.
The sites contain museums, heritage protection and management institutes, archaeology research institutes, four historical villages, and 1,645 cultural relic items, the administration said.
Archaeological experts and technicians from the State administration of cultural heritage in Beijing, the provinces of Shaanxi and Jiangxi, and the Guangxi Zhuang autonomous region have been working since last month on the restoration.
"Our institute is restoring the ancient building of Qingcheng Mountain, which is listed as a world cultural heritage, and three other buildings at the State protection level - Langzhong Yong'an temple, Langzhong Wulgong temple and the Mianzhu Jiannanchun Tianyi wine cellar," Zhou Ping, director of the Shaanxi provincial ancient building design institute, told China Daily yesterday.
The restoration team has completed a survey of the buildings, and work will commence shortly, Zhou said.
Sichuan plans to restore and reconstruct the cultural heritage of the Qiang people within three years with the support from the central government and other provinces.
Source: China Daily
Yangtze marker lights to go solar
The Yangtze River waterway administration has announced that it will use solar power for the more than 5,700 marker lights along China's busiest waterway.
All 5,700 of the battery-powered navigation mark lights along the world's third longest river will gradually be replaced with domestically produced solar-powered lights over a two-year period, Wang Qufa, an official with the Wuhan-based Yangtze waterway bureau, said yesterday.
"Solar powered lights will cut costs because there is no need to maintain them until five years after they have been installed. They also avoid the use of pollutant lead-acid batteries," he said.
The present navigation mark lights have a service life of two years, and their batteries need replacing every three months, he said.
"It would cost at least 4,000 yuan to keep the battery-powered lights working over a five-year period, but only 1,200 yuan to use solar-powered lights," he said.
Domestic research staff have designed seven types of light to suit the climate along various sections of the river, he said.
"One model generates continuous light for a month, even when the weather is overcast two weeks," he said.
High-grade waterways of the future will all be equipped with solar-powered navigation mark lights, Zheng Qingxiu, an official in charge of waterway management with the Ministry of Transport, told China Daily.
The ministry is also applying remote monitoring and measuring technologies to inland waterways that raise the alarm when a navigation mark light moves out of position.
Source: China Daily
All 5,700 of the battery-powered navigation mark lights along the world's third longest river will gradually be replaced with domestically produced solar-powered lights over a two-year period, Wang Qufa, an official with the Wuhan-based Yangtze waterway bureau, said yesterday.
"Solar powered lights will cut costs because there is no need to maintain them until five years after they have been installed. They also avoid the use of pollutant lead-acid batteries," he said.
The present navigation mark lights have a service life of two years, and their batteries need replacing every three months, he said.
"It would cost at least 4,000 yuan to keep the battery-powered lights working over a five-year period, but only 1,200 yuan to use solar-powered lights," he said.
Domestic research staff have designed seven types of light to suit the climate along various sections of the river, he said.
"One model generates continuous light for a month, even when the weather is overcast two weeks," he said.
High-grade waterways of the future will all be equipped with solar-powered navigation mark lights, Zheng Qingxiu, an official in charge of waterway management with the Ministry of Transport, told China Daily.
The ministry is also applying remote monitoring and measuring technologies to inland waterways that raise the alarm when a navigation mark light moves out of position.
Source: China Daily
Time up for substitute teachers
Substitute teachers will have a mixed future in Guangdong, the provincial Party secretary said here on Wednesday.
In a meeting with local educators and officials, Wang Yang said the time was ripe to rid the province of such transitional posts for the benefit of both students and the teachers themselves.
He gave education authorities in all cities three alternatives: one, promote existing substitutes to full teaching posts and provide them with proper training and decent salaries; two, offer substitutes non-teaching positions; and three, fire them.
Authorities in the Pearl River Delta cities have one year to finish the task, while all others have two years, Wang said.
The decision to eradicate the position of "substitute teacher" came after hearing countless complaints from them, the Party chief said yesterday.
"I have heard far too many complaints from teachers about how miserable their lives are," Wang was quoted by the Southern Metropolis Daily as saying.
Xiao Chu works as a substitute teacher in the city of Zhaoqing, where the minimum monthly salary is supposed to be 580 yuan .
"But I earn only 400 yuan a month," Xiao told China Daily yesterday.
"Are we just cheap labor?"
Substitute teachers do the same job as authorized teachers, but are paid only a third of the wages, she said.
Song Hai, vice-governor of Guangdong, said on Wednesday that the average monthly income for a State-employed teacher in the province is 1,200 yuan.
"But substitutes get only 300 to 400 yuan," he said.
"In the poorest areas, they get as little as 200 yuan."
Of Guangdong's 756,000 middle and primary school teachers, 52,000 are substitutes, he said.
"We have more than any other province in the country," he said.
However, getting rid of substitute teacher posts will not solve all of the province's education problems, Luo Weiqi, head of the Guangdong education bureau, said this week.
The problem is that even authorized school teachers in rural areas earn less than civil servants, he said.
According to a report published in Monday's Yangcheng Evening News, the provincial government has said it will "strive" to increase teachers' salaries to a level equivalent to those of civil servants.
The government also plans to include rural teachers within the social security system to improve their living and working conditions, Luo said without giving details.
Also, a more transparent system is needed to supervise the transfer of money from provincial governments to lower-level authorities that is intended to go to teachers.
Source: China Daily
In a meeting with local educators and officials, Wang Yang said the time was ripe to rid the province of such transitional posts for the benefit of both students and the teachers themselves.
He gave education authorities in all cities three alternatives: one, promote existing substitutes to full teaching posts and provide them with proper training and decent salaries; two, offer substitutes non-teaching positions; and three, fire them.
Authorities in the Pearl River Delta cities have one year to finish the task, while all others have two years, Wang said.
The decision to eradicate the position of "substitute teacher" came after hearing countless complaints from them, the Party chief said yesterday.
"I have heard far too many complaints from teachers about how miserable their lives are," Wang was quoted by the Southern Metropolis Daily as saying.
Xiao Chu works as a substitute teacher in the city of Zhaoqing, where the minimum monthly salary is supposed to be 580 yuan .
"But I earn only 400 yuan a month," Xiao told China Daily yesterday.
"Are we just cheap labor?"
Substitute teachers do the same job as authorized teachers, but are paid only a third of the wages, she said.
Song Hai, vice-governor of Guangdong, said on Wednesday that the average monthly income for a State-employed teacher in the province is 1,200 yuan.
"But substitutes get only 300 to 400 yuan," he said.
"In the poorest areas, they get as little as 200 yuan."
Of Guangdong's 756,000 middle and primary school teachers, 52,000 are substitutes, he said.
"We have more than any other province in the country," he said.
However, getting rid of substitute teacher posts will not solve all of the province's education problems, Luo Weiqi, head of the Guangdong education bureau, said this week.
The problem is that even authorized school teachers in rural areas earn less than civil servants, he said.
According to a report published in Monday's Yangcheng Evening News, the provincial government has said it will "strive" to increase teachers' salaries to a level equivalent to those of civil servants.
The government also plans to include rural teachers within the social security system to improve their living and working conditions, Luo said without giving details.
Also, a more transparent system is needed to supervise the transfer of money from provincial governments to lower-level authorities that is intended to go to teachers.
Source: China Daily
Subscribe to:
Posts (Atom)