Ventures Dialogue

Last week I wrote a post on Coca-Cola’s efforts to gain a stronger presence in China with its bid for the 17 year-old China Huiyuan Juice Group (CHJG), the country’s largest juice company.  Coke is interested in CHJG because while Coke has captured a sizable portion of the carbonated beverage market, its fruit juice line is not as strong.  Last Wednesday, Chinese officials rejected Coke’s offer under its anti-monopoly law.  In a statement (in Chinese), the Ministry of Commerce cited the need to protect consumers and preserve competition as reasons for rejecting the bid.  Some are saying however, the new law allows the government to protect national brands.  It has been estimated, but not confirmed, that the two companies together would control around 20 per cent of the juice market. 

While the Ministry’s decision did come to some as a shock, the decision could have longer lasting effects on China.   The day after the deal’s rejection was announced and reports that Coke might abandon efforts all together, shares of CHJG dropped almost 23 per cent before trading was eventually halted.  The shares fell 42.2 per cent in total before regaining some ground, and ended the day at pre-offer, September 2008, levels. Continue reading ‘Coca-Cola’s deal falls flat as Chinese government rejects offer to buy China Huiyuan Juice Group’

With the opening of its $90 million (USD) technology center in Shanghai on March 6, The Coca-Cola Company (Coke) also announced it will invest $2 billion in China over the next three years on bottling plants and distribution infrastructure, sales and marketing, and research and development. 

Over the past 30 years, Coke has invested $1.6 billion in the Chinese Market and has good reasons for doing so.  China is Coca-Cola’s fastest growth market and its third biggest market (after the US and Mexico) says Muthar Kent, Coca-Cola’s chief executive officer in the article “Coca-Cola to invest more than $2 bln in China over next three years” from SINA English.  The article noted globally, Coke posted a five per cent growth in the fourth quarter of 2008 with both sparkling and still beverages, but in China, it posted a 29 per cent gain (19 per cent for the year as a whole).  This represents the largest percentage increase in more than five years (21 consecutive quarters).  Compared to Coke’s North American market, their annual report showed that sales declined by 1 per cent in 2008.  

This $2 billion investment is not the only big move Coke is pursuing in China.  Last September, Coke announced its intention to purchase China Huiyuan Juice Group Ltd, China’s leading pure juice maker. China Huiyuan captures about 42 per cent of China’s fruit juice market. The offer is not final, as according to Anti-Monopoly laws, the deal has to be approved by the Ministry of Commerce.  While there are some tensions rising due to nationalistic pride, because if this deal goes through, it would be the largest acquisition of a domestic company by a foreign firm, a decision is expected by the end of the month.

Coke is not the only beverage giant to show an interest in China. Continue reading ‘Chinese drinks market a big draw for Coke, Pepsi and other foreign firms’

This is the fourth in a series of stories about prominent Canadians in Hong Kong and their reflections on current and potential opportunities between Hong Kong and China, and Canada.  So far we’ve learned about the natural affinity between Hong Kong and Canada, and the reason why it is a successful gateway into the Asia Pacific region.

Many sectors offer opportunities for Canadian firms, in Hong Kong as well as mainland China, but perhaps none more exciting as the environmental technology sector.

Bruce Hicks was born in Canada but his career took him to Hong Kong in 1984.  Having experience in the telecom industry, Hicks is now Managing Director of TPIZ Resources, an environmental services and investment company.  Operating through two joint ventures, the company provides expertise to small and medium sized companies on how to maximize energy efficiency, indoor air quality and water resources among others, in a way that will improve their environmental record while maximizing the financial returns.  It also funds and develops large scale energy efficiency projects through Asia.

Hicks says that the green technology sector in China offers outstanding opportunities for Canadian firms who have good technology and extensive experience in the sector.  In China, he explains, the sector is fragmented with many small companies yet there is huge domestic demand for techology and services in China. 

Ironically, Hicks says that Canada was very helpful on the policy development side about five years ago.  China now has well developed policies which have created enormous demands for green technology solutions.  Canada was there to help develop the framework, but Canadian firms are nowhere in sight to reap the benefits.   Australians have been quick to capitalize on these opportunities by putting good people in China and spending time to develop relationships.

Canada is commonly compared to Australia in Hong Kong with Australians described as more aggressive and with greater staying power.

“Canadians should just get off the stick and go do it,” says Hicks.

In the next story in this series, find out what one Canadian professional hockey player is doing in Hong Kong to introduce inner city kids to Canada’s game.

The Baltic Dry Index may not be common knowledge but it is an important early indicator of possible signs of recovery in global trade according to Globe and Mail reporter Brent Jang.  The index surveys the price of transporting raw materials by sea. 

If the latest rally – four straight days – has staying power, then global trade appears headed for a modest improvement in the second half of 2009, and the shipping industry is poised to ride China’s economic stimulus package and recover from what’s still expected to be a turbulent first half.

Despite some contradictory signs of whether the ocean shipping sector has bottomed, there are enough bright spots to clear the way for a gradual rebound in everything from bulk commodity markets to dismantling old ships to building new ones, experts say.

A decline in commodity prices has coincided with dwindling stockpiles to spur China to renew selected purchases, helped by loosening short-term credit, said Oslo-based shipbroker RS Platou.

“This has especially been the case of iron ore, where Chinese steel mills have been very active securing high-quality ore at very attractive prices. In addition, exports of grains, soybeans and fertilizers have all increased in the same period of time,” said Platou’s analysis, titled A Sustainable Improvement?

Read the entire story.

What do you think?  Is this an early sign of recovery?  What are your experiences? 

Share your thoughts with other Ventures readers by posting a comment.

This is the third in a series of stories about prominent Canadians in Hong Kong and their reflections on current and potential opportunities between Hong Kong and China, and Canada.  Parts 1 and 2 discussed some of the reasons for the vast connections between Hong Kong and Canada, history and education.

With the mutual fondness between Hong Kong and Canada as the foundation, Hong Kong provides fertile ground for Canadian business ventures.   

Business owner Bruce Hicks, a resident in Hong Kong since 1984, says the suggestion that Canadian companies use Hong Kong as their gateway into Asia, “makes absolute sense”.  Building on the strong affinity between Canada and Hong Kong, Hicks explains that it’s possible to get work done in Hong Kong quickly.  The labour force offers a key advantage.  Hicks is the managing director of a green technology company called TPIZ Resources but has had experience in other sectors as well.  Finding trained workers who speak English is much easier in Hong Kong than in Beijing where there is an intense demand on people with technical skills who speak English.   

Hicks also praises the service attitude in Hong Kong explaining that, “there’s still pride in doing a good job in Hong Kong.”   

In the environmental sector in particular, Hicks believes there is a great deal of opportunity for Canadian firms.  Read more about that in the next story in this series.

Canada’s Trade Commissioner in Hong Kong, John Zimmerman, agrees that setting up in Hong Kong can help Canadian firms accelerate the process of breaking into the market in mainland China.  “It’s not the only entry into China but it’s an easy one,” says Zimmerman. 

Continue reading ‘Canadian Reflections on Hong Kong – the stepping stone to Asia’

This is the second in a series of stories about prominent Canadians in Hong Kong and their reflections on current and potential opportunities between Hong Kong and China, and Canada.  Part 1 discussed the reasons for the mutual fondness between Hong Kong and Canada.

The connection between Hong Kong and Canada, for many, begins with a blackboard.  Twenty thousand mainland Chinese students are currently studying at Canadian universities.  Ten thousand Hong Kong students are studying at Canadian universities and 55% of those are in Ontario, and still more Hong Kong born will venture to Canada as early as high school.

This connection to education is another integral reason for the close link between Hong Kong and Canada, according to Dr. William Yip, a Hong Kong born entrepreneur who himself graduated from Concordia University in 1967.

According to Dr. Yip, a Canadian education is considered the first choice in Hong Kong.  The importance of a foreign education is explained in two ways:  one, for a population of 7 million people, there are only nine universities in Hong Kong with limited enrolment.  Secondly, in Hong Kong, education is considered the key to success, and English education, in particular, is highly valued. Continue reading ‘Canadian reflections on Hong Kong – Education strengthens connections’