With Huiyuan Deal Pending, Coca-Cola Promises Further Investment in China

Coke Will Invest $2B in China Over Next Three Years, Says President-CEO Muhtar Kent

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Coke's President-CEO Muhtar Kent
Coke's President-CEO Muhtar Kent
SHANGHAI (AdAgeChina.com) -- In a clear signal of Coca-Cola Co.'s commitment to China, the company opened a $90 million innovation and technology center in Shanghai, its largest R&D facility in Asia, partly to speed up development of new products to suit Chinese consumers' tastes and preferences.

The company said it plans to spend an additional $2 billion on new plant and distribution infrastructure, sales and marketing, and R&D there over the next three years, a move that underscores the importance of China as a growth market for the U.S. beverage giant.

The announcement is also a clear message to the government about Coke's commitment to China.

Coca-Cola is "a long term partner" of China, said the company's president-CEO, Muhtar Kent, at the opening ceremony for the global innovation and technology center in Shanghai on March 6, 2009.

Local regulators are expected to make an announcement in the next few weeks about Coke's offer to buy about two-thirds of China Huiyuan Juice Group for $2.4 billion.

The Hong Kong-listed company is the mainland's largest producer of pure fruit juices, so the acquisition would dramatically expand Coke's share of the non-carbonated drinks business in China, already Coke's third-largest market.

Competing beverage companies say the deal will give the combined business too great an advantage, making it a closely-watched test case for an anti-monopoly law passed last year in China.

If approved, the acquisition will be the largest foreign takeover of a Chinese company, so the pending deal is also testing China's willingness to let local firms fall under foreign control, something it has been loathe to allow in the past.

Coke's new innovation and technology center is five times larger than its previous R&D center in Shanghai and will work closely with Coke's other R&D centers around the world, Mr. Kent said.

Coke invested heavily in China last year as a global sponsor of the 2008 Olympic Games in Beijing and a sponsor of the Olympic torch relay.

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