Coke Archives ~ Business China : news for investors in China

RETAIL: McDonald’s, Coke Seek New China Partners in Changing Market

By newsdoug on August 25, 2016

Bottom line: McDonald’s is likely to choose a buyer for its China stores in the next 2 months, while China Foods’ decision to sell its stakes in several Coca-Cola bottling plants is probably a simple business decision that reflects changing priorities.

McDonald's near a sale of China stores — McDonald’s near a sale of China stores

Two western consumer giants are in the headlines of China’s rapidly shifting corporate landscape, led by word that the list of bidders vying to buy McDonald’s (NYSE: MCD) 1,650 China restaurants has been narrowed to 2. The other headline has one of Coca-Cola’s (NYSE: KO) top China business partners, China Foods (HKEx: 506), announcing its intent to dump its stake in several local bottling joint ventures.

Each of these stories illustrates the vital role that local partners play in the operations of foreign companies doing business in China. McDonald’s has largely owned and operated its thousands of China stores independently since entering the market in the early 1990s. But it wants to find one or more local partners to take over those operations as it moves to a more franchise-style model. Coca-Cola also uses a franchise model for the companies that bottle its trademark drinks that include Coke, as well as Sprite and many others. Read Full Post…

CONSUMER: Coke Tries China M&A Again With Protein Drink Maker

By newsdoug on April 27, 2015

Bottom line: Coke’s proposed $400 million purchase of a Chinese protein drinks maker is likely to get quick regulatory approval, and could make significant contributions to its China operations within the next 2 years.

Six years after a high-profile failure for a major China acquisition, global beverage giant Coca Cola (NYSE: KO) is trying once again with a smaller plan to buy a Chinese maker of protein drinks. This latest play for the maker of China Green-brand drinks looks like a smarter move by Coke, since the deal is valued at a relatively modest $400 million. By comparison, Coke’s failed attempt to buy leading Chinese juice maker Huiyuan (HKEx: 1886) was valued at $2.3 billion, which drew strong scrutiny from China’s anti-monopoly regulator that ultimately vetoed the deal in 2009. Read Full Post…

CONSUMER: Starbucks, Tingyi Heat Up Bottled Beverage Market

By newsdoug on March 20, 2015

Bottom line: Starbucks’ new tie-up with mass-market food maker Tingyi looks like a smart partnership that could help the pair quickly develop China’s largely untapped market for premium bottled beverages.

Following its phenomenal success in China’s retail dining market, US coffee giant Starbucks (Nasdaq: SBUX) is taking aim at bottled beverages in a new tie-up with one of the nation’s leading food product makers. The pairing is a big odd on the surface, bringing together the premium-minded Starbucks with Tingyi (HKEx: 322), a Taiwanese company whose main Master Kong brand is synonymous with tasty but decidedly low-end instant noodles.

But then again, nobody ever dreamed that Starbucks could overcome the huge odds against it by not only convincing tea-minded Chinese to drink coffee, but also getting them pay handsomely for the privilege. Accordingly, I would give the company a fairly strong chance for working similar magic in the highly competitive bottled beverage space, which would provide a huge new source of revenue from its China business. Read Full Post…

News Digest: March 13, 2014

By newsdoug on March 13, 2014

The following press releases and media reports about Chinese companies were carried on March 13. To view a full article or story, click on the link next to the headline.
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Half Of IBM (NYSE: IBM) Workers Quit At Shenzhen Plant, 20 Fired (Chinese article)
Tencent (HKEx: 700) In Talks to Purchase Handset Manufacturer – Sources (English article)
Vipshop (NYSE: VIPS) Prices $550 Mln Convertible Notes, 1.14 Mln ADSs (PRNewswire)
Coke (NYSE: KU) Worries Over Draft Law On Bottled Water Labeling (Chinese article)
Home Inns (Nasdaq: HMIN) Reports Q4, Full Year 2013 Results (PRNewswire)
Latest calendar for Q4 earnings reports (Earnings calendar)

Pepsi-Tingyi Take Aim At Coke With Disney Win

By newsdoug on February 28, 2014

PepsiCo inks deal with China Disneyland

I don’t usually pay much attention to sponsored articles in the Chinese media, but one such announcement today trumpeting a new contract win by PepsiCo (NYSE: PEP) and Taiwan’s Tingyi (HKEx: 322) caught my attention due to the implications for the Chinese beverage market, most notably for industry leader Coca Cola (NYSE: KO). The article, known in the west as “advertorial”, appeared in the English-language China Daily and touted a major new deal for Pepsi and Tingyi to supply drinks for Shanghai’s new Disneyland, which will open in 2015. Read Full Post…

News Digest: May 29, 2013

By newsdoug on May 29, 2013

The following press releases and media reports about Chinese companies were carried on May 29. To view a full article or story, click on the link next to the headline.
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Alibaba Set To Snub US With HK Listing (English article)
Amazon (Nasdaq: AMZN) To Launch Kindle In China In June – Source (Chinese article)
Jingdong to Divest From Drug Seller eHaoYao (English article)
Coca Cola (NYSE: KO) Rolls Out New Packaging In China (Chinese article)
Canadian Solar (Nasdaq: CSIQ) Reports Q1 Financial Results (PRNewswire)

Little Sheep Gets Swallowed: Good for Yum, Good for China M&A 小肥羊被收购对百胜和中国是双赢

By newsdoug on November 9, 2011

Some 7 months after Yum Brands (NYSE: YUM) first announced its bid to buy leading hot pot chain Little Sheep (HKEx: 968), China’s anti-monopoly regulator has finally approved the deal, in a major breakthrough not only for Yum and Little Sheep but also for China. (company announcement) This deal looked smart for both Yum and Little Sheep from the start, but investors had worried that the Commerce Ministry would use the anti-monopoly excuse to veto it over concerns that were more nationalistic in nature. Such a veto, which had led Little Sheep’s Hong Kong-listed shares to trade well below Yum’s offer price, would have sent a chill through the market, demonstrating that China was unwilling to let its best-known brands be purchased by foreign buyers following the Commerce Ministry’s 2009 veto of Coke’s (NYSE: KU) purchase of Huiyuan (HKEx: 1886), China’s leading juice brand. Interestingly, Huiyuan’s shares shot up 16 percent as well after approval of the Yum-Little Sheep deal, as investors bet that perhaps Huiyuan itself could become a takeover target again under the Commerce Ministry’s new enlightened approach, perhaps by Coke rival Pepsi (NYSE: PEP), which announced a major overhaul of its own China strategy earlier this week. (previous post) Following the Little Sheep decision, I would expect to see strong gains in shares of not only Huiyuan but also other up-and-coming Chinese brands in the weeks ahead, as investors bet that they could also now become takeover targets. Likewise, we could also see gains in shares of mid-sized Western consumer brands, as Western governments will now also be under pressure to approve such deals to show their own commitment to fair trade. As to Yum and Little Sheep, I would look for rapid expansion for the Chinese hot pot chain both at home and perhaps even abroad towards the end of next year, after Yum, China’s largest fast-food operator through its KFC brand, has a chance to learn more about the company and formulate a plan to leverage its strong name and popular hotpot format.

Bottom line: China’s approval of Yum’s purchase of Little Sheep will open the door to more buying of well-known consumer brands by both Western and Chinese firms in each other’s markets

Pepsi’s New China Shot Ignores Bigger Issues 百事联手康师傅抢占中国市场

By newsdoug on November 7, 2011

Pepsi's empty China bottle After years of playing perennial number-two to Coke (NYSE: KU), PepsiCo (NYSE: PEP) is gearing up for another shot at the China market through a new tie-up with instant noodle juggernaut Tingyi (HKEx: 322). The deal looks interesting on paper, though Pepsi will need to address the much more fundamental issue of its pathetic marketing in China if it really wants to improve its fortunes in what will soon become the world’s top beverage market. Let’s look at the deal first. Under the agreement, Pepsi will hand over its China bottling operations to Tingyi in exchange for a small stake in the company’s drinks joint venture with Japan’s Asahi (Tokyo: 2502). (English article). The deal not only gives over Pepsi’s money-losing bottling operation to a more seasoned operator, whose Masterkong brand is practically synonymous with instant noodles in China, but also gives Pepsi an important new local partner that better understands the market and whose highly developed sales channels will also be a valuable new resource. But rather than celebrate too much, Pepsi needs to address the much more fundamental issue of marketing. Despite its enviable position as sole soft drink supplier to KFC, easily China’s leading fast food operator, Pepsi’s name remains a relative unknown in China to date due to lack of effective marketing. Its main juice drink product, branded under the Tropicana name, is also a relative unknown. By comparison, Coke invented the word “cola” in China, and its Minute Maid Pulpy brand orange juice drink developed just for the market is the company’s first $1 billion brand developed outside its home US market. Pepsi needs to grasp the importance of marketing in China and use campaigns like those used by Coke, KFC and McDonalds (NYSE: MCD) to bring more excitement to its brands in the market. Otherwise, this latest tie-up with Tingyi could end up as hollow as an empty bowl of noodles.