Huiyuan and Anti-monopoly law (反垄断法 )

About two weeks ago, there was a strong buzz here in China about a recent ruling by China's Ministry of Commerce to reject Coca Cola's bid to acquire Huiyuan, China's largest natural juice brand.

Now, the reason why this case was closely followed was because it would have been the largest foreign acquisition of a Chinese company to date. The case brought into focus a new Chinese anti-monopoly law that was first implemented in August 2008 and has since been modified with more provisions and regulations to provide greater transparency for the anti-trust investigation process.

The transaction was supposed to happen in this way: Coca-Cola would buy Huiyuan's issued shares and any convertible bonds for $2.3 billion and also committed to invest in China over $2 billion over the next three years.

But the review committee decided this transaction would prevent potential competition in China's juice market given that Huiyuan has about 40% of that market and this would boost Coca Cola's share in the market to over 20%.

So what's the big deal that Coca-Cola got its bid rejected? The big deal is how China's Ministry of Commerce responded.

In their official announcement ( here in Chinese http://www.mofcom.gov.cn/aarticle/b/c/200903/20090306108617.html ) MOC gave no real legal basis for their decision but instead insisted that the acquisition would negatively affect the domestic market. Basically, the announcement reads that the effect of consolidation on national economic development would be deleterious.

The thing is, though, in a previous transaction where InBev acquired Anheiser-Busch (http://archives.chicagotribune.com/2008/nov/19/business/chi-wed-brf2-inbev-nov19) the regulations MOC imposed were less stringent and got the OK for the transaction.

In a word, China's Anti-monopoly law is very new and this has brought and will bring lots of questions about how MOC makes its decisions. Some say Coca Cola's failed bid shows that the Chinese government is serious about its anti-monopoly law. Others contend it's just pure protectionism at its best and, if anything, it was how China could get back at the U.S. for rejecting their acquisition of the American oil company, Unocal, back in 2005 (nanpin.china.com.cn/english/2005/Aug/137165.htm ).

Whatever the viewpoint is, the idea is this: anti-monopoly in Chinese law is changing and being revised every day and as this happens there will be less foreign acquisitions and a stronger stance taken by China on this front.

Fen Qing and Obama

Here are two articles that stood out in my mind over the past couple of months:

The first is an article that first appeared over the summer in the New Yorker that deals with a documentary posted on Youtube defending Chinese nationalistic pride. What interested me was reading about two students at Fudan University - one who was studying Heidegger and Husserl, and who is the maker of the documentary, and another student who had recently translated into Chinese a lecture given by Harvard political theory professor Harvey Mansfield on the topic of "Manliness". I've been trying to get in contact with these students but so far no luck.

http://www.newyorker.com/reporting/2008/07/28/080728fa_fact_osnos

The second is a solid, 8 page aria on what Obama represents that appeared in the NY Review of Books in February. The text was delivered in a lecture back in December. It was written by Zadie Smith, best known for her book White Teeth and more recently On Beauty. The narrative flow of the piece is superb. Smith ties in Bernard Shaw, L'il Wayne, Maucaulay among others to express how Obama represents a multiplicity of voices yet also a singular one.

http://www.nybooks.com/articles/22334


No real concrete idea presented in this post but wanted to share two articles I've been reading and re-reading. I'll probably do this from time to time.

Intro

I'm out here in Shanghai and always have random thoughts on random topics so I've decided to string some of these thoughts together with a blog. I've never really been into the blogging world, but I thought I'd give it a shot.

So first off, the name of my blog. It literally means dialogue, or conversation, in Mandarin and for those of you who know about my attempt during freshman year to start a magazine called "Discourse" at Princeton (http://www.princeton.edu/~discours), this is my attempt to continue that project.

China is all over the news every day. From climate change to finance, the Chinese government and its policies are always being highly scrutinized. Next week's G20 summit has been dubbed the G2 summit because really the main players are China and the U.S. While the media's interest in China covers various sectors, including military buildup, economic stimulus packages, and avian flu, the reason why I wanted to come out here was not focused on really studying one specific area. Instead, I just wanted to live with the Chinese and see exactly what's going on out here in the everyday.

I don't want this blog to be academic and do hope to share some of the funnier stories I have from living here. But what I really want to do is focus on one idea for each post and see how much mileage I can get out of that idea.

So that's the goal.

To support my stay here, I work for an American law firm where I translate Chinese legal documents and do research for their China-Latin America practice. I basically get to study Mandarin every day and ask my colleagues questions when I have them.

And so this blog begins.