Coca-Cola deal raises comms strategy concerns

Huiyuan's interim results announcement yesterday revealed that the global beverage giant had not yet filed the necessary documents with MOFCOM, the regulatory body whose approval is a prerequisite for the deal. Foreign enterprises usually need to inform MOFCOM before announcing this type of deal.

The sale of Huiyuan to Coca-Cola is a landmark deal because the PRC Government has been disinclined to sell financially sound companies to foreign companies. It is also the first test of China's anti-trust laws. Despite a slight drop in revenue, Huiyuan’s interim results demonstrated that profits were up by 7.2 per cent in the first half of 2008.

It is thought that Coca-Cola will need to roll out a significant communications initiative to influence grassroots sentiment and lobby the mainland government, in the face of stern opposition from Huiyuan’s Chinese competitors.

In addition, the deal is a litmus test of the influence of Chinese nationalistic sentiment on financial deals, as well as raising questions about Coca-Cola's current communications strategy in the region. "The bigger question is how Coca-Cola will participate in the discussions about the Huiyuan deal - and so far it has been very reactive," said a Beijing-based PR source. "Whether Coke has been too reactive remains to be seen."