China Said 'No, Thanks' to Coke

 Coca-Cola's (KO) $2.4 billion cash offer to acquire Huiyuan was rejected last week by China's Ministry of Commerce, which cites antitrust concerns as the major reason. This deal could have been the largest foreign acquisition of a Chinese firm. Hong Kong-listed Huiyuan is the largest fruit and vegetable juice maker in China, with over 10% share in the $2 billion market, while Coke has a 9.7% market share. This decision came at a time when the Chinese government is encouraging more local firms to acquire brand, technology, and distribution channels through overseas acquisition.

Market Recap
Worries of poor 2008 full-year results sent China's stock market down for the week ended March 20. The Shanghai Composite Index declined by 7.2% to 2,281, while the Shenzhen Composite Index slumped by 9.8% to 8,647.

Financial
Regulators Officially Approve the Futures Trading of Steel Products
Securities regulators in China officially approved steel futures, which will likely start trading on the Shanghai Futures Exchange in late March.

Citic Securities to Set Up Merger & Acquisition Joint Venture with Evercore
China's largest brokerage firm Citic said it has set up a joint venture with Evercore to target cross-border M&A activities and run a private equity fund focused on China.

Technology
China Mobile Felt the Pinch from Recession
The world's largest mobile operator saw its average revenue per user down by 7% in 2008, as mobile subscribers cut back spending. In the fourth quarter of 2008, earnings growth slowed to 11%, compared with 26% in the year-ago quarter. As competition is heating up in the promising 3G area, the operator is quietly toning down its ambition for the future. The currently dominant wireless operator said it aims to secure a third of the 3G market.

Consumer
Advertising Market Expanded by 9% in 2008
Official statistics show that the market grew to CNY 189.96 billion ($27.78 billion) in revenue terms last year. TV commercials remained the most popular form of advertising, accounting for 26.5% of total ad spending, which was up 13% from 2007. Newspaper ads, which accounted for 18% of total ad spending in 2008, rose by 6.4% year over year.

More Beer in Recession
According to the National Bureau of Statistics, total beer output in the first two months of 2009 rose 13% to 5 million kiloliters from the same period last year, indicating a possible recovery after the sluggish market condition in 2008. For the whole year of 2008, beer production increased only 5.5% from 2007.

China Lowers Capital Requirement for Travel Agencies
The new capital requirement is CNY 300,000 ($44,000), down from CNY 4 million for foreign agencies and CNY 1.5 million for local firms. However, the government still bans overseas agencies (excluding those in Hong Kong and Macao) from handling outbound travel in China.

Industrial
China Sets Target for Chinese Steel Makers to Consolidate
By 2011, the government expects the top five steelmakers to account for 45% of total capacity, up from 28.5% now. No steelmaker will be allowed to add new capacity unless it is to replace the outdated old plants that will be shut down.

Contributions from Lun Lu and Iris Tan.