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China Briefings

Reports on China issued by Samsung Economic Research Institute

China Business Intelligence No. 92

China Business Intelligence No. 92

Samsung Economic Research Institute Beijing Office

Oct. 29, 2008

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Highlights:

I. Economy

Along with China's opening of its agricultural market, foreign companies are making inroads into China's agricultural industry. China's lower entry barriers and long-term price growth in agricultural products are stimulating both investment and speculation on the part of foreign companies. As foreign companies have more pricing power and strong competitiveness, China's inefficient local companies are under heavy pressure. China's government will need to balance the positive effects of foreign companies' entry into Chinese markets, by providing the appropriate regulations as well as early warning and guarantee systems to ensure adequate food security.

II. Industry

China's largest fruit juice maker Huiyuan has made significant contributions to the improvement in living standards of the Chinese people by providing high quality fruit and vegetable-based beverages. Along with improvements in the consumption level of Chinese consumers, the fruit and vegetable beverage market has enjoyed rising popularity overall. Coca-Cola, the world's largest soft drink company, recently offered to acquire a 100% stake in the beverage arm of Huiyuan Juice. Coca-Cola's offer, however, created significant negative public sentiment because of fear that national brands are being edged out of the market by global companies, making conditions difficult for the China's small- and medium-sized enterprises to maintain market share.

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