China's rejection of Coca-Cola's $2.4 billion bid for China Huiyuan Juice Group could prompt a backlash against Chinese investing abroad as it risks chilling investment within the country, according
to lawyers and investment bankers commenting on the action.
China's Commerce Ministry says that the combined company's market power could "narrow the room for survival" of smaller players
in China's beverage industry, Gordon Fairclough and Carlos Tejada report. But the ruling sends "a very negative message," according to Lester Ross, an attorney in WilmerHale's Beijing office who
wasn't involved in the deal. "I think it was driven by protectionism, fueled by popular resentment against a foreign company acquiring a popular Chinese brand."
Mei Xinyu, a researcher at
the Chinese Academy of Trade and Economic Cooperation, says the ruling has "nothing to do with trade protectionism." But Yi Xianrong, a researcher in the finance and banking section of the
government-backed Chinese Academy of Social Sciences, says the ministry's rejection was "groundless" given the intense competition in the industry.
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