cocacolacan.jpgIf at first you don't succeed… Coca-Cola is taking another shot at China Huiyuan Juice Group, although this time it is seeking a minority stake in China's largest maker of pure juice.

The US soft drinks giant tried to buy Huiyuan last month, but the bid, which would have been the largest foreign acquisition of a Chinese company, was blocked by the Chinese government on competition grounds.

Shaun Rein, of China Market Research Group, notes how the government went to great lengths to present its decision as straightforward competition issue rather than as a sign of rising protectionism in China — the knee-jerk reaction of many China critics in the west.

Indeed, in this Forbes story Rein argues that China is, if anything, becoming more accommodating to business — both western and local — as a way to counter the slowdown by giving green light to projects that help stem the rising tide of Chinese jobless.

Coca-Cola is interested in Huiyuan for the market penetration it offers in China's less-developed third and forth-tier cities, which western firms have to date tended to bypass in favour of better-known first and second-tier cities. The 800m consumers living in these smaller cities have less disposable income than their metropolitan high-spenders, but presumably they still have enough to buy an occasional can of Coke.

In the big metropolitan cities, consumer spending growth is slowing because of the economic slowdown and consumers are becoming satiated with constant overtures of consumer goods companies. So, firms will have to turn their eyes to smaller cities to find the best growth opportunities in the future, Rein argues.

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