China says Coke case shouldn't hurt Rio Tinto bid

[March 20, 2009]  BEIJING (AP) -- Beijing is confident a Chinese bid to invest in Anglo-Australian miner Rio Tinto Group will not be hurt by its rejection of Coca-Cola's attempt to buy a Chinese juice maker, a Cabinet official said Friday.

Australian opponents of the proposed investment by state-owned Aluminum Corp. of China, or Chinalco, say the Coca-Cola rejection might help them win public support.

"I'm not worried about Chinalco's case in Australia," Chen Jian, a deputy commerce minister, told reporters when asked whether the Coca-Cola rejection might fuel opposition to the Rio Tinto bid. Chen was speaking during a news conference about an upcoming Chinese investment fair.

Chinese regulators rejected Coca-Cola's $2.5 billion bid for Huiyuan Juice Group this week, saying it would hurt competition and raise prices. But industry analysts say Beijing's real concern was to keep a successful local brand from falling into foreign hands.

Australian critics of the Rio Tinto investment say a foreign government company should not allowed to buy control of part of their nation's mineral wealth.

Chen defended the Coca-Cola rejection as justified by Chinese anti-monopoly law and said Australia should review the Chinalco bid according to its own laws.

"As long as something is a monopoly, we will make a judgment," he said. "They also have anti-trust laws. They will make a judgment according to their law."

China encourages foreign direct investment but attempts to acquire established companies face regulatory hurdles.

Chen expressed confidence the Coca-Cola decision would not affect the willingness of foreign companies to invest in China. The country is a top investment destination, though the flow fell 15.8 percent in February from a year earlier to $5.8 billion.

"China still has the potential to attract more FDI," Chen said. He said that in their latest annual reports, global companies said "they were losing money anywhere else, but China still remains profitable."

[Associated Press]

Associated Press researcher Bonnie Cao in Beijing contributed to this report.

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