Coca-Cola makes plans to list on Shanghai stock exchange

 Published: 6/1/2011 10:27:03 AM GMT
Original Cached

Coca-Cola, the world's biggest soft drinks manufacturer, is in talks with the Chinese authorities to list its shares on the Shanghai stock exchange. China experts say the move heralds a wave of Chinese listings as the world's biggest companies look to build their businesses in the world's most populous nation.

Foreign companies are not yet allowed to list in mainland China but the authorities are exploring the possibility of opening an international board and Atlanta-based Coca-Cola could be among the first western firms to sign up.

Geoff Walsh, Coca-Cola's communications director for the Asia-Pacific region, told the Hong Kong Economic Journal that the company is "exploring the opportunity of listing our stock on the Shanghai exchange". He said the company continues "to have positive discussions with Chinese government officials as we look at this opportunity".

John Quelch, dean of the China Europe International Business School in Shanghai, said: "Coca-Cola is an American icon. They will be the first of many and I expect the news will set off a wave of announcements about listings on Asian markets."

The move marks yet another dramatic shift in Coca-Cola's relationship with China. Although it set up bottling plants in Shanghai and Tianjin in 1927, it was kicked out by the communists in 1949 as a symbol of US imperialism. It returned in 1979 when China began its economic reforms.

The news follows announcements that three London-listed companies, HSBC, Unilever and Standard Chartered, are also planning to join the Shanghai exchange. China now has the world's third-biggest stock markets after the US and Japan.

Quelch said Coca-Cola's move was the latest signal in a wider shift in the world economy. "The percentage of the market cap of global companies that is currently held by US investors is going to decline. In 10 years' time, I'd predict that 20 companies in the Fortune 500 will have Asian chief executives."

Last year, Coca-Cola's chief executive, Muhtar Kent, said that the company intended to spend $2bn in China. The firm's Sprite brand is already the country's top selling soft drink. But competition is fierce from local brands Wahaha and Kangshifu and American arch-rival Pepsi, which has a deal with Yum Brands, owner of KFC and Pizza Hut.

China is Yum Brands's fastest growing market: the company opened 500 new restaurants there last year. It now has over 4,000 outlets including the local Little Sheep Mongolian barbecue chain.

Philip Gorham, an analyst at MorningStar, said a Shanghai listing would allow Coca-Cola to "tap into a fast growing investor market" and "allow Chinese investors to invest in a great company without the currency risk."

Gorham added that Coca-Cola was currently enjoying double-digit growth in China – its third biggest market after the US and Mexico – at a time when sales were close to flat across North America and Europe.

Overseas companies can list in Hong Kong but they are barred from doing so in mainland China. Chinese investors can only buy overseas-listed shares through special investment programmes.

Plans to allow the listing of foreign firms have been under discussion since 2007. But the financial crisis is believed to have delayed the authorities' plans to allow qualified foreign companies to issue yuan-denominated stocks.

Chinese media have recently reported that the government may approve the listing of overseas companies on the mainland by the end of June and the first listing on that board may happen as soon as October.

NEWS MAP Shanghai on the map

TAG CLOUD Tags Cloud

Get Adobe Flash player

Previous Next
News in Pictures

Cultural thirst drives China's high-end tea boom

Successful space docking for China

Competing With China

Raw Video: Deadly explosion in China

What Will Happen to Chinese Loans?