Global soft drinks juggernaut The Coca-Cola Company (NYSE: KO) is considering a possible future listing on the Shanghai Stock Exchange to coincide with part of its plan to expand into China. “We continue to have positive discussions with Chinese government officials as we look at this opportunity,” Geoff Walsh, Coca-Cola’s public affairs and communications director for Asia Pacific region recently told a major newspaper in Hong Kong.
As of now, no foreign companies are allowed to list in China’s domestic stock exchanges. China had indicated earlier in 2009 that it would eventually allowed qualified foreign companies to list in Shanghai, with rules and regulations that have yet to be announced.
Currently, Coca-Cola share price ($68.75 as of July 7) is enjoying a gradual upward climb towards its record high of US$88 a share reached in 1998. Chief Executive Officer Muhtar Kent is continuing the corporate strategy started by his predecessor E. Neville Isdell to refocus the company more on its core products, which include Coke, Diet Coke, and Coke Zero, rather than on its other noncarbonated drinks. Kent also reconfigured serving sizes globally and introduced minicans and smaller bottles with new pricing to meet consumer demands and boost profit margins. In 2010, Coca-Cola purchased its largest franchised bottler in Atlanta, essentially bringing it in-house to cut supply-chain costs, and giving the company control of 90% of its North American distribution.
As close to 80% of Coca-Cola’s sales are done outside the United States, Kent plans to spend at least US$27 billion through 2020 for new bottling and distribution facilities in emerging markets such as China and Mexico. Last year, the company opened three bottling plants in the Inner Mongolia region at a cost of about US$246 million, part of the company’s three-year, US$2 billion expansion plan in China. A Shanghai listing seems like a logical extension of Coca-Cola’s plan as it would provide access to China’s huge local currency deposits as well as increase the already strong brand value of the best selling soft drink in the world.
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