In the news: MOFCOM approves AB InBev's PRC deal, work safety head gets fired and Alibaba and JD.com target rural shoppers

MOFCOM approves AB InBev's Chinese acquisition

On August 25, MOFCOM approved Anheuser-Busch InBev plan to increase its shareholding in Chinese brewing company Pearl River Beer by 4.37% to 29.99%, according to a monthly competition report by Norton Rose Fulbright. The ministry decided that the transaction would not result in a change of control or the existing membership of the Chinese brewer's director and supervisory boards – Pearl River Beer would still be managed by the Guangzhou SASAC. One of the conditions MOFCOM imposed in 2008 for approving InBev's takeover of Anheuser-Busch was that any future increase in the stake held in Pearl River Beer must be subject to approval. China's notorious anti-monopoly reviews are usually the biggest challenge in international M&A, with parties often waiting on MOFCOM when their deals have been cleared in all other jurisdictions, only to find their approvals come with remedies or conditions. But it would be unfair to compare the ministry with its much more mature US and EU counterparts. Considering the PRC Anti-monopoly Law is only seven years old, credit must be given to MOFCOM for having taken substantial measures to improve its efficiency and streamline merger control processes in recent years.

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China's head of work safety fired for corruption suspicions

The head of China's work safety regulator was sacked for suspected corruption after 139 people were killed in blasts at a chemicals warehouse in Tianjin last month, Xinhua reported. Yang Dongliang has been stripped of his position as chief of the State Administration of Work Safety. Although the government did not explicitly link his case to the Tianjin incident, the company that operated the warehouse did not have a valid license to work with the hazardous materials stored there. Some say Yang's dismissal was partly due to the need to hold someone accountable to show that the government is on the job. But it is no secret that some big companies around the world can find ways to work around standards and regulations. This incident will prompt ports in the rest of China, including in Hong Kong, to clean up their act.

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Alibaba and JD.com target rural China for growth

China's e-commerce giants, faced with saturated markets in urban areas, are pushing into rural areas in search of growth. Villages appear promising as roughly 600 million rural citizens are seeing their incomes rise faster than city residents (albeit poorer overall). E-commerce has revolutionalized shopping and e-commerce companies are continuing to diversify the experience for its customers. Alibaba spent big on shares in electronics store chain Suning, which also just signed a deal with Dalian Wanda to open stores in Wanda Plazas throughout the country. There were 77 million e-commerce customers in the countryside last year, up 41% compared with 17% growth in urban areas. Perhaps now with the increasing number of rural online shoppers, the costs of inland logistics and warehousing may pay off.

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COFCO Coca-Cola opens second bottling factory

COFCO Coca-Cola, the bottling joint venture established by COFCO and Coca-Cola, has laid the foundation of the soft drink maker's second Chinese bottling plant, based in Hebei. Coca-Cola plans to invest an additional US$4 billion in China over the next three years. The new plant will cover 112 million consumers in Beijing, Tianjin and Hebei. The company has put US$9 billion into China since 1979. Coca-Cola is one of the busiest MNCs in China, with several challenges in IP and anti-monopoly. While its proposed acquisition of privately owned Chinese juicemaker Huiyuan was blocked by MOFCOM in March 2009 and caused global controversy, the joint venture with state-owned COFCO allows China to keep track of the foreign brand's expansion and influence. But the fact that it plans to invest billions more in China shows that global companies, despite the sometimes restrictive local regime, don't want to miss out on this massive consumer market.

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