Huiyuan’s shares dropped by HK$3.49 per share, or 42.05%, to close at HK$4.80 apiece. In early trading, the company’s shares dropped 53% at one point to the day’s lowest level of $3.88. After having been suspended since March 11, 2009, the stock continued trading on March 19, 2009.

The recent price fall was in a sharp contrast to its performance in the past several months after the announcement of the Coca-Cola bid. Huiyuan’s shared price had doubled since September in 2008 after the beverage giant of America offered a deal of HK$ 12.2 in cash for each of Huiyuan’s listed shares in Hong Kong.

On March 19, 2009, the Ministry of Commerce vetoed Coca-Cola’s bid to buy Huiyuan, the largest juice maker in China, saying the acquisition could help to create a too strong player, which has sufficient resources and marketing prowess to smash its rivals.

Qin Gang, spokesman of the Foreign Ministry, said in the regular briefing on March 19, 2009 that the ruling is different from trade and investment protectionism. Qin said China will adhere to the policy of opening up the markets open and welcoming foreign investment as usual, reiterating that China opposes trade and investment protectionism.

Analysts foretold that Huiyuan’s shared price will linger on around the current level, yet, as an independent company, Huiyuan will do well in the long run.

OSk, a research firm based in Hong Kong, said in a report that without the offer of Coca-Cola, they expected Huiyuan’s price to plunge, downgrading Huiyuan to sell with a target price of HK$4.

Liu Ziyuan, an analyst from BOCOM International, predicted that Huiyuan shares will fall back to the level before the takeover program was announced. Wang Xiaodi, an analyst from Merchant Securities, said that in the short term, Huiyuan has lost the good chance of obtaining the advanced management technique and marketing expertise from foreign investors.

But according to Liu, the failure of Coca-Cola’s bid would not affect much on the Huiyuan’s current business. Liu said that the juice market has not changed since the takeover program was announced in 2008, and that no rival in the domestic market could ever put Huiyuan’s place in danger at present.

With more than 45% of the pure juice market in China, Huiyuan is the country’s largest juice beverage maker, controlling over 10% of Chinese fruit and vegetable juice market that grew 15% in 2008 to $2 billion.

Liu said at present it is more important to see if Huiyuan’s management team has an alternative plan now that the deal has failed.

Zhu Xinlin, who established Huiyuan in Guangdong province in 1992, now holds more than 30% of its shares listed in Hong Kong. After the takeover plan was revealed in 2008, Zhu said that he would appreciate the Chinese government even if the deal is denied. He was quoted as saying, “If the deal is denied, I would assume the government has its own concerns.”

Huiyuan said on March 19, 2009 that it respects the decision made by the Ministry of Commerce and the company’s business will go on as usual.

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Guotai Jun’an Securities Co, one of the largest brokerages in China, is the very firm that the public attack most, as it’s reported that, for 2008 in which great losses hit the financial services and a drop of 24.24 percent in net profit fell on the company, it’s ready to grant big hope in the rise of wage to its executive.

As one of the largest firms in the country (about 3,200 employees) in both regular brokerage services and an investor in other companies, Guotai Jun’an was condemned by the Chinese media for its decision that 3.2 billion yuan ($470 million) would be spent on “compensation and welfare expenses” for the past year, 57 percent higher than its compensation budget at the beginning of the year. Take a move State broadcaster China Central Television for example, it remarked the decision as the one that “causing harmful social influence”.

It would be beyond anyone’s imagination if the compensation and welfare expenses are the only directions in which the total amount mentioned goes. That means the staff would get 1 million yuan each, tantamount 88 times an average urban worker’s annual income in 2007.

Forty-four brokerage and financial companies are exposed to have spent 20.9 billion yuan in compensation last year, some of which even spent 400,000 yuan on their staff on average. However, top executives in financial forms are usually paid much higher than the regular staff does. Among those executives, the pay as high as 66 million in 2007 for Ma Mingzhe, chairman of Ping An Insurance (Group) Co, aroused heat discussion and severe denouncement on the Internet.

A netizen-oriented survey has become a more powerful trigger of the public anger. The survey indicates that around 90 percent of the netizens criticize Guotai Jun’an’s action with such words as “outrageous” and “disgraceful”. And the company is so immoral and incredible that it is also compared to robbery in 2008 in which stock investors suffered an average of 200,000 yuan each.

“The compensation policy in State-owned companies should not be handled at will,” said Professor Li Shuguang with China University of Political Science and Law. As far as we know the top two shareholders with more than half of stocks of the Guotai Jun’an in hand are working in Shanghai State-owned Assets Management Co and Central Huijin Investment Co. respectively, and both are state sectors.

The Ministry of Finance, in the coming Friday, would issue a new set of principles in the evaluation of performances of state-sectors financial institution and it would be added to the compensation plan. And it was on the Jan 13 that it also publicized an announcement that had certain restriction on the state-sector financial companies’ stock option incentives and employee stock ownership plans. In addition, advice was given that the enlarging income gaps should be taken into consideration before any appropriate action was to be taken.

Are you interested in the business opportunities in China?

China is one of the world’s great growth markets and is likely to be for many years to come. Foreign companies often face difficulties in assessing Chinese market demand and enacting effective strategies because of the language barriers, culture differences, and high expense.

BPOVIA is the leading virtual assistant and Knowledge process outsourcing (KPO) service provider in China. BPOVIA is the only virtual assistant company ever been nominated for the prestigious “Red Herring 100 Asia” Awards 2008. Combines international perspective with local know-how, BPOVIA can provide our clients China business development service and help our clients doing successful business in China.

Please visit http://www.BPOVIA.com/ for details about our service.