Protectionism Rears Ugly Head

It appears Beijing isn’t as comfortable with capitalism as they appeared to be during the Olympics.

China has rejected Coca-Cola's planned $2.4 billion acquisition of that nation’s top juice maker Huiyuan Juice, saying the deal would have been bad for competition.

The acquisition by Coca-Cola would have been the largest-ever buyout of a Chinese company by a foreign rival, but was rebuffed in what is sure to be seen as another sign of the protectionism that has been mounting globally as much of the world is gripped by recession.

"The message is particularly significant given Coke's good corporate-citizen status so visible during the high-priority Beijing Olympics project, as well as its pledge of $2 billion of additional investment in China," says Credit Suisse analyst Carlos Laboy.

Observers said China's ruling on Coke could cut both ways in that Chinese companies that have been making increasingly high-profile acquisitions abroad may run into trouble of their own.

And it's not just China, “this is going on around the world,” says Tim Seymour. “Look for more of it and it’s very negative for the global economy.”

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