More Coke in China

With 80% of its business derived from overseas, Coca-Cola Co. (NYSE: KO) is penetrating deeper into the lucrative China market with its robust balance sheet in 2009.

In February, despite many companies cutting dividends to retain cash on their balance sheet, Coca-Cola decided to raise its dividend by 7.9%. Last week, Coca-Cola opened its $90 million innovation and technology center in Shanghai, China. Coca-Cola also announced its plan to invest $2 billion in China over the next three years, including new plants, R&D, sales and marketing. Coca-Cola’s $2 billion investment plan is also a response to its rival PepsiCo Inc.’s $1 billion investment plan in China over the next four years. Currently, Coca-Cola is still waiting for Chinese government’s approval on its acquisition deal with China’s largest juice maker Huiyuan Juice Group Ltd. for $2.4 billion in cash. If complete, the deal will be Coca-Cola’s largest overseas acquisition.

Coke’s latest move will definitely increase investors’ confidence in its overseas business and will bring in more revenue to the company in the future. It will also provide more pleasure to Chinese consumers.

If Coca-Cola successfully acquired Huiyuan, will Coca-Cola create a new product line that focus on Chinese customer’s taste? How about a Chinese-tea-flavored Coke?