Coca-Cola bubbles with joy over first profits
Coca-Cola bubbles with joy over first profits
Despite Coca-Cola being the biggest beverage company and one of the most valuable brands in the world, it has apparently taken almost 20 years to make a profit in Vietnam.
Coca-Cola Company’s executive vice president Irial Finan told Ministry of Planning and Investment leaders in a meeting last week that the firm had now gained a profit.
However, Finan did not specify the level of profits the fizzy drinks maker has achieved. He said Coca-Cola Vietnam had repaid all of its debts and the firm was well on the way to expanding in the country.
The information of Coca-Cola’s profit came just a year and a half after the firm faced transfer pricing investigations from Vietnamese tax authorities in late 2012. Prior to that point, Coca-Cola had reported huge losses while continually expanding its investments in Vietnam.
Previously, Coca-Cola claimed cumulative losses in Vietnam of $181 million up to September 30, 2011, a figure that even outstripped its equity of $141.8 million, according to the Ho Chi Minh City Department of Taxation. The company blamed the high price of materials exclusively provided by its parent company for the losses.
Coca-Cola, which entered Vietnam in 1995, currently operates three plants in Ho Chi Minh City, Hanoi and Danang. Although it had reported huge losses for a long time, Coca-Cola still expanded investment, raising doubts over transfer pricing activities to avoid tax payment.
Danang City People’s Committee at one point rejected a major Coca-Cola production line expansion plan in 2012, citing Coca-Cola’s continual losses as a reason.
Finan said Coca-Cola this month put three new production lines in Ho Chi Minh City into operation in order to meet rising demand in Vietnam.
He said the production expansion showed that Coca-Cola had seriously implemented its investment commitment in the country. In October 2012, Coca-Cola announced it would invest an additional $300 million into Vietnam over the next three years, bringing its total investment in the country to $500 million.
vir
