The Cost of Doing Business in China: The Coca-Cola Company (KO), Caterpillar Inc. (CAT), Alcoa Inc (AA)

Now the Chinese are moving into the aluminum industry as the metal becomes a more important product for aircraft and car manufactures. Competition in the country is heating up, stockpiles of the metal are at 50% throughout the country, and aluminum prices are falling. Over the past year, the metal’s price has fallen 7.7%, and Alcoa Inc (NYSE:AA)’s stock price has followed along. Year to date, shares of Alcoa are down 0.58%, while the Dow is up 10.76%. That’s after ending 2012 down 2.9% while the index was up 7.26%.

But the competition from China’s aluminum producers may decrease in the future for Alcoa. In mid-February, a Chinese state-owned organization purchased a 13% stake in Australia’s Alumina. That company’s largest asset is a 40% stake in Alcoa World Aluminum and Chemicals, which is a joint venture with Alcoa, which holds the other 60% of the business.

This new partnership could benefit Alcoa Inc (NYSE:AA) in the future, but as we have seen in the past, when it comes to the Chinese government, nothing is set in stone and there’s very little rhyme or reason behind some decisions.

The article The Cost of Doing Business in China originally appeared on Fool.com and is written by Matt Thalman.

Fool contributor Matt Thalman has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola. Check back Monday through Friday as Matt explains what caused the Dow’s winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter: @mthalman5513.

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