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NEW YORK (TheStreet) -- Coca-Cola (KO) - Get Free Report CEO Muhtar Kent thinks the U.S. is losing its competitive edge, and that doing business in emerging economies like China and Brazil is easier and friendlier.

In China "you have a one-stop shop in terms of the Chinese foreign investment agency and local governments are fighting for investment with each other," Kent told the

Financial Times

, comparing the country's business operations to a "well-managed company."

While Chinese provinces compete with one another to draw business, U.S. states do not do enough along similar veins, Kent argued, and that puts them at a disadvantage in the global marketplace.

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"They're learning very fast, these countries," Kent told the paper, referring to China and Brazil. "In the West, we're forgetting what really worked 20 years ago. In China and other markets around the world, you see the kind of attention to detail about how business works and how business creates employment."

Kent attributed the United States' shortcomings to divisive politics and outdated tax regulations. An environment under those conditions boosts uncertainty and inhibits investment, he said, insisting that American politicians be held more accountable for their efforts to turn the economy around.

"I believe the U.S. owes itself to create a 21st century tax policy for individuals as well as businesses," he said, criticizing rules that tax U.S. companies for repatriating cash brought in from international markets. "If you talk about an American company doing business in the world today with its Chinese, Russian, European or Japanese counterparts, of course we're disadvantaged. A Chinese or Swiss company can do whatever it wants with those funds

earned overseas. When we want to bring them back, we are faced with a very large tax burden."

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"When a country is in trouble, you can't have a polarized political process," Kent added. "There's too much comfort. We need more needles to stick in politicians."

While Coca-Cola gets around 41% of its annual sales and 19% of operating income from the U.S. (with around 7% of global sales by volume coming from China), according to some analyst estimates, Chinese and Russian markets are gaining share. The company is looking to expand, tapping into those potential international sources for increased revenue and profit.

Coca-Cola announced Monday its plans to invest $3 billion in Russia over the next five years, and said in August it would invest $4 billion in China over the next three years. The Chinese investment follows a previous three-year investment in China of more than $3 billion. Those figures compare with a $1.3 billion capital investment in North America this year.

Coke rival


(PEP) - Get Free Report

is also looking to emerging markets for growth.

Pepsi said Sept. 9 that it completed its acquisition of Wimm-Bill-Dann Foods

, a Russian manufacturer of dairy and juice products, a deal of around $5.4 billion.

Russia is now Pepsi's largest market outside the U.S. The deal is expected to add around $5 billion in annual revenue to Pepsi.

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Coupled with its bottler

Coca-Cola Hellenic

(CCH) - Get Free Report

, Coca-Cola operates 17 plants in Russia.

Coke shares were 1.9% higher at $70.06 in trading Tuesday.

-- Written by Miriam Marcus Reimer in New York


>To contact the writer of this article, click here: Miriam Reimer.

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