Wahaha vs Danone

Topics: China, Joint venture, Strategic management Pages: 11 (2655 words) Published: December 8, 2012
III. Wahaha Versus Danone :

a) The Joint-Venture :
1- Analysis of the conflict between Danone and Wahaha:
In an interview with internet portal Sina quoted as saying, Zong Qinhou, boss of Wahaha Group, the first Chinese beverage producer Danone owns 51% of which, called the Chinese government "to enact rules to protect domestic companies from malicious acquisitions ", denouncing the takeover attempt of subsidiaries of his company by the French.

Verbal attacks against Zong Danone represent a "habitual attitude" of the boss of Wahaha Group during negotiations, said Tuesday in an AFP spokesman for French food group in Paris.

According to Danone, which does not wish to comment on these statements, the French group wants Wahaha to integrate the companies owned by Mr. Zong who work almost exclusively for the first beverage manufacturer in China.

Contractor well known in China and a delegate to the National People's Congress (ANP, Parliament), Mr. Zong said that Danone wants to buy four billion yuan (517 million) subsidiaries, which are not affected by the initial agreement both partners, and to acquire exclusive use of the Wahaha brand in the beverage and food. He said he would resist attempts to Danone.

"I told them so solemn that the Chinese are now standing, that we are no longer at the time of the invasion by China of the eight foreign alliances," said Zong at Sina, referring to the intervention In 1900 troops from France, Britain, Germany, Austria-Hungary, Russia, Italy, Australia and the United States, to suppress the Boxer movement.

"China has its own sovereignty, its own personality, but you continue to talk in a threatening manner, which increases our indignation," he adds. Zong immediately received the support of its employees to believe a letter signed by "all employee representatives", published by Sina.

In the Asia-Pacific, Danone achieves a turnover of 2.1 billion euros and employs over 41,000 people, Wahaha counting the number of its key brands alongside Robust, Aqua, Danone and Britannia.
China accounts for almost one tenth of its total turnover of 13 billion euros. Danone is the latest foreign firms to bear the brunt of a certain economic nationalism in China.

The U.S. investment fund Carlyle had twice revised downwards its claims on the manufacturer of construction equipment Xugong Group Construction Machinery (XGCM), one and a half after announcing he would take control. Economic nationalism has also emerged in the buyouts of a number of Chinese cookware Supor by the French group of small appliances Seb, or a company of Wuhan Boiler boiler, also a French, Alstom.

• Danone and Wahaha Group Reach an Amicable Settlement:

Danone and Wahaha Group are pleased to announce that they have reached an amicable settlement, subject to the approval of the Chinese authorities. The settlement has been the outcome of renewed efforts of both parties to put a final end to their dispute through productive negotiations that have taken place in a spirit of mutual respect and with the support of both the Chinese and French governments.

As part of the settlement, Danone and Wahaha are to conclude their existing joint venture relationships. Danone has agreed to sell its 51% interest in the Danone-Wahaha joint ventures to its Chinese partners. The execution of this agreement will put an end to all legal proceedings related to the disputes between the two parties.

Commenting on the transaction, Frank Riboud, CEO and Chairman of Danone, stated: "The collaboration between Danone and Wahaha helped to build a strong and respected leader in the Chinese beverage industry. We are confident that Wahaha will continue to be highly successful under its future management guidance. Danone has a longstanding commitment to China where it has been present. Since 1987 and we are keen to accelerate the success of our Chinese activities, in keeping with our mission of bringing health through food...
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