study guide
1. When and how did Danone expand into the Chinese market? What problems did Danone Group encounter while operating in China?
From the case, Danone expand into Chinese market in the late 1980s. However, Danone faced challenges in China due to lack of market knowledge. In 2000, Danone purchased Robust, the then-second largest company in the Chinese beverage industry. Sales of Robust had reached RMB2 million in 1999. After the purchase, Danone dismissed the original management and managed Robust directly. Because its new management was not familiar with the Chinese beverage market, Robust struggled. Its tea and milk products almost disappeared from the market. So, during 2005 to 2006, the company lost RMB150 million.
2. How was the Danone and Wahaha JV formed? What was its structure? Why did Danone decide to form a joint venture rather than establish a 100 percent owned subsidiary?
In 1996, Danone Group, Bai Fu Qin and Wahaha Group combined forces in a joint venture. Danone bought the interests of Bai Fu Qin and gained legal control of the joint venture with 51% of shares. While, members of the JV are entitled to use Wahaha’s trademark. Because of Danone lack of knowledge about Chinese market, through the joint venture, the company can make better market decisions and created the largest beverage company in China.
3. What was the problem of Danone Wahaha joint venture that triggered the conflict between the companies? What were the differences in Danone’s and Wahaha’s understanding of their own respective roles and responsibilities in this venture? What aspects of national and organizational culture affected this perspective?
The problem is wahaha used it trademark to open subsidiaries companies in other countries, however, Danone believes the Wahaha trademark belongs to the joint venture company and Wahaha is illegal to use the trademark for its own purposes. The difference between Danone and Wahaha for understanding the role in joint venture are,
From the case, Danone expand into Chinese market in the late 1980s. However, Danone faced challenges in China due to lack of market knowledge. In 2000, Danone purchased Robust, the then-second largest company in the Chinese beverage industry. Sales of Robust had reached RMB2 million in 1999. After the purchase, Danone dismissed the original management and managed Robust directly. Because its new management was not familiar with the Chinese beverage market, Robust struggled. Its tea and milk products almost disappeared from the market. So, during 2005 to 2006, the company lost RMB150 million.
2. How was the Danone and Wahaha JV formed? What was its structure? Why did Danone decide to form a joint venture rather than establish a 100 percent owned subsidiary?
In 1996, Danone Group, Bai Fu Qin and Wahaha Group combined forces in a joint venture. Danone bought the interests of Bai Fu Qin and gained legal control of the joint venture with 51% of shares. While, members of the JV are entitled to use Wahaha’s trademark. Because of Danone lack of knowledge about Chinese market, through the joint venture, the company can make better market decisions and created the largest beverage company in China.
3. What was the problem of Danone Wahaha joint venture that triggered the conflict between the companies? What were the differences in Danone’s and Wahaha’s understanding of their own respective roles and responsibilities in this venture? What aspects of national and organizational culture affected this perspective?
The problem is wahaha used it trademark to open subsidiaries companies in other countries, however, Danone believes the Wahaha trademark belongs to the joint venture company and Wahaha is illegal to use the trademark for its own purposes. The difference between Danone and Wahaha for understanding the role in joint venture are,