Was there a learning asymmetry in the joint ventures?
From Zong’s perspective, there was, because he thought that the Wahaha Group had not received any technological or managerial expertise from Danone, whereas Danone did get a its place in the Chinese market, which they hoped for.
From Danone’s view, however, there was managerial expertise offered to the Wahaha Group personnel in R&D and marketing for the Joint ventures, but Zong kicked them out. Because of this, there might have been a learning asymmetry when taking Danone’s perspective into account.
Has Danone been able to access the location-bound FSAs of the Wahaha Group? Should Danone have rejected the joint venture entry mode in the first place?
In order to answer this question, one should first look at what Wahaha Group’s FSAs are. The number one reason for Danone to cooperate with the Wahaha Group was that the Wahaha Group was already a strong firm, with a good position in a fast-growing market. This was also the reason for Danone to set up joint ventures. They did not have good understanding of the Chinese market, so by cooperating with a local firm, they could acquire knowledge wchich could help to become a key player in this market.
The joint venture started off pretty succesful, with succesful investments by Wahaha and Danone. With annual sales of around $1,35 billion, these joint ventures accounted for 75 per cent of Danone’s sales in China and about 3 per cent of its global sales. So when looking at this, one could conclude that Danone has been able to access Wahaha Group’s location-bound FSAs.
So, Danone should not have rejected the joint venture entry mode, because this joint venture has brought them where they are today; a big player in the Chinese market.
Can you provide an update on Danone’s activities in China after the sale of its joint venture assets to the Wahaha Group, using materials available on the Web?
In 2012, 6 per...
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