Danone settles with Wahaha, sells JV stake

The "amicable settlement" between the companies, which together ran 39 joint ventures, is subject to Chinese regulatory approval but has the support of Paris and Beijing, the companies said in a joint statement.

"The completion of this settlement will put an end to all legal proceedings related to the disputes between the two parties," they said.

The statement did not give any financial details of the deal, and Wahaha spokesman Shan Qining declined to release any figures.

The feud began when Danone said it had discovered that Wahaha chairman Zong Qinghou had set up an entire production and distribution network in parallel to the French firm's joint ventures with Wahaha.

In mid-2007 the French firm sought an arbitration ruling, accusing the Chinese beverage giant of breach of agreement by selling Wahaha-branded drinks without its permission.

"The collaboration between Danone and Wahaha helped to build a strong and respected leader in the Chinese beverage industry," Danone chairman and chief executive Franck Riboud said in the statement.

"We are confident that Wahaha will continue to be highly successful under its future management."

Danone remains committed to China, Riboud said, adding the company was "keen to accelerate the success of our Chinese activities".

The dispute had sparked a series of retaliatory moves in China and abroad, including in the United States and Sweden.

A Chinese court ruled last year that Wahaha owned the trademark, which was valued by the state-controlled China Daily newspaper at $2.4 billion.

The feud between the two companies was at turns bitter and personal, with Danone trying to install a French executive to replace Zong as chairman in mid-2007. Zong fought off the move, declaring it illegal.

The dispute also struck a nationalist chord, with Zong accusing his French partners of trying to steal a Chinese brand. But the Wahaha chairman on Wednesday adopted a more friendly tone.

"China is an open country. Chinese people are broad-minded people. Chinese companies are willing to cooperate and grow with the world's leading peers on the basis of equality and reciprocal benefit," Zong said in the statement.

Zong founded Wahaha in 1987 selling milk products in a school store.

Danone and Wahaha formed their joint venture in 1996, and the Chinese drink maker credits the foreign investment and technology it gained through that partnership with helping to transform it into a national brand.

Lao Bing, a Shanghai-based food and beverage analyst, however said Chinese companies may see the case as a cautionary tale about the risks of relying on foreign partners.

"They should learn to think twice about the power of capital and that they may no longer have full control over the situation," Lao said.

"They must not just sign agreements to attract capital, because clauses could jeopardise their development in the future."

Source: AFP

Published courtesy of