Wahaha gets personal in Danone disagreement

By Neil Merrett

- Last updated on GMT

Related tags Danone Contract

A legal disagreement between Danone and a Chinese business
partner today got personal, after the dairy giant was branded as
being "despicable" for launching a
court action in the US.

With a growing number of groups looking to partner with local firms when entering China's burgeoning food and beverage market, the outcome of the case could have dramatic implications for future investment in the country.

A spokesperson for Wahaha derided Danone's move as " bluffing" designed to pressure the company into selling its remaining stake to the dairy giant, in an interview with France's AFP news agency.

The comments followed Danone's announcement this week that it had filed a suit in a Californian court against Wahaha's parent company Ever Maple Trading, over allegations it had breached a contractual agreement.

A spokeswoman for Danone said that it had no comment on Wahaha's reaction.

However, she told Dairyreporter.com, that it still hoped a compromise could yet be found outside of the courts.

"As we have said since the beginning, our purpose is to stop the illegal production and sales of copies of our joint venture products," she said.

"We consider that settling this difference out of the court is still possible and our priority."

Danone said the importance of emerging markets like China made a quick resolution imperative . "

Our sales in emerging countries represent more than 30 per cent of our total sales," she added.

The dispute stems from an agreement established between the two parties in 1996, which prevents Wahaha from manufacturing goods that compete directly with products released through its joint ventures with Danone.

The agreement has gone on to sour relations between the parties, with Wahaha publicly lashing out following a rebuffed attempt by Danone to acquire its remaining shares in April of this year.

As such, company chairman Zong Qinghou vehemently rejected any possible attempt to sell of the remaining 49 per cent of its assets to the group, due to his dissatisfaction with the terms of the joint venture.

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