CHINA: Danone counters Wahaha Union lawsuit, appeals for calm

By | 17 December 2007

Groupe Danone has dismissed a lawsuit from the trade union of its joint venture in China as "totally groundless", and has called for calm in the long-running saga.

The French company has been hit today (17 December) by a legal action from the Wahaha Union, which represents around 10,000 workers of the Hangzhou Wahaha Group - Danone's food and beverage joint venture partner in the country.

The union has accused Danone of damaging the joint ventures' and shareholders' interests by holding stakes and chairing positions in the ventures' direct competitors. Danone has been asked to "stop violating rights", and has been slapped with a demand for CNY10m (US$1.3m) to be paid in damages.

"Our lawyer's initial feedback is that this is a totally groundless claim," Danone said today. "We will handle the case according to legal procedures."

"For a long period of time, Danone has been a company well known for its efforts in placing the company's social mission as equally important as its economic mission. From that perspective, we recognise and welcome the efforts made by the Wahaha Union aiming to protect the interests of all the employees."

The French company warned, however, that is the head of Hangzhou Wahaha who is more to blame for the union's grievances. With the union claiming that "the average monthly income of a Joint Venture employee is only around EUR100", Danone highlighted that "it is well known that in the past decade, Mr Zong Qinghou (head of Hangzhou Wahaha) was fully responsible for the day-to-day management of the Joint Venture business. It is a general manager's responsibility to provide reasonable remuneration to the employees".

Wahaha Union holds a 24.6% share of Hangzhou Wahaha Group and is an indirect shareholder of Danone Wahaha Joint Ventures.

Danone concluded its response to the union lawsuit by saying that it feels that it is in all parties' interests to find an amicable solution to the dispute through discussions. "Although there has been a lot difficulty, we still believe we can achieve this goal," the company said. "Therefore, we urge all the parties to avoid taking any actions which will further intensify or complicate the situation, and work together aiming to bring about an amicable settlement as soon as possible."

Sectors: Soft drinks, Water

Companies: Danone, Wahaha

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