FRANCE: Danone hoping for amicable Wahaha settlement

By | 12 June 2007

Danone has moved to clarify the ongoing saga concerning its Wahaha dispute in China.

The French company said yesterday (11 June) that it hopes an "amicable settlement may be possible" to the dispute. On 4 June, Danone filed a lawsuit against the owners of its joint-venture partner, Hangzhou Wahaha, alleging that it is illegally selling products which are the same as those sold by the joint ventures and is making unlawful use of the joint ventures' distributors and suppliers.

Four days later, the chairman of the joint venture, Zong Qing Hou, resigned, accusing Danone of "bullying and slander". Zong also said he would respond to arbitration proceedings filed by Danone in Stockholm "so Danone won't win for sure and we won't lose for sure."

Zong is also the chairman of Hangzhou Wahaha.

"With regard to Mr. Zong's open letter dated Friday (8 June), we welcome his recognition of the validity of the Stockholm arbitration procedure," Danone said yesterday. "Other than that, the facts stated in this letter are either incomplete, twisted, out of context, or simply untrue."

The French company said it understood the "genuine emotion and concern" caused by Zhong's resignation. "However we think that it is inappropriate for anyone to seek to leverage employees, business partners and the public to support their goal of maximising their own personal wealth, while endangering the business continuity of the company, and raising antagonistic sentiments against individuals, companies or nations," Danone added.

"With due government support, we continue to believe an amicable settlement may be possible," the company said, adding that it will call for a board meeting with the joint venture's Chinese directors to "address the current business and management situation".

The Danone Wahaha joint venture is 49%-owned by Zong, with Danone holding 51%. The Wahaha brand covers water, lactic beverages, energy drinks and RTD teas in China.

Sectors: Soft drinks, Water

Companies: Danone, Wahaha

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