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Danone's trademark dispute with Wahaha may have ended, but the fallout from the one of the most long-running and high-profile disputes between joint venture partners in the drinks sector will not disappear so easily.

Danone and Wahaha said today (30 September) that they have agreed to end their dispute, after Danone agreed to ditch its 51% stake in the two companies' Chinese joint venture.

With allegations of copycat production and lengthy, not to mention costly, legal battles, it is a tale that contains some of the worst nightmares for western companies seeking partners in emerging markets.

There is already evidence that the Wahaha dispute has influenced Danone's strategy in these markets.

The French food and soft drinks giant announced in April that it would pursue growth in India, another key emerging market, on its own. The firm said it was pulling out of a turbulent 13-year joint venture with India's Wadia Group and would seek to grow its business "autonomously" in the country.

Having had its fingers singed, Danone appears sceptical about working with 'local' partners in emerging markets.

From the Wahaha side, it is clear the company believes the dispute with Danone could jeopardise the confidence of foreign investors in China.

China's Government took part in the peace talks between the two companies and its obsession with presenting a friendly face to outside investors is stamped all over today's official Wahaha statement.

"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," chimed Wahaha Group chairman Zong Qinhou.

The statement is reminiscent of China's strenuous efforts to deny claims of "economic nationalism" after officials blocked Coca-Cola Co's takeover of Huiyuan Juice Group.

In the end, companies are not going to turn their backs on so-called 'emerging markets' - the clue, of course, is in the name.

Danone today reiterated its "longstanding commitment" to China. Shortly before Coca-Cola Co was bounced out of the Huiyuan deal, it announced a three-year US$2bn investment plan for China, which is now the soft drinks giant's third largest market in the world by volume.

Multinational drinks companies cannot afford to be absent from the likes of India, China, Russia and Brazil, because of the growth opportunities those countries hold.

But, the Wahaha example will not be lost on those who operate in such markets and it may lead some to rethink their approach.


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