This was a strategy that helped Danone succeed in many other markets. 16 Pages Posted: 29 Jan 2009. On April 10, Wahaha's trade union released an announcement, saying they'll "firmly uphold Zong's leadership and take back all the rights related to the well-known brand 'Wahaha.'" "But Danone's offer of 4 billion yuan is below these companies' total assets of 5.6 billion yuan. A Tale of Two Companies Abstract. Some Chinese companies in partnership with Danone have begun doubting the intentions of Danone, and troubles have also emerged inside Wahaha. Wahaha held 49 percent of the shares of the joint ventures, while the rest were jointly taken by Danone and Peregrine. They've stopped attacking each other and said they hope to sit down to solve their disagreements peacefully.

The joint venture in our case is between Hangzhou Wahaha and Danone, which was formed by the two companies to gain a competitive advantage in the food and beverage industry. Danone, which owns 51 percent stake of the 39 joint ventures, has accused Wahaha of setting up independent companies and selling products identical to those sold by the joint ventures. At first, the Wahaha Group owned 40% of the share of theThe strategy Danone employed in China was the traditional capital investment method. They also said that during the 10-year partnership, Danone hasn't transferred any technology or supported Wahaha's research and development.Although Danone has announced it would take legal action against Wahaha's illegal use of the brand, it still hopes to solve their disputes through negotiations. Thus the two sides signed a contract about using the brand.According to Zong, there is a clause in the contract that says: The Chinese side can use the brand "Wahaha" on the production and selling of other products after these projects get approval from the board of directors of the joint ventures between Wahaha and Danone. When Wahaha promoted its new product Future Cola, Danone didn't agree either. Jingzhou Tao and Edward Hillier Together their profits stood at 1.04 billion yuan in 2006. Danone, demanding €5 billion in compensation from the French company for trademark infringement.5 Hangzhou Wahaha Foods Co., one of the five joint ventures established by the two firms, has even sued the State Trademark Bureau for rejecting 10 year-old applications that would have transferred the Wahaha brand from the Chinese companies to Wahaha as Pedagogy. Suggested Citation: Suggested Citation. Wahaha held 49 percent of the shares of the joint ventures, while the rest were jointly taken by Danone and Peregrine. An organization seeks to gain competitive advantage over its local competitors by relocating its production operations overseas to its subsidiary companies to access lower cost and higher quality resources and also compete successfully in the host country by transferring the latest technology, expertise and knowledgeWahaha is the largest soft drink producer in China, competing with the big players including Pepsi and Coca Cola. The dispute reveals many questions that China faces as it integrates into the world economy, such as what to do when rule of law leadsaffair in China See all articles by Micah Schwalb Micah Schwalb. It was founded in 1987 when the company began selling soda water, ice cream, and stationary to children. The dispute between Wahaha and Danone, which continues to grow hotter and more contentious everyday, is threatening to derail a huge investment into the Chinese market by the French beverage and yogurt giant . A joint venture was formed in 1996 between Danone Group and Wahaha Group. Danone remained quiet and turned a blind eye when it2.1 Brief History: Wahaha Group Moreover, Zong said, in the initial stage of their cooperation, even if he, as the general manager of the joint ventures, wanted to use more than 10,000 yuan, he had to get the approval of the CFO at Danone.After carving out a niche in the market, Wahaha wished to increase investment in assembly lines, but this plan was rejected by Danone. T Indeed, the conflict with each partner of their interest ratio. His idea was to sell nutritional milk drinks aimed at children which were not common during that period. Danone’s ultimate goal is to take over the Chinese beverage industry. The Chinese company, Hangzhou Wahaha Group, was the country’s leading beverage manufacturer at the time of the joint venture’s inception.

But from a legal standpoint the 51% share says otherwise.

Furthermore, Dickinson argues that Wahaha’s perspective during the contract formation saw their 49% share meaning full control since the other 51% was split between Danone and Peregrine. As private ownership was illegal during that time, he partnered with the local government (Liu, 2007) and created the state owned Wahaha Nutritional Foods Factory, later Wahaha Group with Zong asC O M M E N TA RY Danone subsequently took over Peregrine's shares when the latter went bankrupt amid the 1997 Asian financial crisis. Keywords: China Law Wahaha. It's this clause that triggered the dispute between Danone and Wahaha.Zong feels very frustrated because if he wanted to use the brand established by himself, he has to get the other's agreement. 1.

What lessons can be learned from the dispute? Since the announcement, the clash between the two sides has burst into open warfare.After squabbling for almost two months-especially after May 9 when Danone declared it would take legal proceedings against Wahaha-the two sides have gradually quieted down. "The most important thing now is a solution acceptable to both sides," said He.Wahaha's cooperation with Danone originated in 1996, when the two companies and the Hong Kong investment bank Peregrine set up five joint ventures making bottled mineral water and other food products under the brand "Wahaha." The new companies have no relationship with Danone, but still use the brand "Wahaha. As of 2007, Danone, the French multinational food company, was in a fierce battle with China-based Wahaha Group (the largest beverage producer in China) to win control of their joint ventures (JVs) in China. The Danone-Wahaha partnership once seemed ideal, but the companies’ relationship has deteriorated. Schwalb, Micah, Wahaha as Pedagogy (December 15, 2007). According to(Dunning & Lundan, 2008), there are several seeking behaviors that induced organizations to expand internationally.