of 13
8/4/2019 DANONE WAHAHA
1/13
Danone and Wahaha: A Bitter-Sweet PartnershipNegotiations to Gain a Share of the Non-JVs:
Dec. 9, 2006Franck Riboud, Danoneschairman signed a legal agreement with Zong.It provided for the integration of the non-JVsinto the JV. i.e. Danone would acquire a 51%stake in the non-JVs for RMB 4 billion($544million).
However, Zong rejected the offer later on.
8/4/2019 DANONE WAHAHA
2/13
Danone and Wahaha: A Bitter-Sweet Partnership
The Public Saga
April 3, 2007-an article entitled Wahaha Victim ofLow-ball Buyout by Danone was published on the
website of Xinhua which generates heated publicdebate.
April 5, 2007-Danone held a press conference inShanghai saying that its proposed acquisition of 51%of the non-JVs was in compliance with relevant lawsand regulations in China.
8/4/2019 DANONE WAHAHA
3/13
Danone and Wahaha: A Bitter-Sweet Partnership
April 8, 2007 Zong said that because of hisignorance of the importance of trademark and brand,the development of Wahaha fell into a trap designed
by Danone.
April 9, 2007-Danone send a formal letter to theChairman of the Danone-Wahaha JV requesting legal
action against Wahaha for illegal competition andunlawful use of the Wahaha trademark, with a graceperiod of 30 days.
8/4/2019 DANONE WAHAHA
4/13
Danone and Wahaha: A Bitter-Sweet PartnershipMay 9 2007-Danone filed a case for arbitrationagainst Zong and Wahaha in Stockholm.
June 4, 2007-Danone filed suit in Los Angelessuperior court against Ever Maple and Hongsheng, aswell as Zongs wife and daughter who ran the twocompanies.
June 5, 2007-Zong resigned as chairman of the JVs.
8/4/2019 DANONE WAHAHA
5/13
Danone and Wahaha: A Bitter-Sweet Partnership
November 10, 2007-Habgzhou ArbitrationCommittee ruled that Danone had failed to file alawsuit within a reasonable time to settle the dispute
of the trademark transfer.
The Wahaha labour union accused Danone of holdingshares in companies that competed with the 39
Danone-Wahaha JVs.
8/4/2019 DANONE WAHAHA
6/13
Danone and Wahaha: A Bitter-Sweet Partnership
December 18, 2007-Danone announced theautomatictermination of its agreed JV with MengliuDairy Group because some of the conditions and
prerequisites had not been met within the agreedtimeframe
December 21, 2007-under political pressure fromtheir respective governement, Danone and Wahahaagreed to suspend their legal battle and resumenegotiations.
8/4/2019 DANONE WAHAHA
7/13
Danone and Wahaha: A Bitter-Sweet Partnership
CONFLICT - RESOLUTION Different attitudes
towards key issues in theformation and operation
of the joint venture,major differences inbusiness culture andexpectations as to howbusiness should and isbeing conducted.
Danone could haveassumed zeroknowledge of how
things work in Chinaand attempeted toadjust to working inChina the Chines wayrather than followingwhat they usuallypractice elsewhere.
8/4/2019 DANONE WAHAHA
8/13
Danone and Wahaha: A Bitter-Sweet PartnershipCONFLICT - RESOLUTION
It seems that the ChineseWahaha expectationswere that their 49% of the
JV meant full control, asthe other 51% were splithalf-half between Danoneand Peregrine through theSingapore registered Jinjia.
Danone later took overPeregrines part gaining
51% of the JV
The two companies lacked
communications.
Discuss and ensure thatall parties understandthe structure andpossible changes incontrol over the JV.
Focus on building asense of trust andmutual respect between
partners that go beyondthe legal bond.
Both parties contibutesand gains from the JV.
8/4/2019 DANONE WAHAHA
9/13
Danone and Wahaha: A Bitter-Sweet Partnership
CONFLICT - RESOLUTION Trademark control
Wahaha, initially being astate-owned company,
refused the transfer oftrademark rights to the new
JV although this was initiallythe basis for which the JV
was formed upon. Constant attempt by
Danone to adhere theChinese to western use
of legal maneuvers andethics
Ensure a solid local legalfoundation to the JV andtry to clarify all possible
misunderstandingregarding interpretationand usage of JV assets.Reach a mutualunderstanding between
JV partners and gainsupport to the agreementwith the local authorities.
8/4/2019 DANONE WAHAHA
10/13
Danone and Wahaha: A Bitter-Sweet Partnership
CONFLICT - RESOLUTIONManagement structure.
Effective control of dailyoperations was handed to
Zong and Wahaha, as thelocal China experts, whilethe only involvement ofDanone had was throughthe board of directors.
Danone was attempting toempower the localpartner and was not fullyaware of the potential
implications.
All parties should beinvolved in the JV dailyoprations through
extensive mutualcollaborations. Having aChinese partner shouldnot serve as an excuse forstaying passive.
8/4/2019 DANONE WAHAHA
11/13
Danone and Wahaha: A Bitter-Sweet Partnership
CONFLICT - RESOLUTION . .
8/4/2019 DANONE WAHAHA
12/13
Danone and Wahaha: A Bitter-Sweet Partnership
Background:
8/4/2019 DANONE WAHAHA
13/13
Danone and Wahaha: A Bitter-Sweet Partnership
Background: