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Get Full Essay Get access to this section to get all help you need with your essay and educational issues. The dispute reveals many questions that China faces as it integrates into the world economy, such as what to do when rule of law leads to an unpopular result or harms a valued Chinese company.
The MNC employs roughly 90, staff across five continents. Since its founding in the late s, the company has grown from three people selling drinks to school children to become the largest Chinese bottled-water company today.
This growth is mainly the result of the drive and talent of founder Zong Qinghou, who expanded the company by satisfying Chinese consumer demand and aligning his business strategy with government policy. Danone and Wahaha formed their first joint venture JV in China in Moreover, continuing reform and strong economic growth have dramatically changed not only China itself, but perceptions of the country, both at home and abroad.
In many ways, China in is a world away from China in News of the Danone-Wahaha dispute—in which Danone accused Zong of setting up mirror companies that illegally used the Wahaha trademark—burst into the public arena in April Since then, Chinese and foreign media have covered the dispute extensively.
At times, both parties in the dispute have been unusually outspoken and vitriolic. The following summary of the dispute is based on media reports. What lessons can be learned from the dispute? Danone and Zong negotiated over several months to resolve the conflict. After negotiations failed, Danone requested arbitration in Stockholm, Sweden, and filed lawsuits in Los Angeles and other cities, mainly over trademark infringement and non-compete obligations see Table.
Thus, ownership of the Wahaha trademark had never been transferred to the JV. Further fueling the dispute, several Wahaha companies initiated proceedings against Danone-nominated JV directors—accusing them of breaching non-compete obligations by serving simultaneously on the boards of the Danone-Wahaha JVs and other Chinese companies that were competitors of Wahaha.
The novel feature of the Danone-Wahaha dispute is the geographic and legal range of the various litigation. To date, the parties have initiated at least 12 lawsuits and arbitration cases within China and six other jurisdictions.
In DecemberDanone and Wahaha jointly announced a truce and that both sides were committed to resolving the dispute by negotiation. The parties originally planned to negotiate through February but extended negotiations until the end of March.
As the CBR went to press in mid-April, the partners had not yet agreed to continue negotiating. What can Danone do now? Current knowledge on how to do business in China is light years ahead of where it was then, and the investment environment has changed substantially.
Since many JVs created in the s may face similar problems, perhaps a more relevant question is, what else could or should Danone do to manage the situation now and regain control of the JVs?
First, Danone should have a clear public relations strategy to manage how it appears in the Chinese media. Danone risks jeopardizing its future in China if Chinese consumers turn against it— Chinese nationalism should not be underestimated.
Though Danone holds a majority stake in the Danone-Wahaha JVs, the Chinese public generally regards Wahaha as a national treasure and Zong, in some respects, as a national hero.
Zong commands tremendous loyalty among his workers, the Chinese media, and the general population. Since the dispute became public, the Chinese blogosphere has repeatedly discussed boycotting Danone products.
On the other hand, critics point out that Zong has played the nationalist card masterfully in the past to protect his own personal and family interests. A recent move by Danone demonstrates that the company may be on the right track.
According to press reports, on January 16,Emmanuel Faber, the Danone-nominated chair of the JVs and a key actor in the dispute who replaced Zong in June against the wishes of employees loyal to Zong, resigned from his position in the JV.Sep 30, · Danone has agreed to sell its 51 percent stake in the ventures to Wahaha, putting an end to all legal proceedings related to the disputes between the two parties, the companies said in separate.
Danone Group and its partner, Wahaha Group Company, are shareholders in a joint venture (JV) company that is the largest beverage company in China.
A recent dispute between the partners now threatens to wreck it. Danone v. Wahaha: Who Laughs Last?
Quingxui Bu* Abstract Multinational Companies may result in culture clashes, incompatibility of Western corporate governance and legal resolution strategies. As one of the most successful joint venture models, the high-profile Danone/Wahaha dispute has.
Oct 01, · The dispute erupted in , when Danone accused Wahaha, which is based in Hangzhou, of secretly operating a set of parallel companies that .
Apr 17, · The story behind the Wahaha Danone JV dispute April 17, After reading China Law Blogs post on the Danone and Wahaha Joint Venture dispute, I just had to translate this 21st Century Business Herald article which ran over the weekend.
The Danone-Wahaha dispute is a story of the relationship between two very different entities against a backdrop of incredible change. The dispute reveals many questions that China faces as it integrates into the world economy, such as what to do when rule of law leads to an unpopular result or harms a valued Chinese company.