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Thu, Jun 07, 2007 - Page 10 News List

Wahaha calls Danone's plan 'dispicable'


China's largest drink company accused France's Danone yesterday of using the courts to force a cheap takeover, in a bitter feud over a joint-venture agreement, branding the action "despicable."

Groupe Danone SA said on Tuesday it had filed a lawsuit in the US against companies linked to Wahaha Group (娃哈哈), its joint venture partner, for illegally producing identical products and selling them on the Chinese market.

The complaints alleged that the firms broke a Wahaha-Danone agreement by selling the same products as those made by the two parties' joint ventures in China.

A spokesman for Wahaha said yesterday Danone was trying to pressure Zong Qinghou (宗慶后), the company's millionaire founder and chairman, to sell his firms that make the disputed products cheaply and branded the action "despicable and laughable."

The French company, which produces Evian mineral water and Danone yoghurts, set up five joint ventures with Wahaha in 1996 under an agreement that bars the Chinese company from making products that compete with it.

Danone owns 51 percent of the joint ventures with Wahaha and the two sides recently agreed for the French firm to invest another 4 billion yuan (US$519 million) for controlling stakes in Wahaha subsidiaries.

These subsidiaries, which Zong controls, make the disputed products. But Zong apparently wants to back out of the deal.

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