Danone won a partial victory on Thursday in its dispute with Chinese partner Wahaha when Zong Qinghou, the founder of the Chinese company, resigned as chairman of their soft drinks joint venture.

However, the French group now faces the difficult task of asserting control over the lucrative but troubled joint venture. Zong, a hard-driving entrepreneur, had almost total management control of the business.

The dispute between the two companies is being closely watched by multinationals because it has highlighted many of the cultural differences that are often present in joint ventures in China.

Danone has been in partnership with Wahaha since 1996 and the bottled water they produce together has become one of the most well-known brands in China. With sales of £¿bn ($1.4bn) last year, the joint venture accounted for 5-6 per cent of Danone's operating profits and about half of Wahaha's profits.

The French group has accused Zong of setting up a parallel sales company to distribute drinks brands controlled by the joint venture. It has begun legal action against Wahaha in China and requested arbitration in Sweden.

It has also begun a lawsuit in the US, in which it claimed it had been cheated of at least $100m and would continue to suffer losses of £¿5m a month unless the court intervened.

Emmanuel Faber, head of Danone's Asia operations, will become interim chairman of the joint venture.

Danone said it was in contact with the local government in Hangzhou, where Wahaha is based, to discuss "management continuity". Wahaha is one of the most successful companies in Hangzhou and Zong is a leading member of the local branch of the Communist Party.

"This is a bit of a hollow victory for Danone," said one Shanghai-based executive familiar with both companies. "It does not really solve any of the problems they have with the joint venture."

In a long personal letter published on Thursday, which included a quotation from Chairman Mao, Zong said he was resigning because of the "humiliation and framing" he had suffered from Danone since the dispute began.

Zong also questioned whether Danone executives would be able to exert control. "It is not an exaggeration to say that they do not know which way the gates of the joint venture companies open," he said.

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