Chinese drinks giant brands Danone 'despicable' over lawsuit
(TODAYonline.com)Updated: 2007-06-08 09:57
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| The Logo of French food giant Danone, December 2006. |
China's largest drink company accused France's Danone on Wednesday 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 Tuesday it filed a lawsuit in the United States against companies linked to Wahaha Group, 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 Wednesday Danone was trying to pressure Zong Qinghou, the company's millionaire founder and chairman, to sell his firms that make the disputed products cheaply and branded the action "despicable and laughable."
"Danone is bluffing and applying worldwide pressure to force Chairman Zong Qinghou to give in," said Shan Qining.
"What it doesn't realise is Zong's resolve gets harder. Once the public knows the truth, then the departure of Danone from China and the capital market is not far away.
"Danone's real intention... for their actions against Zong is to force him to yield and annexe Wuhaha at a low price."
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 four billion yuan (519 million dollars) 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.
The agreement would give the joint venture the exclusive right to produce, distribute and sell food and beverage products under the Wahaha brand.
Danone said Tuesday it had filed its lawsuit in Los Angeles.
"Hangzhou Wahaha Food and Beverage Sales Co. Ltd. is illegally selling products which are the same as those sold by Wahaha joint ventures and is making unlawful use of the joint ventures' distributors and suppliers," Danone said in a statement. -- AFP
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