China's Wahaha says Danone talks at impasse

 

 

Hangzhou Wahaha Group, China's top beverage firm, said on Sunday talks with joint venture partner French food group Danone to resolve a long-running dispute have hit an impasse as a deadline nears.

 

Group Chairman Zong Qinghou told reporters on the sidelines of China's annual National People's Congress, or parliament, that he could not accept Danone's demands for ending the feud.

 

The French company had accused Wahaha of setting up parallel and illegal operations alongside their venture that sells Wahaha branded products such as soft drinks and bottled water.

 

Zong said Danone has proposed that their joint venture along with the businesses at the centre of the dispute be listed as one entity and that Wahaha guarantees the value of Danone's share of the listed firm will not fall below 50 billion yuan ($7 billion; Dh25.69 billion).

 

"How can anyone guarantee a share price?" said Zong. "It's up to the market. It doesn't make any sense."

 

Zong said he has proposed that Danone buy his share of the joint ventures or that it be bought by a third party, but that the French company has rejected those options.

 

In December, Danone and Wahaha agreed to cease all lawsuits in their highly public and acrimonious dispute and enter talks to resolve the dispute.

 

The firms failed to resolve the issue and extended the talks for another month, a deadline that will expire at the end of March, said Zong.

 

"For negotiations to succeed there must be trust and benefits for both sides. These are not negotiations," he said.

 

"If we don't reach an agreement, then we have to go back to the courts to decide," he said.

 

Previously the two companies traded a series of lawsuits and countersuits that at one point had spread to California, Sweden, and China's Supreme Court.

 

The feud became highly personal and eventually involved several Danone executives based in the mainland as well as Zong's wife and daughter. French President Nicolas Sarkozy and his Chinese counterpart Hu Jintao also discussed the issue during a state visit last year.

 

The maker of LU cookies, Evian mineral water and Activia yoghurt has a 51 per cent stake in a joint venture with Wahaha – named after the sound of a laughing child.

 

Danone began investing in China in the 1980s and its widespread network helped sales in Asia expand almost 21 per cent to 2.4 billion euros in 2006, becoming the mainland's packaged water market leader and number two in the biscuit market. (Reuters)