Danone Under Attack In China

Danone takeover of Chinese drink maker Wahaha would result in loss of Chinese control of their brand.

Workers at China's largest drink maker Wahaha have said they are opposed to a series of takeovers by the French Groupe Danone which would result in the loss of Chinese control of their brand. "We strongly urge the state to quickly issue laws and regulations opposing hostile takeovers by foreign capital, and, in an effort to safeguard the interests of our national brand, to immediately investigate the clearly hostile takeover action begun by the Danone Group," they said in a statement issued April 9.

France's Danone, which owns 51% of a joint venture with Wahaha, plans to invest four billion yuan (US$519 million) for controlling stakes in Wahaha subsidiaries, Wahaha chairman Zong Qinghou told Sina.com. The agreement would give the joint venture the exclusive right to produce, distribute and sell food and beverage products under the Wahaha brand, Zong said. "We consider such provisions unfair, prohibiting us from making goods that are produced by the joint ventures while imposing no restrictions on Danone itself," Zong said.

Danone, one of the world's largest yogurt makers, set up five joint ventures with Wahaha in 1996 under an agreement that bars the Chinese company from making products that compete with it.

Copyright Agence France-Presse, 2007

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