Danone fiasco underlines China business risks
Monday, 18 June 2007
BEIJING, June 17 (AFP): Rogue companies. Secret profits. Legal threats. Allegations of "evil deeds" and "tyranny."
It may sound like an overwrought corporate thriller, but all are elements in a dispute between French firm Danone and its Chinese partner which has underlined the lingering risks of doing business in China.
The case has seen a successful Sino-foreign joint venture devolve into a catfight of charges and recriminations. For many, it's a cautionary tale about getting into bed with a Chinese partner.
"In my mind, there is no reason to have a (Chinese) partner anymore," said Mic Mittasch, an Australian who was involved in joint ventures but now runs a wholly foreign-owned business here creating production lines for manufacturing firms.
"A lot of firms that have them are now looking to cut down on the partner's influence."
The French firm, maker of Danone yogurt and Evian water, is now trying to do just that with its estranged partner Wahaha, China's biggest drinks company.
Since joining forces in 1996, Danone has injected tens of millions of dollars to gain access to Wahaha's China distribution network in a venture run by Zong Qinghou, one of China's most successful businessmen.
It may sound like an overwrought corporate thriller, but all are elements in a dispute between French firm Danone and its Chinese partner which has underlined the lingering risks of doing business in China.
The case has seen a successful Sino-foreign joint venture devolve into a catfight of charges and recriminations. For many, it's a cautionary tale about getting into bed with a Chinese partner.
"In my mind, there is no reason to have a (Chinese) partner anymore," said Mic Mittasch, an Australian who was involved in joint ventures but now runs a wholly foreign-owned business here creating production lines for manufacturing firms.
"A lot of firms that have them are now looking to cut down on the partner's influence."
The French firm, maker of Danone yogurt and Evian water, is now trying to do just that with its estranged partner Wahaha, China's biggest drinks company.
Since joining forces in 1996, Danone has injected tens of millions of dollars to gain access to Wahaha's China distribution network in a venture run by Zong Qinghou, one of China's most successful businessmen.