Beverages News
- Danone to appeal China ruling
Date: 12-Dec-2007 Sources: (Shenzhen Daily)
FRENCH food group Danone will appeal to a Chinese court to overturn a decision forcing it to hand back the best-selling Wahaha beverages brand to its estranged venture partner, Hangzhou Wahaha Group.
The decision by a Chinese arbitration commission Monday to terminate a trademark transfer deal signed in 1996, was 'wrong, blatantly illegal and unacceptable,'Danone's lawyers said yesterday.
'The decision is trampling Chinese laws and seriously hurts Danone's interest,'Tao Wuping told reporters in Shanghai.
'We will demand that the decision be cancelled by the relevant court,'Tao said, adding Danone may be a victim of local protectionism.
The arbitration commission is located in the eastern city of Hangzhou, where Wahaha is based, and mainland newspapers have said the local government owns a stake in China's biggest drink maker, which was founded by billionaire chairman Zong Qinghou. Wahaha officials could not immediately be reached for comment.
In one of the most high-profile disputes between a foreign company and a Chinese partner, Danone and Wahaha have been exchanging accusations and lawsuits for months.
The dispute has raised concerns among foreign investors about potential risks involved in investing in joint ventures in China. The French company has accused Wahaha of setting up parallel operations outside their ventures that sell Wahaha-branded products such as soft-drinks and bottled water.
Although Danone has asserted that it paid Wahaha US$6.6 million for exclusive rights to use the Wahaha trademark at their joint ventures, Danone said it never got official approval to own the brand, one of China's best known.
Instead, Danone and Wahaha signed a separate agreement in 1999 allowing their joint ventures to use, rather than own, the trademark.
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