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Doing business in China : Danone-Wahaha joint venture

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  1. Danone
    1. History
    2. Glassmaking tradition
    3. Strategic reorientation
    4. History
    5. Joint ventures
  2. Why joint venture between Danone and Wahaha?
  3. Right process to resolve the dispute?
  4. What kind of lessons you have learned from this joint venture dispute?

1919: ?DANONE? was founded by Isaac Carasso in Barcelona (Spain) as a small factory producing yoghurt. ?DANONE? is a Catalan diminutive of the name of his first son, Daniel.
- 1929: The first factory was built in France, but during World War II, Daniel Carasso moved the company to New York, where Dannon Milk Products Inc. was founded. In the United States, Daniel partnered with the Swiss-born Spaniard Joe Metzger and changed the brand name to DANONE which sounded more American.
- 1951: Daniel Carasso returned to Paris to manage the family's businesses in France and Spain, and the American business was sold off in 1959.
- 1967: In Europe, DANONE merged with Gervais, the leading fresh cheese producer in France, thus becoming Gervais DANONE.

[...] Twelve lawsuits had been initiated within China and in six other jurisdictions. The battle represented hundreds of millions of Euros. DANONE asked for a merger but Wahaha refused, and a tribunal proposal was the only way the resolve the situation. The tribunals are the last solution to resolve an issue like this, because it is difficult for people to work together later, if they have been fighting for their own interest in the recent past. This situation breaks the corporate culture created by the joint venture. [...]

[...] Thus, that year, the joint venture between Wahaha and DANONE was looked as the win-win cooperation in China. Both of them got what they needed from the other and succeeded in increasing business in the future What is the Right process to resolve a dispute? According to Wikipedia a Joint Venture is an entity formed between two or more parties, here DANONE and the Hangzhou Wahaha Group Co, to undertake economic activity together. The parties agree to create a new entity by contributing equity, and then share the revenues, expenses, and control of the enterprise. [...]

[...] Another lesson to be learned is that a joint venture can never succeed under weak or uncertain legal procedures. In this case, the issue with the transfer of the trademark from Wahaha to DANONE caused a lot of problems because of its rejection, and the negotiation of a license agreement without solid legality. It was a significant mistake, and a joint venture needs to have a strong legal basis, to avoid problems like this one. Finally, we may also learn from another mistake of DANONE. [...]

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