Case Study: How Danone and Wahaha, which have all to success in China failed?

Résumé du document

We are in 1996, DANONE is the number one dairy in the world, and after a merger with BSN in 1973 it became the first food company in France.
Danone achieves many conquests overseas markets; they also carry a lot of mergers and acquisitions.

Already in 1989, after the fall of the Berlin Wall, Danone sent several experts to analyse and capture the market of Eastern dairy products, biscuits and mineral water. They perform several joint ventures in Russia and the Czech Republic.

This is in line with their global conquest Danone wishes to settle in China. They want to sell their products by creating a joint venture. This year, Danone reaches the turnover of 83.9 billion francs.

They perform a joint venture in China with a large partner: Wahaha, China's leading beverage with the president Mr. Zong Qinghou one of the richest man in China, who is also a member of the Chinese Communist Party, with many influence.
So in February 1996 Danone started to conquer China with a new big partner size: Wahaha.

Extraits

[...] II) What Danone should have done? Why this joint venture was a Fail? We have seen in the history of this joint venture between Danone and Wahaha that did not work and it was a failure, especially for the French giant food company. In most cases, and this is the case here, they have ignored the cultural differences on certain points. Each country has a very specific culture, and even within a country, each with its own form of culture, when you want to do business in China, it is necessary to know the characteristics and respect because it is a country with very different culture from our. [...]

[...] But in parallel, Danone invests heavily, while Wahaha with Mr Zong refuses to invest as heavily as it considers its contribution is its brand. Problem appears in the “perfect” Joint Venture More tensions arise between Danone and Wahaha, without the necessary communication is done, it's a cruel lack of knowledge in Chinese culture which Danone is victim to the Chinese, even if there tensions, problems or difficulties , as we will not clearly ask them what wrong , All is well! [...]

[...] http://www.danone.com/fr/groupe/valeurs.html Interview from Mr. Zong Qinghou in 2011 by POUILLE Jordan in Danone voulait acheter Wahaha à bas coût” (http://www.usinenouvelle.com/article/danone-voulait-acheter-wahaha-a-bas- cout.N151232) Interview /Z]_abkl †žŸ »êëüýÿ from Gérard Haas (lawer) by Jean-Marie Pottier, for the journal nouvel 10 december 2007, http://tempsreel.nouvelobs.com/opinions/20071210.OBS9452/on-peut-se-poser- la-question-de-la-valeur-d-un-contrat-en-chine.html Franck Riboud, CEO OF Danone Chine, ce n'est pas Alice au pays des merveilles» Magazine Challenges Challenges. [...]

[...] Case Study: How Danone and Wahaha, which have all to success in China failed? Summary Presentation of the case 2 Danone: The conqueror 2 Creation of the China JV 3 Problem appears in the “perfect” Joint Venture 4 Litigated cases 5 II) What Danone should have done? 9 Why this joint venture was a Fail? 9 Loss of trust 9 Different laws, different cultures 10 Manage your JV, don't let Chinese 11 Comparison of Hofstede's model 12 Conclusion 13 Bibliography 14 Presentation of the Danone-Wahaha case Danone : The conqueror We are in 1996, DANONE is the number one dairy in the world, and after a merger with BSN in 1973 it became the first food company in France. [...]

[...] In the case of the joint venture between Danone and Wahaha, the right arbitration is CSC. Thus in 2007, Danone filed the case to the CSC and put a complaint against his partner, accusing international business competition, imposture towards Danone and demanding that Whaha give a finance compensating to their 39 remaining years until they end to the contract of the joint venture . And Danone claims 890 million euros. In this situation more tense between the two parties. Wahaha replied that he had never violated the contract but it's actually Danone which has violated it, as in the Joint Venture agreement a clause was: "Do not harm the interests of the joint venture." It turns out that in 2000, Danone wanted to strengthen its presence in China for a large purchase campaign, including buying "Lebaishi" which at this moment was the main competitor of Wahaha, but Danone did not buying only this company, they also acquired Yili, Huiyuan and several other companies still in the beverage sector which according Wahaha, caused huge losses for their company. [...]