Doing business in China : Danone-Wahaha joint venture

Résumé du document

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.

Extraits

[...] Creating a Joint Venture in China implies knowing this local way of working, and DANONE does not seem to be well prepared as is evident by their failure in the market. It would have been better if they didn't act as imperialists, and had signed a contract with Wahaha about such issues at the outset. The other problem was that they did not create enough links with the local partner, and thus took a long time to discover that Wahaha was using their name without paying DANONE. [...]

[...] Why did DANONE and Wahaha embark on a joint venture for doing business in China? This is not only a question for this case, but also a question for the common joint venture. The joint venture between DANONE and Wahaha was a good success case for the Chinese market it displayed good cooperation and good business. In my opinion, the answer to the question is the link between the needs of market and the needs of technology. This implies that DANONE wanted Chinese market share and Wahaha wanted better technology. [...]

[...] In 1979, the company abandoned glassmaking by disposing of Verreries Boussois. In 1987, Gervais DANONE acquired the European biscuit manufacturer Général Biscuit, who owned the LU brand, and in 1989, it bought out the European biscuit operations of Nabisco. In 1994, BSN changed its name to 'Groupe DANONE', adopting the name of the Group's best-known international brand. Franck Riboud succeeded his father, Antoine, as the company's Chairman and Chief Executive Officer in 1996 when Riboud senior retired. Under Riboud junior, the company continued to pursue its focus on the 3 product groups: Dairy, Beverages, and Cereals; and divested itself of several activities which had become non-core. [...]

[...] DANONE had abundant money for investment in China, and had advanced technology, which was a much-need resource for Wahaha. 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. [...]

[...] This situation breaks the corporate culture created by the joint venture. Hereafter, trust will be lost, and the arguments that surface due to the conflict will remain in the minds of the two corporate bodies. First of all, negotiations were to be promoted, but unfortunately they failed because each actor wanted to win the deal. In asking for justice, the break is initiated, as it is not possible to go back and in all possibility the companies will not be able to work together anymore. [...]