The news that Danone is preparing to forcibly acquire the shares of other non-joint venture companies of Wahaha Group for RMB 4 billion has once again pushed itself into the embarrassing position of a "national brand intruder". In the past few years, this company has attracted "attention" due to its several acquisitions of Chinese consumer goods brand companies.
In Danone’s view, since the joint venture has lasted for ten years, it is a legitimate business behavior to protest against Wahaha’s use of the joint venture brand in non-joint venture companies. As for the way Wahaha put it to the media before the solution was finalized, Fan Yimou, president of Danone Group Asia Pacific, clearly expressed dissatisfaction in an interview with reporters on April 5. It is normal for cooperation to change. "Calm negotiation and resolution are better than other methods." Much more.”
According to the previous joint venture agreement between the two companies, the Wahaha trademark cannot be used outside the joint venture company without the permission of the joint venture company. This agreement is still valid. After the joint venture between Wahaha and Danone, other non-joint venture companies established by Zong Qinghou are also using the Wahaha brand.
According to data disclosed at Wahaha’s 2007 Distribution Conference, Wahaha’s sales exceeded 20 billion yuan and profits exceeded 2 billion in 2006; the total assets of non-joint ventures reached 5.6 billion yuan and profits also reached 1.04 billion. Yuan.
“Wahaha is undoubtedly a representative of a national brand, but it is not a company with a modern corporate management system.” Chen Yu, an analyst at Oriental Iger, believes that from a commercial legal perspective, Wahaha non-joint ventures use joint ventures The brand’s approach is questionable.
"In mainland China, this has become a common thing. When any commercial disputes or different understandings occur, neither the Chinese business community nor public opinion seems to have the habit of discussing legality first. Emotions often come first, so words like 'trap' and 'trap' abound. In fact, it seems that this always benefits Chinese companies, but in the long run, it has no impact on the business environment or even the company itself. Any benefit," one business analyst opined.
What is a "trap"?
Ten years after the joint venture, Zong Qinghou used the words "accidentally fell into Danone's trap", "control of national brands may be lost", "Danone will be in China" The public statement that the beverage industry has formed a monopoly has completely exposed the conflicts between the two parties.
According to people familiar with Danone and Wahaha, frictions between Wahaha and Danone have already existed. Danone and Wahaha have long had disputes over Wahaha's use of the Wahaha brand in non-joint venture companies. Until the day of the interview, Danone and Wahaha had been communicating on this matter.
In 1996, Wahaha used part of its fixed assets as investment to establish five joint ventures with foreign parties such as the French Danone Group to produce products including purified water, eight-treasure porridge, etc. under the "Wahaha" trademark. At that time, Wahaha held 49% of the shares, and Danone and Peregrine together held 51%. After the Asian financial turmoil, Hong Kong Peregrine sold its shares to Danone, allowing Danone to jump to a 51% controlling position.
After Danone failed to propose the transfer of the "Wahaha" trademark rights to its joint venture, the two parties changed a trademark use contract. One of them stated that "China can use the (Wahaha) trademark in the production and sales of other products in the future, and these product projects have been submitted to the board of directors of Wahaha and its joint venture for consideration." That is, "submission to the joint venture company's board of directors for consideration" is the prerequisite for the Chinese party to use the Wahaha trademark.
But it is not just joint ventures that currently use the Wahaha brand. In 1999, Zong Qinghou decided to establish a number of companies that had no joint venture relationship with Danone through companies established by employee-funded stockholdings. In the past few years, Wahaha invested in a number of related companies in the west, old revolutionary areas, and the Three Gorges Reservoir area. The industrial company uses the Wahaha brand but does not introduce Danone into the joint venture.
According to the analysis of financial data as of the end of 2001, these companies are wholly owned by Wahaha or cooperate with third parties other than Danone, but there are 20 non-joint ventures in which Wahaha is the major shareholder.
“Business is business.” Fan Yimou expressed his idea of ??joint venture with outstanding Chinese brands.
In Danone's view, any company, whether domestic or foreign, has the right to protect joint venture brands from arbitrary use in accordance with business principles.
Danone is not worried about whether the acquisition of so many outstanding national brands involves monopoly. "Monopolies in the food and beverage industry around the world rarely occur." Fan Yimou gave an example. Even if the total number of brands operated or controlled by Danone is added up, it does not exceed 15 in China. Master Kong, Uni-President, Pepsi-Cola, Coca-Cola, and Nestlé are all powerful competitors.