Saudi Electronic University Danone Wrangle with Wahaha Discussion

Danone’s Wrangle with Wahaha
This week’s discussion will focus on cultural negotiation using the case study about Danone in China (p. 255 in the
textbook).
This case is a cautionary tale of how important cultural differences are when forming strategic partnerships or joint
ventures with companies from different countries.
Our content this week reflects on the impact of conflict on decision-making. As a decision-maker within your
organization, it is important for you to deal with conflict in a skilled manner. Doing so can create positive outcomes
and provide opportunities for improvement rather than undesirable results.
After reading the case, reflect and write your paper on the following:
1.
What was the problem in the joint venture that triggered the conflict between the two companies?
2.
What were the differences of each company’s understanding of their own respective roles and responsibilities in this
venture?
3.
Did any aspect of organizational culture or national culture affect this perspective?
4.
As a leader, what are some ways you can handle conflict when it arises?
Embed course material concepts, principles, and theories, which require supporting citations along with two
scholarly peer-reviewed references supporting your answer. Keep in mind that these scholarly references can be
found in the Saudi Digital Library by conducting an advanced search specific to scholarly references.
Be sure to support your statements with logic and argument, citing all sources referenced
Use APA 7th for citation and referencing
224
kinesics
The study of
communication through
body movement and facial
expression.
oculesics
The area of communication
that deals with conveying
messages through the use of
eye contact and gaze.
Part 2 The Role of Culture
Kinesics Kinesics is the study of communication through body movement and facial
expression. Primary areas of concern include eye contact, posture, and gestures. For example, when one communicates verbally with someone in the United States, it is good
manners to look the other person in the eye. This area of communicating through the use
of eye contact and gaze is known as oculesics. In some areas of the world, oculesics is
an important consideration because of what people should not do, such as stare at others
or maintain continuous eye contact, because it is considered impolite to do these things.
Another area of kinesics is posture, which can also cause problems. For example,
when Americans are engaged in prolonged negotiations or meetings, it is not uncommon
for them to relax and put their feet up on a chair or desk, but this is insulting behavior
in the Middle East. Here is an example from a classroom situation:
In the midst of a discussion of a poem in the sophomore class of the English Department,
the professor, who was British, took up the argument, started to explain the subtleties of the
poem, and was carried away by the situation. He leaned back in his chair, put his feet up
on the desk, and went on with the explanation. The class was furious. Before the end of the
day, a demonstration by the University’s full student body had taken place. Petitions were
submitted to the deans of the various facilities. The next day, the situation even made the
newspaper headlines. The consequences of the act, that was innocently done, might seem
ridiculous, funny, baffling, incomprehensible, or even incredible to a stranger. Yet, to the
native, the students’ behavior was logical and in context. The students and their supporters
were outraged because of the implications of the breach of the native behavioral pattern. In
the Middle East, it is extremely insulting to have to sit facing two soles of the shoes of
somebody.48
haptics
Communicating through the
use of bodily contact.
proxemics
The study of the way people
use physical space to
convey messages.
intimate distance
Distance between people that
is used for very confidential
communications.
personal distance
In communicating, the
physical distance used for
talking with family and close
friends.
social distance
In communicating, the
distance used to handle
most business transactions.
public distance
In communicating, the
distance used when calling
across the room or giving a
talk to a group.
Gestures are also widely used and take many different forms. For example, Canadians shake hands, Japanese bow, and Middle Easterners of the same sex kiss on the
cheek. Communicating through the use of bodily contact is known as haptics, and it is
a widely used form of nonverbal communication.
Sometimes gestures present problems for expatriate managers because these behaviors have different meanings depending on the country. For example, in the United States,
putting the thumb and index finger together to form an “O” is the sign for “okay.”
In Japan, this is the sign for money; in southern France, the gesture means “zero” or
“worthless”; and in Brazil, it is regarded as a vulgar or obscene sign. In France and
Belgium, snapping the fingers of both hands is considered vulgar; in Brazil, this gesture
is used to indicate that something has been done for a long time. In Britain, the “V for
victory” sign is given with the palm facing out; if the palm is facing in, this roughly
means “shove it”; in non-British countries, the gesture means two of something and often
is used when placing an order at a restaurant.49 Gibson, Hodgetts, and Blackwell found
that many foreign students attending school in the United States have trouble communicating because they are unable to interpret some of the most common nonverbal ­gestures.50
A survey group of 44 Jamaican, Venezuelan, Colombian, Peruvian, Thai, Indian, and
Japanese students at two major universities were given pictures of 20 universal cultural
gestures, and each was asked to describe the nonverbal gestures illustrated. In 56 percent
of the choices, the respondents either gave an interpretation that was markedly different
from that of Americans or reported that the nonverbal gesture had no meaning in their
culture. These findings help to reinforce the need to teach expatriates about local nonverbal communication.
Proxemics Proxemics is the study of the way that people use physical space to convey
messages. For example, in the United States, there are four “distances” people use in communicating on a face-to-face basis (see Figure 7–2). Intimate distance is used for very
confidential communications. Personal distance is used for talking with family and close
friends. Social distance is used to handle most business transactions. Public distance is
used when calling across the room or giving a talk to a group.
One major problem for Americans communicating with people from the Middle
East or South America is that the intimate or personal distance zones are violated.
Chapter 7 Cross-Cultural Communication and Negotiation
Intimate distance
Personal distance
Social distance
Public distance
225
18″
Figure 7–2
18″ to 4′
Personal Space Categories
for Those in the United
States
4′ to 8′
8′ to 10′
Source: Adapted from Richard M. Hodgetts and Donald F. Kuratko, Management, 2nd ed. (San Diego, CA: Harcourt Brace Jovanovich,
1991), p. 384.
Americans often tend to be moving away in interpersonal communication with their
Middle Eastern or Latin counterparts, while the latter are trying to physically close the
gap. The American cannot understand why the other is standing so close; the latter cannot understand why the American is being so reserved and standing so far away. The
result is a breakdown in communication.
Office layout is another good example of proxemics. In the United States, the more
important the manager, the larger the office, and often a secretary screens visitors and
keeps away those whom the manager does not wish to see. In Japan, most managers do
not have large offices, and even if they do, they spend a great deal of time out of the
office and with the employees. Thus, the Japanese have no trouble communicating
directly with their superiors. A Japanese manager staying in his office would be viewed
as a sign of distrust or anger toward the group.
Another way that office proxemics can affect communication is that in many European companies, no wall separates the space allocated to the senior-level manager from
that of the subordinates. Everyone works in the same large room. These working conditions often are disconcerting to Americans, who tend to prefer more privacy.
Chronemics Chronemics refers to the way in which time is used in a culture. When
examined in terms of extremes, there are two types of time schedules: monochronic and
polychronic. A monochronic time schedule is one in which things are done in a linear
fashion. A manager will address Issue A first and then move on to Issue B. In individualistic cultures such as the United States, Great Britain, Canada, and Australia, as well
as many of the cultures in Northern Europe, managers adhere to monochronic time
schedules. In these societies, time schedules are very important, and time is viewed as
something that can be controlled and should be used wisely.
This is in sharp contrast to polychronic time schedules, which are characterized
by people tending to do several things at the same time and placing higher value on
personal involvement than on getting things done on time. In these cultures, schedules
are subordinated to personal relationships. Regions of the world where polychronic time
schedules are common include Latin America and the Middle East.
When doing business in countries that adhere to monochronic time schedules, it is
important to be on time for meetings. Additionally, these meetings typically end at the
appointed time so that participants can be on time for their next meeting. When doing
business in countries that adhere to polychronic time schedules, it is common to find
business meetings starting late and finishing late.
chronemics
The way in which time is
used in a culture.
Chromatics Chromatics is the use of color to communicate messages. Every society
uses chromatics, but in different ways. Colors that mean one thing in the United States
may mean something entirely different in Asia. For example, in the United States it is
common to wear black when one is in mourning, while in some locations in India
people wear white when they are in mourning. In Hong Kong red is used to signify
chromatics
The use of color to
communicate messages.
monochronic time
schedule
A time schedule in which
things are done in a linear
fashion.
polychronic time schedule
A time schedule in which
people tend to do several
things at the same time and
place higher value on
personal involvement than on
getting things done on time.
226
Part 2 The Role of Culture
happiness or luck and traditional bridal dresses are red; in the United States it is common
for the bride to wear white. In many Asian countries shampoos are dark in color because
users want the soap to be the same color as their hair and believe that if it were a light
color, it would remove color from their hair. In the United States shampoos tend to be
light in color because people see this as a sign of cleanliness and hygiene. In Chile a
gift of yellow roses conveys the message “I don’t like you,” but in the United States it
says quite the opposite.
Knowing the importance and the specifics of chromatics in a culture can be very
helpful because, among other things, such knowledge can help you avoid embarrassing
situations. A good example is the American manager in Peru who, upon finishing a oneweek visit to the Lima subsidiary, decided to thank the assistant who was assigned to
him. He sent her a dozen red roses. The lady understood the faux pas, but the American
manager was somewhat embarrassed when his Peruvian counterpart smilingly told him,
“It was really nice of you to buy her a present. However, red roses indicate a romantic
interest!”
■ Achieving Communication Effectiveness
A number of steps can be taken to improve communication effectiveness in the international arena. These include improving feedback systems, providing language and cultural
training, and increasing flexibility and cooperation.
Improve Feedback Systems
One of the most important ways of improving communication effectiveness in the international context is to open up feedback systems. Feedback is particularly important
between parent companies and their affiliates. There are two basic types of feedback
systems: personal (e.g., face-to-face meetings, telephone conversations, and personalized
e-mail) and impersonal (e.g., reports, budgets, and plans). Both systems help affiliates
keep their home office aware of progress and, in turn, help the home office monitor and
control affiliate performance as well as set goals and standards.
At present, there seem to be varying degrees of feedback between the home offices
of MNCs and their affiliates. For example, one study evaluated the communication feedback between subsidiaries and home offices of 63 MNCs headquartered in Europe, Japan,
and North America.51 A marked difference was found between the way that U.S. companies communicated with their subsidiaries and the way that European and Japanese
firms did. Over one-half of the U.S. subsidiaries responded that they received monthly
feedback from their parent companies, in contrast to less than 10 percent for the subsidiaries of European and Japanese firms. In addition, the Americans were much more
inclined to hold regular management meetings on a regional or worldwide basis. Seventyfive percent of the U.S. companies had annual meetings for their affiliate top managers,
compared with less than 50 percent for the Europeans and Japanese. These findings may
help explain why many international subsidiaries and affiliates are not operating as efficiently as they should. The units may not have sufficient contact with the home office.
They do not seem to be getting continuous assistance and feedback that are critical to
effective communication.
Provide Language Training
Besides improving feedback systems, another way to make communication more effective
in the international arena is through language training. Many host-country managers
cannot communicate well with their counterparts at headquarters. Because English has
become the international language of business, those who are not native speakers of
English should learn the language well enough so that face-to-face and telephone conversations and e-mail are possible. If the language of the home office is not English, this
Chapter 7 Cross-Cultural Communication and Negotiation
other language also should be learned. As a U.S. manager working for a Japanese MNC
recently told one of the authors, “The official international language of this company is
English. However, whenever the home-office people show up, they tend to cluster
together with their countrymen and speak Japanese. That’s why I’m trying to learn
Japanese. Let’s face it. They say all you need to know is English, but if you want to
really know what’s going on, you have to talk their language.”
Written communication also is extremely important in achieving effectiveness. As
noted earlier, when reports, letters, and e-mail messages are translated from one language
to another, preventing a loss of meaning is virtually impossible. Moreover, if the communications are not written properly, they may not be given the attention they deserve.
The reader will allow poor grammar and syntax to influence his or her interpretation and
subsequent actions. Moreover, if readers cannot communicate in the language of those
who will be receiving their comments or questions about the report, their messages also
must be translated and likely will further lose meaning. Therefore, the process can continue on and on, each party failing to achieve full communication with the other. Hildebrandt has described the problems in this two-way process when an employee in a
foreign subsidiary writes a report and then sends it to his or her boss for forwarding to
the home office:
The general manager or vice president cannot be asked to be an editor. Yet they often send
statements along, knowingly, which are poorly written, grammatically imperfect, or generally
unclear. The time pressures do not permit otherwise. Predictably, questions are issued from
the States to the subsidiary and the complicated bilingual process now goes in reverse,
ultimately reaching the original . . . staff member, who receives the English questions
retranslated.52
Language training would help to alleviate such complicated communication problems.
Provide Cultural Training
It is very difficult to communicate effectively with someone from another culture unless
at least one party has some understanding of the other’s culture.53 Otherwise, communication likely will break down. This is particularly important for multinational companies
that have operations throughout the world.54 Although there always are important differences between countries, and even between subcultures of the same country, firms that
operate in South America find that the cultures of these countries have certain commonalities. These common factors also apply to Spain and Portugal. Therefore, a basic
understanding of Latin cultures can prove to be useful throughout a large region of the
world. The same is true of Anglo cultures, where norms and values tend to be somewhat
similar from one country to another. When a multinational has operations in South
America, Europe, and Asia, however, multicultural training becomes necessary. The
International Management in Action box “Communicating in Europe” provides some
specific examples of cultural differences.
As Chapter 4 pointed out, it is erroneous to generalize about an “international”
culture because the various nations and regions of the globe are so different. Training
must be conducted on a regional or country-specific basis. Failure to do so can result
in continuous communication breakdown.55 Many corporations are investing in programs to help train their executives in international communication. Such training has
become more common since it began in the 1970s as many Americans returned from
the Peace Corps with increased awareness of cultural differences. And this training is
not limited to those who travel themselves but is increasingly important for employees
who ­frequently interact with individuals from other cultures in their workplace or in
their ­communication.
“Whether a multinational or a start-up business out of a garage, everybody is global
these days,” said Dean Foster, president of Dean Foster Associates, an intercultural consultancy in New York. “In today’s economy, there is no room for failure. Companies have
227
International Management in Action
Communicating in Europe
In Europe, many countries are within easy commuting
distance of their neighbors, so an expatriate who does
business in France on Monday may be in Germany on
Tuesday, Great Britain on Wednesday, Italy on Thursday,
and Spain on Friday. Each country has its own etiquette
regarding how to greet others and conduct oneself during social and business meetings. The following sections examine some of the things that expatriate
managers need to know to communicate effectively.
France
When one is meeting with businesspeople in France,
promptness is expected, although tardiness of 5 to
10 minutes is not considered a major gaffe. The French
prefer to shake hands when introduced, and it is correct
to address them by title plus last name. When the meeting is over, a handshake again is proper manners.
French executives try to keep their personal and professional lives separate. As a result, most business
entertaining is done at restaurants or clubs. When gifts
are given to business associates, they should appeal to
intellectual or aesthetic pursuits as opposed to being
something that one’s company produces for sale on the
world market. In conversational discussions, topics such
as politics and money should be avoided. Also, humor
should be used carefully during business meetings.
Germany
German executives like to be greeted by their title, and
one should never refer to someone on a first-name basis
unless invited to do so. When introducing yourself, do not
use a title, just state your last name. Business appointments should be made well in advance, and punctuality
is important. Like the French, the Germans usually do not
entertain clients at home, so an invitation to a German
manager’s home is a special privilege and always should
be followed with a thank-you note. Additionally, as is the
case in France, one should avoid using humor during
business meetings. They are very serious when it comes
to business, so be as prepared as possible and keep
light-hearted banter to the German hosts’ discretion.
Great Britain
In Britain, it is common to shake hands on the first meeting, and to be polite one should use last names and
appropriate titles when addressing the host, until invited
to use their first name. Punctuality again is important to
the British, so be prepared to be on time and get down
to business fairly quickly. The British are quite warm,
though, and an invitation to a British home is more likely
than in most other areas of Europe. You should always
bring a gift if invited to the host’s house; flowers,
­chocolates, or books are acceptable.
228
During business meetings, suits and ties are common
dress; however, striped ties should be avoided if they
appear to be a copy of those worn by alumni of British
universities and schools or by members of military or
social clubs. Additionally, during social gatherings it is a
good idea not to discuss politics, religion, or gossip
about the monarchy unless the British person brings the
topic up first.
Italy
In traditional companies, executives are referred to by
title plus last name. It is common to shake hands when
being introduced, and if the individual is a university
graduate, the professional title dottore should be used.
Business appointments should be made well in
advance, and if you expect to be late, call the host and
explain the situation. In most cases, business is done at
the office, and when someone is invited to a restaurant,
this invitation is usually done to socialize and not to continue business discussions. If an expatriate is invited to
an Italian home, it is common to bring a gift for the host,
such as a bottle of wine or a box of chocolates. Flowers
are also acceptable, but be sure to send an uneven number and avoid chrysanthemums, a symbol of death, and
red roses, a sign of deep passion. Be sure to offer highquality gifts with the wrapping done well, as the Italians
are very generous when it comes to gifts. It is not a common practice to exchange them during business, but it is
recommended that you are prepared. During the dinner
conversation, there are a wide variety of acceptable topics, including business, family matters, and soccer.
Spain
It is common to use first names when introducing or
talking to people in Spain, and close friends typically
greet each other with an embrace. Appointments should
be made in advance, but punctuality is not essential.
If one is invited to the home of a Spanish executive,
flowers or chocolates for the host are acceptable gifts.
If the invitation includes dinner, any business discussions should be delayed until after coffee is served. During the social gathering, some topics that should be
avoided include religion, family, and work. Additionally,
humor rarely is used during formal occasions.
Source: Rosalie J. Tung, “How to Negotiate with the Japanese,” California Management Review, Summer 1984, pp. 62–77; Carla Rapoport, “You Can Make Money in Japan,” Fortune, February 12, 1990,
pp. 85–92; Margaret A. Neale and Max H. Bazerman, “Negotiating
Rationally,” Academy of Management Executive, August 1992,
pp. 42–51; Martin J. Gannon, Understanding Global Cultures, 2nd ed.
(Thousand Oaks, CA: Sage, 2001), pp. 35–56; Sheida Hodge, Global
Smarts (New York: Wiley, 2000), chapter 14; Richard D. Lewis, When
Cultures Collide (London: Nicholas Brealey, 1999), pp. 400–415.
Chapter 7 Cross-Cultural Communication and Negotiation
229
to understand the culture they are working in from Day 1.” Mr. Foster recounted how an
American businessman recently gave four antique clocks wrapped in white paper to a
prospective client in China. What the man did not realize, he said, was that the words in
Mandarin for clock and the number four are similar to the word for death, and white is
a funeral color in many Asian countries. “The symbolism was so powerful,” Mr. Foster
said, that the man lost the deal.56 Chapter 14 will give considerable attention to cultural
training as part of selection for overseas assignments and human resource development.
Increase Flexibility and Cooperation
Effective international communications require increased flexibility and cooperation by
all parties.57 To improve understanding and cooperation, each party must be prepared to
give a little.58 Take the case of International Computers Ltd., a mainframe computer firm
that does a great deal of business in Japan. This firm urges its people to strive for successful collaboration in their international partnerships and ventures. At the heart of this
process is effective communication. As Kenichi Ohmae put it:
We must recognize and accept the inescapable subtleties and difficulties of intercompany
relationships. This is the essential starting point. Then we must focus not on contractual or
equity-related issues but on the quality of the people at the interface between organizations.
Finally, we must understand that success requires frequent, rapport-building meetings by at
least three organizational levels: top management, staff, and line management at the working
level.59
■ Managing Cross-Cultural Negotiations
Closely related to communications but deserving special attention is managing negotiations.60,61 Negotiation is the process of bargaining with one or more parties to arrive at
a solution that is acceptable to all. It has been estimated that managers can spend
50 percent or more of their time on negotiation processes.62 Therefore, it is a learnable
skill that is imperative not only for the international manager but for the domestic manager
as well because more and more domestic businesses are operating in multicultural environments (see Chapter 6). Negotiation often follows assessing political environments and
is a natural approach to conflict management. Often, the MNC must negotiate with the
host country to secure the best possible arrangements. The MNC and the host country
will discuss the investment the MNC is prepared to make in return for certain guarantees
or concessions. The initial range of topics typically includes critical areas such as hiring
practices, direct financial investment, taxes, and ownership control. Negotiation also is
used in creating joint ventures with local firms and in getting the operation off the ground.
After the firm is operating, additional areas of negotiation include expansion of facilities,
use of more local managers, additional imports or exports of materials and finished goods,
and recapture of profits.
On a more macro level of international trade are the negotiations conducted
between countries. The current balance-of-trade problem between the United States and
China is one example. The massive debt problems of less developed countries and the
opening of trade with Eastern European and newly emerging economies are other
­current examples.
negotiation
Bargaining with one or
more parties for the purpose
of arriving at a solution
acceptable to all.
Types of Negotiation
People enter into negotiations for a multitude of reasons, but the nature of the goal determines what kind of negotiation will take place. There are two types of negotiations that
we will discuss here: distributive and integrative negotiations. Distributive negotiations
occur when two parties with opposing goals compete over a set value.63 Consider a person
who passes a street vendor and sees an item he likes but considers the price, or set value,
a bit steep. The goal of the buyer is to procure the item at the lowest price, getting more
distributive negotiations
Bargaining that occurs
when two parties with
opposing goals compete
over a set value.
230
integrative negotiation
Bargaining that involves
cooperation between two
groups to integrate interests,
create value, and invest in
the agreement.
Part 2 The Role of Culture
value for his money, while the goal of the seller is to collect as much as possible to
maximize profits. Both are trying to get the best deal, but what translates into a gain by
one side is usually experienced as a loss by the other, otherwise known as a win-lose
situation. The relationship is focused on the individual and based on a short-term interaction. More often than not, the people involved are not friends, or at least their personal
relationship is put aside in the matter. Information also plays an important role because
you do not want to expose too much and be vulnerable to counterattack.
Research has shown that first offers in a negotiation can be good predictors of
outcomes, which is why it is important to have a strong initial offer.64 This does not imply
that overly greedy or aggressive behavior is acceptable; this could be off-putting to the
other negotiator, causing her or him to walk away. In addition to limiting the amount of
information you disclose, it can be advantageous to know a little about the other side.
Integrative negotiation involves cooperation between the two groups to integrate
interests, create value, and invest in the agreement. Both groups work toward maximizing benefits for both sides and distributing those benefits. This method is sometimes
called the win-win scenario, which does not mean that everyone receives exactly what
they wish for, but instead that the compromise allows both sides to keep what is most
important and still gain on the deal. The relationship in this instance tends to be more
long term since both sides take time to really get to know the other side and what motivates them. The focus is on the group, reaching for a best-case outcome where everyone
benefits. This is the most useful tactic when dealing with business negotiation, so from
this point on, we assume the integrative approach. Table 7–8 provides a summary of the
two types of negotiation.
The Negotiation Process
Several basic steps can be used to manage the negotiation process. Regardless of the
issues or personalities of the parties involved, this process typically begins with planning.
Planning Planning starts with the negotiators identifying the objectives they would like
to attain. Then they explore the possible options for reaching these objectives. Research
shows that the greater the number of options, the greater the chances for successful
negotiations. While this appears to be an obvious statement, research also reveals that
many negotiators do not alter their strategy when negotiating across cultures.65,66 Next,
consideration is given to areas of common ground between the parties. Other major areas
include (1) the setting of limits on single-point objectives, such as deciding to pay no
more than $10 million for the factory and $3 million for the land; (2) dividing issues into
short- and long-term considerations and deciding how to handle each; and (3) determining
the sequence in which to discuss the various issues.
Interpersonal Relationship Building
The second phase of the negotiation process
­involves getting to know the people on the other side. This “feeling out” period is
Table 7–8
Negotiation Types and Characteristics
Characteristic
Distributive Negotiations
Integrative Negotiations
Objective
Motivation
Interests
Relationship
Outcome
Claim maximum value
Individual-selfish benefit
Divergent
Short term
Win-lose
Create and claim value
Group-cooperative benefit
Overlapping
Long term
Win-win
Source: Adapted from Harvard Business Essentials: Negotiation (Boston: Harvard Business School Press, 2003), pp. 2–6.
Brief Integrative Case 2.2
Danone’s Wrangle with Wahaha
In 1996, Danone Group and Wahaha Group combined
forces in a joint venture (JV) to form the largest beverage
company in China. A longstanding trademark dispute
between the JV members, embedded within a broader
clash of national and organizational cultures, came to a
head. Valuable lessons can be learned from this dispute
for investors considering joint ventures in China.
The Wahaha Joint Venture was established in 1996 by
Hangzhou Wahaha Food Group Co. Ltd., Danone Group,
and Bai Fu Qin Ltd. In 1997, Danone bought the interests
of Bai Fu Qin and gained legal control of the JV with
51 percent of the shares. While members of the JV are
entitled to use the JV’s Wahaha trademark, in 2000, the
Wahaha Group developed companies outside of the JV
that sold products similar to those of the JV and used the
JV’s trademark. The Danone Group objected and sought
to purchase those non-JV companies.1
In April 2007, Danone offered RMB4 billion to
acquire 51 percent of the shares of Wahaha’s five non-JV
companies. Wahaha Group rejected the offer. Subsequently, Danone filed more than 30 lawsuits against
Wahaha for violating the contract and illegally using the
JV’s Wahaha trademark in countries such as France,
Italy, the U.S., and China.2
Danone’s Background
Danone traces its routes to Europe in the early 20th century.
In 1919, Isaac Carasso opened a small yogurt stand in
Spain. He named it “Danone,” meaning “Little Daniel,”
after his son. Carasso was aware of new methods of milk
fermentation conducted at the Pasteur Institute in Paris. He
decided to merge these new techniques with traditional practices for making yogurt. The first industrial manufacturer of
yogurt was started.3
Following his success in Europe, Carasso immigrated
to the U.S. to expand his market. He changed the Danone
name to Dannon Milk products, Inc., and founded the first
American yogurt company in 1942 in New York. Distribution began on a small scale. When Dannon introduced
the “fruit on the bottom” line in 1947, sales soared. The
following year, he sold his company’s interest and returned
to Spain to manage his family’s original business.4
By 1950, Dannon had expanded to other U.S. states in
the Northeast. It also broadened the line by introducing
low-fat yogurt that targeted the health-conscious consumer. Sales continued to rise. Dannon expanded across
the country throughout the 1960s and 1970s. In 1979,
Dannon became the first company to sell perishable dairy
products coast to coast in the U.S.5
In 1967, Danone merged with leading French fresh
cheese producer Gervais to become Gervais Danone. In
1973, Gervais Danone merged with Boussois-SouchonNeuvesel (BSN), a company that had also acquired the
Alsacian brewer Kronenbourg and Evian mineral water.6
In 1987, Gervais Danone acquired European biscuit manufacturer Général Biscuit, owners of 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. Under its current CEO, Franck Riboud, the company has pursued its focus on the three product groups:
dairy, beverages, and cereals.7 Today, Danone’s mission is
to produce healthy, nutritious, and affordable food and
beverage products for as many people as possible.
Danone’s Global Growth
Danone, with 160 plants and nearly 100,000 employees,
has a presence in all five continents and over 120 countries. In 2015, Danone recorded €21.1 billion in sales, a
nearly 30 percent increase from its €15.2 billion in sales
in 2008. Danone enjoys leading positions in healthy food:8
∙
∙
∙
∙
No.
No.
No.
No.
1
2
2
1
worldwide in fresh dairy products
worldwide in bottled water
worldwide in baby nutrition
in Europe in medical nutrition
Its portfolio of brands and products includes Activia,
a probiotic dairy product line; Danette, a brand of cream
desserts; Nutricia, an infant product line; Danonino, a
brand of yogurts; and Evian, a brand of bottled water.9
Listed on Euronext Paris, Danone is also ranked among
the main indexes of social responsibility: Dow Jones Sustainability Index Stoxx and World, ASPI Eurozone
(Advanced Sustainable Performance Indices), and Ethibel
Sustainability index. Danone has ranked number 51 in top
100 international brands according to Interbrand 2015
Best Global Brand valuation, with the brand value of
$8.6 billion.10
In 2014, Danone recorded an organic growth rate of
4.7 percent despite a weak European economy, further
strengthening its global standing. The group’s performance is the result of a balanced strategy that builds on
255
256
Part 2 The Role of Culture
international expansion, a growing commitment to innovation, and strengthening health-oriented brands. Danone
invests heavily in research and development—€276 million in 2015. One hundred percent of projects currently
in the pipeline focus on health and nutrition.11
As of 2014, Danone is the world’s second largest producer of bottled water. Danone owns the world’s topselling brand of packaged water, Aqua, which recorded
sales of 11 billion liters in 2014. With Evian and Volvic,
Danone also owns two of the five worldwide brands of
bottled water.12 Its revenue from water products amounted
to €4.2 billion in 2014: China, France, Indonesia, and
Mexico accounted for the most sales. Growth is strongest
in China, Indonesia, and Argentina, with emerging markets accounting for 70 percent of all of Danone’s bottled
water sales.13
In the mid-1990s, Danone did 80 percent of its business in Western Europe. Until 1996, the company was
present in about a dozen markets including pasta, confectionery, biscuits, ready-to-serve meals, and beer. The
company realized that it is difficult to achieve simultaneous growth in all these markets. Therefore, they decided
to concentrate on the few markets that showed the most
growth potential and were consistent with Danone’s focus
on health. Starting in 1997, the Group decided to focus
on three business lines worldwide (Fresh Dairy Products,
Beverages, as well as Biscuits and Cereal Products), and
the rest of the business lines were divested. This freed the
company’s financial and human resources and allowed for
quick expansion into new markets in Asia, Africa, Eastern
Europe, and Latin America. In less than 10 years, the
contribution of emerging markets to sales rose from zero
to 40 percent while that of Western Europe went below
50 percent.14 By 2014, emerging markets accounted for
60 percent of all growth, with over 60 percent of all
employees working outside of Europe.15
In 2007, the same year that it attempted to acquire
51 percent of the shares of Wahaha’s five non-JV companies, Danone marked the end of a 10-year refocusing
strategy period during which the Group’s activities were
refocused in the area of health. That year, the Group
sold nearly all of its Biscuits and Cereal Products business to the Kraft Foods group, while adding Baby
Nutrition and Medical Nutrition to its portfolio by
acquiring Numico.
Danone is now centered on 4 business lines:
1. Fresh Dairy Products, representing approximately
53 percent of consolidated sales for 2014.
2. Waters, representing approximately 20 percent of
consolidated sales for 2014.
3. Baby Nutrition, representing approximately 21 percent of consolidated sales for 2014.
4. Medical Nutrition, representing approximately 7 percent of consolidated sales for 2014.
Danone Strategy in China
Danone entered the Chinese market in the late 1980s.
Since then, it has invested heavily in China, building factories and expanding production. Today, Danone has
70 factories in China, including Danone Biscuits, Robust,
Wahaha, and Health. Ten percent of Danone’s workforce
is located in China. Danone sells primarily yogurt, biscuits, and beverages in the Chinese market.16 By 2014,
Danone’s Asia-Pacific division employed 28,000 people
in the Asia-Pacific area, which was almost 30 percent of
Danone’s total employees.
In the early 2000s, Danone’s Wahaha was China’s largest beverage company. In 2008, 57 percent of Danone’s
Asian sales were in China. Two billion liters of Wahaha
were sold in 2004, making it the market leader in China
with a 30 percent market share.17 In Asia, in 2007, Danone
Group was the market leader with a 20 percent share of
a 34-billion-liter market. In comparison, rivals Coca-Cola
and Nestlé had a 7 percent and 2 percent share, respectively. Evian, its global brand, was sold alongside of local
brands such as China’s Wahaha.
In the past 20 years, Danone has purchased shares of
many of the top beverage companies in China: 51 percent
of the shares of the companies owned by Wahaha Group,
98 percent of Robust Group, 50 percent of Shanghai Maling Aquarius Co., Ltd., 54.2 percent of Shenzhen Yili
Mineral Water Company, 22.18 percent of China Huiyuan
Group, 50 percent of Mengniu, and 20.01 percent of
Bright dairy. These companies, leaders in their industry,
all own trademarks that are well-known in China.18
However, while expanding into the Chinese market,
Danone faced challenges due to lack of market knowledge. In 2000, Danone purchased Robust, the then-­secondlargest company in the Chinese beverage industry. Sales
of Robust had reached RMB2 billion in 1999. After the
purchase, Danone dismissed the original management and
managed Robust directly. Because its new management
was not familiar with the Chinese beverage market, Robust
struggled. Its tea and milk products almost disappeared
from the market. During 2005–2006, the company lost
RMB 150 million.19
Wahaha Company
The Wahaha company was established in 1987 by a retired
teacher, Mr. Zong Qinghou. In 1989, the enterprise opened
its first plant, Wahaha Nutritional Food Factory, to produce “Wahaha Oral Liquid for Children,” a nutritional
drink for kids. The name Wahaha was meant to evoke a
laughing child, combining the character for baby (wa)
with the sound of laughter.20 After its launch, Wahaha
won a rapid public acceptance. By 1991, the company’s
sales revenue grew beyond 100 million renminbi (¥).21
In 1991, with the support of the Hangzhou local ­district
government, Wahaha Nutritional Food Factory merged
Brief Integrative Case 2.2 Danone’s Wrangle with Wahaha
257
with Hangzhou Canning Food Factory, a state-owned
enterprise, to form the Hangzhou Wahaha Group Corporation. After mergers with three more companies, Wahaha
became the biggest corporation of its district.22
Since 1997, Wahaha has set up many new subsidiaries.
It was aided by state and local government because its
continuous expansion helped create new jobs and its
increased profits led to more tax revenues.
In 1996, the Hangzhou Wahaha Group Corporation
began a joint venture with Danone Group and formed five
new subsidiaries, which attracted a $45 million foreign
investment and then added another $26.2 million investment. With the investment funds, Wahaha brought worldclass advanced production lines from Germany, America,
Italy, Japan, and Canada into its sites. The terms of the
Danone-Wahaha joint venture allowed Wahaha to retain all
managerial and operating rights as well as the brand name
Wahaha. In the next eight years, the company established
40 subsidiaries in China, and in 1998 launched its own
brand, “Future Cola,” to compete against Coke and Pepsi.23
In 2000, the company produced 2.24 million tons of beverages with sales revenue of $5.4 billion. The production
accounted for 15 percent of the Chinese output of beverages.
The group became the biggest company in the beverage
industry of China with total assets of $4.4 billion.24
Back in 2007, it produced 6.89 million tons of beverage with a sales revenue of $25.8 billion. Today, Hangzhou Wahaha Group Co., Ltd., is still a leading beverage
producer in China with over 60,000 employees and 150
subsidiaries, though sales have dropped since 2013 due to
the shrinking carbonated beverage market. The company
product category contains more than 100 varieties, such
as milk drinks, drinking water, carbonated drinks, tea
drinks, canned food, and health care products.25
According to a report on the “Top 10 Beverage
Companies” released by the China Beverage Industry
­
Association, Wahaha contributed 55.57 percent to the
Association Top 10’s overall production, 65.84 percent to
its revenue, and 73.16 percent to its profit tax. According
to Zong Qinghou, the president of Wahaha: “As China
becomes the world’s largest food and beverage market,
we’ll be a major player in the global market.” Wahaha
implements a strategy of “local production and local distribution’’ and has built an excellent production-distribution network. Its Wahaha R&D center and Analysis
Center provide guarantees for high product quality.26
Danone-Wahaha Joint Venture Conflict
The Wahaha joint venture (JV) was formed in 1996 with
three participants: Hangzhou Wahaha Food Group
(Wahaha Group); Danone Group, a French corporation
(Danone); and Bai Fu Qin, a Hong Kong corporation
(Baifu). Danone and Baifu did not invest directly in the
JV. Instead, Danone and Baifu formed Jin Jia Investment,
a Singapore corporation (Jinjia). Upon the formation of
the JV, Wahaha Group owned 49 percent of the shares of
the JV and Jinjia owned 51 percent of the shares of the
JV. This structure led to immediate misunderstandings
between the participants. From Wahaha Group’s point of
view—with the division of ownership at 49 percent Wahaha
Group, 25.5 percent Danone, and 25.5 percent Baifu—it
was the majority shareholder in the JV. Figure 1 shows the
initial structure of the JV. Since Wahaha Group felt it
controlled the JV, it was relatively unconcerned when it
transferred its trademark to the JV.27
In 1998, Danone bought out the interest of Baifu in
Jinjia, becoming 100 percent owner of Jinjia and effectively the 51 percent owner of the JV. This gave it legal
control over the JV because of its right to elect the board
of directors. For the first time, the Wahaha Group and
Zong realized two things: (1) They had given complete
Hierarchy of the Initial Wahaha Joint Venture
Figure 1
Structure of Initial Wahaha
Joint Venture
The Wahaha Joint Venture
Wahaha Group
(led by Chairman
Zong Qinghou)
40%
Jin Jia Investment
Co. Ltd.
51%
WAHAHA G R OUP
Danone Group
50%
Bai Fu Qin Ltd
50%
Source: Steven M. Dickinson, “Danone v. Wahaha,” China Economic Review, September 1, 2007, http://www.chinaeconomicreview.com/
node/24126.
258
Part 2 The Role of Culture
control over their trademark to the JV and (2) a foreign
company was now in control of the JV. From a legal
standpoint, this result was implied by the structure of the
JV from the very beginning. However, it is clear from
public statements that the Wahaha Group did not understand the implications when they entered into the venture.
The Danone “takeover” in 1998 therefore produced significant resentment on the part of Wahaha Group. Rightly
or not, Wahaha felt that Danone misled them from the
very beginning.28
When the JV was formed, Wahaha Group was a stateowned enterprise owned by the Hangzhou city government. After formation of the JV, it was converted into a
private corporation, effectively controlled by Zong. This
set the stage for Wahaha Group’s decision to take back
control of the trademark it felt had been unfairly transferred to Danone. Zong and his employees now viewed
the transferred trademark as their personal property.29
When the JV was formed, Wahaha Group obtained an
appraisal of its trademark valuing it at RMB100 million
(US$13.2 million). The trademark was its sole contribution to the JV, while Jinjia contributed RMB500 million
(US$66.1 million) in cash. Wahaha Group also agreed not
to use the trademark for any independent business activity
or allow it to be used by any other entity. However, the
trademark transfer was rejected by China’s Trademark
Office. It took the position that, as the well-known mark
of a state-owned enterprise, the trademark belonged to the
state and Wahaha Group did not have the right to transfer
it to a private company.30
Rather than terminate the JV, the shareholders (now
Danone and Wahaha Group) decided to work around the
approval issue by entering into an exclusive license agreement for the trademark in 1999. Because the license
agreement was intended to be the functional equivalent of
a sale of the trademark, they were concerned the Trademark Office would refuse to register the license. Therefore, they only registered an abbreviated license. This was
accepted by the Trademark Office, which never saw the
full license. As a result, Wahaha Group never transferred
ownership of the Wahaha trademark to the JV, just the
exclusive license. Thus, Wahaha Group never complied
with its basic obligation for capitalization of the JV. It
does not appear that any of the JV documents were revised
to deal with this changed situation.31
Although Danone was the majority shareholder and
maintained a majority interest on the board of directors,
day-to-day management of the JV was delegated entirely
to Zong. He filled management positions with his family
members and employees of the Wahaha Group. Under
Zong’s management, the JV became the largest Chinese
bottled water and beverage company.32
Beginning in 2000, the Wahaha Group created a series
of companies that sold the same products as the JV and
used the Wahaha trademark. The non-JV companies
appear to have been owned in part by Wahaha Group and
in part by an offshore British Virgin Islands company
controlled by Zong’s daughter and wife. Neither Danone
nor Wahaha Group receives any benefits from the profits
of these non-JV companies. According to press reports in
China, products from the non-JV companies and the JV
were sold by the same sales staff working for the same
sales company, all ultimately managed by Zong.33
In 2005, Danone realized the situation and insisted it
be given a 51 percent ownership interest in the non-JV
companies. Wahaha Group and Zong, who by this time
was one of the richest men in China, refused.34
Details of the Dispute
In April 2006, Wahaha was informed by its 10-year JV
partner Danone that it had breached the contract by establishing nonjoint ventures that had infringed upon the
interests of Danone. Danone proposed to purchase 51 percent of the shares of Wahaha’s nonjoint ventures.35 The
move was opposed by Wahaha. In May 2007, Danone
formally initiated a proceeding, claiming that Wahaha’s
establishment of nonjoint ventures as well as the illegal
use of the “Wahaha” trademark had seriously violated the
noncompete clause. The two parties carried on 10 lawsuits
in and out of China, and all the ruled cases between
Wahaha and Danone have ended in Wahaha’s favor.36
On February 3, 2009, a California court in the United
States dismissed Danone’s accusation against the wife and
daughter of Zong Qinghou and ruled that the dispute
between Danone and Wahaha should be settled in China.
In addition, Danone’s lawsuits against Wahaha were
rejected by courts in Italy and France; and a series of
lawsuits brought by Danone in China against Zong Qinghou and Wahaha’s nonjoint ventures all ended in failure.37
The rationality of the existence of the nonjoint ventures, the ownership of the “Wahaha” trademark, and the
noncompete clause issue were the key points of the
Danone-Wahaha dispute.38 In 1996, Wahaha offered a list
of 10 subsidiaries to Danone, which, after evaluation,
selected four. Jinja Investments Pte Ltd. (a Singaporebased joint venture between Danone Asia Pte Ltd. and
Hong Kong Peregrine Investment, of which Danone is the
controlling shareholder); Hangzhou Wahaha Group Co.,
Ltd.; and Zhejiang Wahaha Industrial Holdings Ltd.
jointly invested to form five joint venture enterprises, with
shareholdings of 51 percent, 39 percent, and 10 percent,
respectively. In 1998, Hong Kong Peregrine sold its stake
in Jinja Investments to Danone, which makes Danone the
sole shareholder of Jinja Investments, giving it the control
of over 51 percent of the joint ventures. Wahaha and
Danone cooperated on the basis of joint venture enterprises, rather than the complete acquisition of Wahaha by
Danone. As a result, Wahaha was always independent,
and its nonjoint ventures have existed and developed since
Brief Integrative Case 2.2 Danone’s Wrangle with Wahaha
1996. Relevant transactions of Wahaha’s nonjoint ventures and joint ventures were disclosed fully and frankly
by the auditing reports of PricewaterhouseCoopers, an
accounting firm appointed by Danone. Meanwhile, during
the 11-year cooperation, Danone assigned a finance director to locate in the headquarters of Wahaha Group to audit
the latter’s financial information.39
Danone and Wahaha had signed in succession three relevant agreements concerning the ownership of the “Wahaha”
brand name. In 1997, the two parties signed a trademark
transfer agreement, with an intention to transfer the “Wahaha”
trademark to the joint ventures. The move, however, was not
approved by the State Trademark Office.40 For this reason,
the two parties signed in 1999 the trademark licensing contract. According to law, the same subject cannot be synchronously transferred and licensed for use to others by the same
host. Therefore, the signing and fulfillment of the trademark
licensing contract showed that the two parties had agreed to
the invalidation of the transfer agreement. The “Wahaha”
brand should belong to the Wahaha Group, while the joint
ventures only have the right of use.41
In October 2005, the two parties signed the No. 1
amendment agreement to the trademark licensing contract, in which it confirmed Party A (Hangzhou Wahaha
Group Co., Ltd.) as owner of the trademark. In addition,
the second provision of the amendment agreement clearly
stated that the several Wahaha subsidiaries listed in the
fifth annex of the licensing contract as well as other
Wahaha subsidiaries (referred to as “licensed Wahaha
enterprises”) established by Party A or its affiliates following the signing of the licensing contract also have the
right granted by one party to use the trademark. The
“licensed Wahaha enterprises” involved in the amendment
agreement refer to the nonjoint ventures.42 According to
related files, Wahaha maintains the ownership of the
“Wahaha” trademark, while its nonjoint ventures have the
right to use the trademark.43 The Wahaha brand is among
the most famous in China. It ranked No. 16 among domestic brands and is worth US$2.2 billion, according to a
recent report by Shanghai research firm Hurun Report.
Wahaha doesn’t publicly disclose financial figures.44
Ventures and Acquisitions
Several years ago, as Wahaha sought to expand its market,
Wahaha suggested adding online new production lines by
increasing investment, while Danone requested Wahaha
outsource to product processing suppliers for its joint ventures. Wahaha saw the shortcomings in using product processing suppliers, so it set up nonjoint ventures to meet
production needs. Wahaha believed that the existence and
operation of the nonjoint ventures did not adversely affect
the interest of Danone.45
During the 11 years that followed 1996, Danone invested
less than RMB1.4 billion in Wahaha’s joint ventures but
259
received a profit of RMB3.554 billion as of 2007. On the
other hand, Danone acquired several strong competitors of
Wahaha including Robust, Huiyuan, and Shanghai Maling
Aquariust. Wahaha saw Robust as its biggest rival. Wahaha
was disappointed that Danone failed to hold up its end of
the bargain of “jointly exploring markets in and out of
China” listed in the JV contract.46
Through the influence of the Chinese and French governments, Danone and Wahaha reached a peaceful settlement in late 2007. However, Danone’s proposal to sell its
shares in the joint ventures to Wahaha for RMB50 billion
(finally reduced to approximately RMB20 billion) was
rejected by Wahaha.47
After the negotiations were suspended, the two parties
again turned to legal action. All the ruled cases, both in
China and abroad, have ruled against Danone.48
Conflict Resolution
In late September 2009, France’s Groupe Danone SA
agreed to accept a cash settlement to relinquish claims to
the name Wahaha. In a joint statement issued September
30, 2009, Danone announced a settlement with China’s
Hangzhou Wahaha Group Co. by saying its 51 percent
share in joint ventures that make soft drinks and related
products will be sold to the businesses’ Chinese partners.
“The completion of this settlement will put an end to all
legal proceedings related to the disputes between the two
parties,” the statement said.49
The feud over control of the Wahaha empire offered a
glimpse into the breakup of a major Asian–foreign joint
venture. Danone’s strategy to publicly confront its partner
and Wahaha’s strategy to respond with its own accusations marked a break with prevailing business practice in
China, where problems have usually been settled with
face-saving, private negotiations.50
Analysts said the case served to reinforce how difficult
it is to operate a partnership in China. “That’s a key lesson:
To build a [brand] business in China you need to build
from the ground up,” said Jonathan Chajet, China managing director for consultancy Interbrand.51 Foreign firms
such as Procter & Gamble, Starbucks, and General Motors
have operated wholly or in part through joint ventures in
China. But executives involved say the expectations of foreign and local parties can conflict in a JV; for instance,
when an international company is striving for efficiencies
and profits that match its global goals while the local
­partner—sometimes an arm of the Chinese government—
strives to maximize employment or improve technology.
At other times, partners have stolen corporate secrets or
cheated and otherwise sabotaged a venture, while legal
avenues have had little effect on disputes over operations.52
Danone, which reported the Wahaha business generated about 10 percent of its global revenue in 2006 but
has since adjusted how it accounted for Wahaha, said it
260
Part 2 The Role of Culture
expects no impact on its income statement from the settlement. In China, it will be left with a much smaller footprint and is essentially starting over.53 Danone’s CEO
Franck Riboud stated: “Danone has a long-standing commitment to China, where it has been present since 1987,
and we are keen to accelerate the success of our Chinese
activities.” China is Danone’s fourth-largest market after
France, Spain, and the U.S., contributing about €1bn, or
8 percent, of Danone’s revenues.54
Lessons Learned55
What can potential foreign investors learn from this dispute? Although JVs in China can be quite difficult, with
proper planning and management, they can be successful.
In the case of the Wahaha–Danone JV, many basic rules
of JV operations in China were violated, virtually guaranteeing the JV’s destruction. According to Steve Dickinson, lawyer at Harris Moure PLC, the primary rules
violated are as follows:56
1. Don’t use technical legal techniques to assert or
gain control in a JV.
2. Do not expect that a 51 percent ownership interest
in a JV will necessarily provide effective control.
3. Do not proceed with a JV formed on a weak or
uncertain legal basis.
4. The foreign party must actively supervise or participate in the day-to-day management of the JV.
Questions for Review
1. When and how did Danone expand into the Chinese
market? What problems did Danone Group encounter while operating in China?
2. How was the Danone and Wahaha JV formed?
What was its structure? Why did Danone decide
to form a joint venture rather than establish a
100 percent-owned subsidiary?
3. What was the problem of the Danone-Wahaha joint
venture that triggered the conflict between the companies? What were the differences in Danone’s and
Wahaha’s understanding of their own respective
roles and responsibilities in this venture? What
aspects of national and organizational culture
affected this perspective?
4. Was Danone successful in proving its claims in
court? How was the conflict between the two companies resolved? What were the key lessons for
Danone about doing business in China?
5. Did Danone follow the advice regarding JVs in
China mentioned in the list just above? Which
aspects did it follow and which did it not?
Source: This case was prepared by Tetyana Azarova of Villanova University under the
supervision of Professor Jonathan Doh as the basis for class discussion. Additional
research assistance was provided by Kelley Bergsma and Ben Littell. It is not intended
to illustrate either effective or ineffective managerial capability or administrative
responsibility.
ENDNOTES
1. Patti Waldmeir and Sundeep Tucker, “Danone to
Quit Joint Venture with Wahaha French Group to
Focus on Expanding Own Units in China,” Financial Times, September 30, 2009, https://www.ft.
com/content/849e7eda-ad87-11de-bb8a00144feabdc0.
2. Wahaha Group, “Danone Encounters Continuous
Frustration in China and a Murky Future Due to
Unsuccessful Litigations,” press release, PR Newswire, September 9, 2008, www.prnewswire.co.uk/
news-releases/danone-encounters-continuousfrustration-in-china-and-a-murky-future-due-tounsuccessful-litigations-152564955.html.
3. “Our Heritage,” Danone, www.danone.com/en/forall/our-mission-in-action/our-heritage/.
4. Ibid.
5. Ibid.
6. Bill Bruce, “Danone Celebrates Its 90th Birthday,”
April 14, 2009, www.foodbev.com/news/danonecelebrates-its-90th-birthday/.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
Ibid.
Danone, 2014 Annual Report, February 20, 2015.
Danone, www.danone.com/en.
“Rankings,” Interbrand, http://interbrand.com/
best-brands/best-global-brands/2015/ranking/.
“Research at Danone,” Danone, www.danone.com/
en/for-all/research-innovation/our-research-at-aglance/.
“Waters,” Danone, www.danone.com/en/brands/
business/beverages.html.
Ibid.
Danone 2008 Annual Report: Economic and Social
Report.
Danone 2014 Annual Report: Economic and Social
Report.
Shangguan Zhoudong, “Danone’s Quick Expansion
in China,” China Daily, June 15, 2007, www.
chinadaily.com.cn/bizchina/2007–06/15/content_
895462.htm.
Brief Integrative Case 2.2 Danone’s Wrangle with Wahaha
17. T. C. Melewar, E. Badal, and J. Small, “Danone
Branding Strategy in China,” Brand Management 13, no. 6 (July 2006), pp. 407–417.
18. “Danone Encounters Continuous Frustration in
China.”
19. Ibid.
20. Vivian Wai-yin Kwok, “A Pyrrhic Victory for
Danone in China,” Forbes, August 6, 2007, www.
forbes.com/2007/06/08/wahaha-danone-zong-markets-equity-cx_vk_0608markets2.html.
21. Wahaha, http://en.wahaha.com.cn/aboutus/index.htm.
22. Ibid.
23. Ibid.
24. Ibid.
25. Ibid.
26. Ibid.
27. Steven M. Dickinson, “Danone v. Wahaha,” China
Economic Review, September 1, 2007, www.
chinaeconomicreview.com/node/24126.
28. Dickinson, “Views You Can Use.”
29. Dickinson, “Danone v. Wahaha.”
30. Ibid.
31. Ibid.
32. Ibid.
33. Ibid.
34. Ibid.
35. Baoxiu Ye, “Wahaha Reviews 21:0 Whitewash
Against Danone,” PR Newswire, April 13, 2009,
261
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
http://www.journalist-association.eu/archive/news.
php?newsid=19477.
Ibid.
Ibid.
Ibid.
Ibid.
Ibid.
Ibid.
Ibid.
Ibid.
Ibid.
Ibid.
Ibid.
Ibid.
Ibid.
J. T. Areddy, “Danone Pulls Out of Disputed
China Venture,” The Wall Street Journal,
October 1, 2009, http://online.wsj.com/article/
SB125428911997751859.html.
Ibid.
Ibid.
Ibid.
Ibid.
Waldmeir and Tucker, “Danone to Quit Joint Venture with Wahaha.”
Dickinson, “Danone v. Wahaha.”
Ibid.

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