Wahaha files for arbitration

Updated: 2007-06-18 09:02

Chinese beverage maker Hangzhou Wahaha Group Co. said Sunday it has filed for arbitration to resolve a dispute over its Wahaha brand with its French joint-venture, partner Groupe Danone SA.

The Hangzhou Arbitration Commission accepted the arbitration application Thursday, Hangzhou Wahaha Group said in a statement.

Wahaha is one of China's best-known brands of bottled water and drinks.

Hangzhou Wahaha Group signed an agreement in 1996 to transfer the Wahaha brand to Hangzhou Wahaha Food Co., a joint venture with Danone, but the agreement failed to get the approval from China's state trademark office, the statement said.

"Therefore, the brand transfer failed and the brand transfer agreement expired. The Wahaha brand still belongs to Hangzhou Wahaha Group," it said.

Danone and its Chinese joint venture partner, multimillionaire Zong Qinghou -- the chairman of Hangzhou Wahaha Group -- have been publicly battling for more than two months.

Danone is accusing Zong of privately producing and selling the Wahaha joint venture products on the side. Zong has been calling the joint venture's exclusivity and non-competition clauses unfair.

Zong founded the Wahaha group in the late 1980s. In mid-1996, along with Danone he began establishing a string of nearly 40 joint ventures, each 51 percent owned by Danone.

But earlier this year, Danone officials accused Zong of undermining their business with a parallel network of facilities making many of the same products.

Zong, who was the chairman of the Wahaha joint ventures, resigned from those posts earlier this month.

Zong's resignation came after Danone filed a lawsuit in the U.S. and an arbitration case in Sweden over alleged breach of a non-competition clause by Zong.

Danone and Wahaha began their joint venture in China in 1996. The beverage operation has become one of China's largest.

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