Wahaha to sue three JV directors from Danone

Updated: 2007-07-04 01:05

Chinese beverage giant Wahaha Group on Tuesday confirmed its plan to sue three executives of Danone, Wahaha's French joint venture partner.

"If Danone do not sue the three directors, Wahaha will do it," said Liu Xiangwen, lawyer of Wahaha, at a press conference in Hangzhou, capital of east China's Zhejiang Province.

Zong Qinghou, chairman of Wahaha Group, said he would sue for a total of one million yuan (131,000 U.S. dollars).

Emmanuel Faber, who recently replaced Zong Qinghou as chief of Danone and Wahaha's 39 joint ventures, Qin Pang, China director for Danone Asia and Francois Caquelin, a financial director, are the targets of Wahaha's lawsuits.

Liu claimed that the three men were hired by more than 20 counterpart firms of Wahaha-Danone and carried out a series of investment, marketing and management projects for the firms, which are competitors of the joint-venture in the beverage industry.

"Their employment in these competitive companies is against China's corporate law ... and their actions have damaged the interests of the joint ventures and the interest of Wahaha's shareholders," Liu said.

Danone's purchase of three drinks companies - Robust, Shenzhen Yili and Shanghai Jianguanghe - also violated Danone and Wahaha's non-competition agreements, the lawyer added.

Danone was unavailable for comment on Wahaha's intentions announced at the press conference.

The move was the latest in the dispute between the Chinese drink group and the French giant that first emerged in April but has since taken on a highly public tone.

On June 26, Wahaha said it had decided to "demand justice by legal procedures" after Danone had filed for arbitration and lawsuits against it.

Wahaha said in a statement, "We will respond actively to the lawsuits filed by Danone in Stockholm and the United States, and we plan to launch a countersuit demanding compensation of two billion, three billion or five billion euros."

The statement continued, "We have conclusive evidence that Danone has broken the law.

"Wahaha is not against the opening-up policy of China, or cooperation with others, or cooperation with foreign investors. However, we want the cooperation to be equal, mutually beneficial, complementary, mutually respectful with equal interest," the statement said.

Wahaha has applied for arbitration over a trademark dispute with Danone at the Hangzhou Arbitration Committee, asking the committee to terminate a trademark transfer contract signed between Hangzhou Wahaha Group and the joint venture of Wahaha and Danone in 1996.

Wahaha said its contract with Danone was never approved by China's trademark authority, which meant the transfer was invalid and the contract should be terminated.

Danone, which owns 51 percent stake of the 39 joint ventures, has accused Wahaha of setting up independent companies and selling products identical to those sold by the joint ventures.

Danone is demanding a 51-percent stake in the non-joint venture companies, which Wahaha Group has rejected.

Danone filed its first lawsuit against Wahaha on May 9 in Stockholm.

On June 4, Danone filed a lawsuit in the Los Angeles-based Superior Court against Ever Maple Trading Ltd. and Hangzhou Hongsheng Beverage Co. Ltd, and two individuals related to the companies.

Ever Maple Trading Ltd. is the controlling shareholder of Hangzhou Hongsheng Beverage, which is the parent company of Hangzhou Wahaha Food and Beverage Sales Co., Danone's joint venture partner in China.

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