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Wahaha Lays into Danone
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Drastic accusations, poignant recount, strong-worded banners, flashing cameras - all in an agitated atmosphere.

The once successful partnership model between Wahaha and Danone turned to Wahaha's fiercest attack ever against the French company yesterday - in front of roughly 300 reporters from across the country.

Wahaha Group, China's largest beverage maker, said it has requested its joint ventures with Groupe Danone SA to file a lawsuit against the three board members of Danone for allegedly breaking Chinese rules by holding concurrent positions on boards of competing Chinese companies.

The Chinese company also sought compensation from the French side, for an amount that it said "won't be too much".

According to Wahaha, the three Danone board members - Emmanuel Faber, Qin Peng and Francois Caquelin - hold positions on the boards of several Chinese beverage companies such as Robust, Aquarius, Bright Dairy & Food and Health, in which Danone has investments.

"The Chinese shareholders have employed lawyers to notify the 39 joint ventures, demanding the board or supervisors to file lawsuit against the three foreign directors and inquire into the civil liability for compensation," Wahaha's lawyer said yesterday.
Chinese shareholders could also file a subrogation lawsuit and are likely to take legal action against two former board members appointed by Danone, depending on the response from the ventures, the lawyer said.

Once the model of successful Sino-foreign cooperation, the joint venture now hangs by a hair as the Chinese company threatened legal actions after Danone initiated arbitration proceedings in Stockholm and a lawsuit in Los Angeles, accusing Wahaha of breaching contracts signed in the beginning of their partnership in 1996.

Wahaha is also preparing to countersue the French company for an undeclared amount, joining forces with minor shareholders of Wahaha.

At yesterday's press conference, the grandest ever held by Wahaha, Chinese drinks tycoon Zong Qinghou and representatives of related companies, distributors and law circles tore into the Paris-based firm.

The 62-year-old Zong, Wahaha's founder and chairman, said he was determined not to shy away from the media and would speak out the truth because Danone misled the public. He said he planned to reverse the international perception that Wahaha violated the contracts because it had kept silent so long.

(China Daily July 4, 2007)

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