| Danone sues Wahaha for deal-infringement claim |
SHANGHAI, June 1 -- Groupe Danone SA has lodged eight claims with an international arbitration institute over its Chinese partner Hangzhou Wahaha Group's five allegedly illegal companies, according to the company yesterday.
The application was submitted to the Arbitration Institute of the Stockholm Chamber of Commerce on May 9 by Danone Asia Pte Ltd and three of its subsidiaries, the world's biggest yogurt maker said at the start of its legal proceedings against Wahaha.
Danone claimed that China's largest food and beverage maker sold competitive products from its own companies that broke their cooperation agreement.
Zong Qinghou, chairman of Wahaha and one of China's wealthiest men, was included as the party against whom the arbitration is filed.
Danone asked Wahaha to stop selling competitive products and seeks compensation on the basis of contract infringement, the company said without providing financial details.
Officials from Danone were not available for comment yesterday, while Shan Danning, a spokesman for Wahaha, refused to comment.
In an earlier notice, the company said it will defend any legal proceedings from Danone.
Following the legal measures, Danone also sent a letter to Wahaha on May 22, urging the firm to hold aboard meeting as soon as possible over the concerns that the half-year-long dispute is dampening the production of their joint venture.
Danone estimated its sales revenue will increase only three percent for this year, a fall of 30 percent from last year.
It started cooperation with Wahaha in 1996, setting up ventures that prevent the Chinese company from using the Wahaha brand or making competitive products without Danone's approval outside joint ventures.
The company is aggressively buying stakes in local rivals such as Bright Dairy & Food Co, Shenzhen Health Food Co and Guangdong Robust Group in China, where the world's largest consumer market is becoming a new cash cow towards its global sales.
Last year, Danone made a profit of one billion euros (US$1.3 billion) globally with Asia Pacific contributing 20 percent, said Emmanuel Faber, president of Danone Asia Pacific on April 11, adding the income of the joint venture with Wahaha accounts for three percent of its global income.
Danone has so far invested 1.5 billion yuan (US$194 million) in the ventures and realized a profit of 3.8 billion yuan, according to Zong.
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