Read the following scenario about ‘The bidding for NatWest’, and then consider the questions using the course concepts and in the context of Inter-Organisational, Intra-Organisational, Inter-Group and Intrapersonal Negotiation and communication strategies. You can draw on any knowledge gain from other ‘International Negotiation and Sales Management’ courses.
Case 3: The Assignment – ‘The Danone, Wahaha joint venture Dispute’
Part 1. The real story behind Wahaha’s conflict with Danone – ’national capital’ or just capital?
Saturday, 24 November 2007.
Chinaworker examines the ongoing legal dispute between Wahaha, China’s largest drinks maker, over its stormy partnership with Groupe Danone of France. Chen Lizhi, chinaworker.info
From April to July this year, the dispute between Qinghou Zong (CEO of Wahaha) and Danone China (subsidiary of Danone, the world’s largest dairy company) for control of the Wahaha brand in the Chinese market became a public brawl. The main issue is that Danone China demands the sole rights to the Wahaha brand, based on its previous contract with Zong. However, Zong insists he was duped by Danone at that time and therefore argues the contract is invalid.
With Danone aggressively pressing its exclusive rights to the brand, Zong finally took up the motto of defending the ’national interest’ to attract public support. He claimed he was misled by overseas capital, and asked the Chinese people to support him. In a short time he received massive support from sections of the media, the nationalist youth, and some sections of the masses.
The Research paper on The Danone-Wahaha Dispute
... 2008 is a world away from China in 1996. News of the Danone-Wahaha dispute—in which Danone accused Zong of setting up mirror companies ... that illegally used the Wahaha trademark—burst into ... 47 COMMENTARY it concerns major Chinese companies or famous Chinese brands. This view fits the concept of PRC law as ...
The Palace of Yuan Ming Yuan [in Beijing] was burnt by an Anglo-French army over 150 years ago. The Eight-Nation Alliance invaded China over 100 years ago (to ”suppress” the Boxer Rebellion in 1901).
It is over 50 years since Mao, in 1949, claimed the Chinese people had ”stood up”. But now the French have attacked the interests of our “Middle Kingdom”, and therefore the call has gone up to ”counterattack”!
Nationalists rally to the cause
The Fengqing [Chinese nationalist youth] raged against the devil of French capital – vowing to resist the biscuits and yoghurt of Danone. They argued that, “defending Qinghou Zong is defending national capital, and defending national capital is defending the national interest.” Unfortunately for the nationalists, however, certain persons with ulterior motives exposed Zong’s secret – the businessman has obtained Canadian permanent residence, and is on his way to become a Canadian, meaning he can no longer sit as a “people’s representative” in the National People’s Congress. Zong’s wife and daughter have US passports – they have been living in America for several years with their eight-figure deposits in foreign bank accounts! In fact, rather than defending the ”Chinese brand” of Wahaha against foreign capital, Zong is defending the rights of his own company, registered in the well-known tax haven of the British Virgin Islands (BVI), to use this brand.
Having just taken up the rallying cry of “decisively boycotting foreign brands” and “Han national and foreign barbarian cannot co-exist”, the Fengqing found they were defending the interests of “high-class American Chinese”. Matters weren’t helped by Zong’s statement that he is not a Canadian, and that his daughter will give up her US citizenship. If Zong’s family had not made a mistake, why were they to give up US citizenship?” This was a real slap in the face for the nationalist Fengqinq.
Zong’s slogan of “defending national interests” is shown to be bankrupt.
Zong is a typical representative of the parasitic capitalists in China who got rich during the last two decades by plundering the former state-owned sector built up with public funds. Wahaha Group began life in 1987 as a state-owned enterprise, owned by the Education Bureau of the Shangcheng District of Hangzhou City. Zong made use of his joint venture with Danone, which dates back to 1996 when Wahaha was still a state-owned company, to speed its ’restructuring’ into what is now a private family-owned company.
The Dissertation on Official Name National Capital Territory of Delhi (Nct)
Delhi, known locally as Dilli (Hindi: दिल्ली, Punjabi: ਦਿੱਲੀ, Urdu: دِلّی dillī), and by the official name National Capital Territory of Delhi (NCT), is the largest metropolis by area and the second-largest metropolis by population in India. It is the eighth largest metropolis in the world by population with more than 12.25 million inhabitants in the territory and with nearly 22.2 million ...
’National interests’ – in France
Zong is not alone of course when he today raises the slogan of ’national capital’. We involuntarily recall a story about the attempted acquisition of Danone. But in this story, “French” Danone was the quarry not the hunter. In 2005, the news broke that US-based Pepsi had launched a takover bid for Danone. French public opinion, whipped up by the media and politicians looking for some easy popularity, was very negative. We heard how French children eat Blédina and Lu biscuits, and drink Evian water and Danone yoghurt as they are growing up. The fact is that Danone was originally a Greek family company, built up in Barcelona approximately 80 years ago. Today, Danone’s business covers over 100 countries and only 20 percent of its products and brands are actually French brands.
Some French politicians argued at that time it would be better for Danone to be taken over by a European corporation such as Nestlé, than to allow it to slip into the hands of the US. Actually, although Nestlé is a so-called ”Swiss” company, it too is a multinational like Pepsi – only 32 percent of Nestlé sales are in Europe.
Capitalist globalization
The world is flat and the earth is a village. Under the current phase of capitalist globalisation, socialised production makes capital, technology, resource and labour widely spread globally. If in the 18th, 19th and even 20th century, it was still possible for national capital to develop separately on a regional basis; at that time there was still large scope for the development of productivity under capitalism. While different capitalists had various conflicts domestically and internationally at different levels, so-called “national capital” and “national industry” seemed to be reasonable. However, today, with very few boundaries to the flow of capital, and finance capital able to flow at electric speed globally, does there exist “real and pure” national capital?
The Essay on The Accumulation of Capital
Joan Robinson (1903-83) is one of the leading economists of the 20th century and the only woman among the great economists. Her writings on economic development show a strong sense of the historical context of social change and a concern with economic organization and institutions rather than resource allocation. The existence of al living beings has the character of certain economic ...
The world is flat and the earth is a village. This is not only a story for a “Qinghou Zong”, it is model for thousands of Chinese “Qinghou Zongs” and Indian “Qinghou Zongs”. In order to reduce operational costs, American capitalists can massively outsource jobs to Indian capitalists, and Indian capitalists can re-outsource tasks to Mexican capitalists so as to meet the requirements of their contracts. Therefore, American consumers can get convenient service and pay to American service providers, but management is under the control of Indians two oceans away and actual service is provided by their “neighbour behind the southern high-wall”.
Every part of the world is linked to each other in the era of globalisation. The capitalists do not care where they make their profit, they only mind how much profit they can obtain. As Marx said in Capital: “As capital’s profits increase so does its boldness. Give it 10% and it will go anywhere. Given it 20% and it will be enthused; with 50% it will be positively fearless; and with 100% it is capable of overriding all human laws; for 300% there are no crimes it will not risk even if takes them to the gallows…”
Playing the ’national’ card
If Wahaha could make billions of dollars profit from the US market, Qinghou Zong would move the whole of Wahaha to the US without hesitation. Someone might say it is not realistic? True, for the drinks industry it has not yet happened, but for the PC industry it is already a fact. After its acquisition of IBM computers (PC section), Lenovo has moved its headquarters to the US, and recruited a number of Americans as Lenovo’s senior management. They have only left several manufacturing bases and a research centre in China. If you think Lenovo is a Chinese national industry, Lenovo does not mind, since it can help them make a profit in China. However, it is not important whether this “national industry” is developed independently and technology is researched independently.
Capital is capital, its responsibility is to expand and exploit surplus value. The capitalist is personified capital, its first character is to obtain more surplus value, not to defend interest for one country or one nation.
The Term Paper on Company Comparison: Raytheon (Rtn) and Textron (Txt)
Raytheon was founded in Cambridge, Massachusetts in 1922, as the American Appliance Company, by Laurence K. Marshall, Vannevar Bush, and Charles G. Smith. Marshall and Bush were engineering students, while Smith was an inventor and scientist, but they were all entrepreneurs. After failures to market an idea for a new refrigerator the trio began to focus on electronics. (Raytheon, Wikipedia.com) An ...
While capitalism has globalised at extreme speed in the last two decades, however, private ownership and national borders act as a barrier and the main factor leading to new crises for world capitalism. The Wahaha story shows how capitalists under pressure, for their own ends, will play the nationalist card.
History teaches us there will never be a “pure free” market, and the idea of “a harmonious world society” is an impossible daydream on the basis of capitalism. Capitalism faces “incurable diseases” meaning that multi-conflicts must occur –the first and second world wars are the best evidence of that. Each capitalist nation has a state – to defend the economic and political interests of the rulers, the capitalists – and this state (government, army, law courts, prisons) can only be based on national territory, and society. This leads to conflicts – and even wars – between capitalist states, even as capital becomes more and more international.
The working class of all countries must not fall into the trap of believing there is any common ground with their exploiters. There can never be a “national interest” over the “class interest” of the exploited. Workers in China must link up with the international working class to fight for genuine socialism and an end to capitalism across the globe.
Background: How Zong privatised Wahaha with help from Danone
Early in 1993, Wahaha’s management tried to attract outer investors to set up a shareholding company under the name of Wahaha Group, so as to obtain private shares for themselves. However, since the percentage of private shares within this new share-holding company was over the limit set by the central government, the new company could not be listed on the Chinese stock-market and could not absorb massive funding. Meanwhile, Zong also met financial and operational problems in the beverage market. This is why Zong entered into an alliance with Danone and its Hong Kong subsidiary in 1996. There is an interesting story about the friendship between Zong and Danone China’s CEO, Fang Yimou. Today Zong says that he never like that ”French guy” and had few personal contacts with him, but in the 1990s Fang Yimou acted as guarantor for Zong’s 16-year old daughter when she applied to study and live in the USA.
The Research paper on Case Study of Irish Biscuits Ltd, of the Danone Group
INTRODUCTIONTowards the end of 1994 the management team in Irish Biscuits Ltd identified the need to strengthen its marketing function. By July 1995 the marketing department had doubled in size and the marketing budget had increased to £2.5 million compared with a budget of approximately £1 million in other years.The new team was charged with the task of updating the company's corporate image and ...
On account of Zong’s “problems”, the Hangzhou Shangcheng district government agreed to set up a joint-venture Wahaha company, in which Danone had a controlling stake of 51 percent, with the state-owned Wahaha Group holding 49 percent. From that time, under Zong’s guidance, a state-owned company and its Wahaha brand became controlled by overseas capital, for the relatively low price of 100 million yuan (around $13.4 million).
In fact, this was a key step for Zong to achieve his ultimate goal – privatization of state-owned Wahaha Group.
Since the central government strictly controlled the transfer of state-owned brands to overseas investors, Zong and Danone cooked up a system of ’twin contracts’ – one for official purposes, the other being the actual terms of their partnership. This legal trick forms the basis of the current dispute between Danone and Zong’s now privatised family company. In a recent interview with CCTV, Zong confessed he had cheated the government and the people on the issue of twin-contracts with Danone.
Starting in 2000, the Shangcheng district government agreed to the privatisation of Wahaha Group.
In the asset evaluation report made at the time of privatisation, Wahaha Group’s trademark, business reputation, production technology and liquid assets were not included, because these assets were by this time already signed over to the joint venture. The result of this financial wizardry was, of course, to lower the sale price of the remaining state-owned assets.
Likewise, if privatisation of Wahaha had not been carried out by MBO (management buy-out) its value would have been much higher, and the former state managers, like Zong, would have had to pay more cash to obtain the same size shareholding. The restructuring documents requested the group’s original sole owner, the district government, to transfer 49 percent of the net assets to Qinghou Zong, his management team and employees. Zong himself put up about 150 million yuan which accounted for 29.4 percent of the shares, while the workers and staff members (management) put up 19.6 percent of the capital, or 100 million yuan. The actual financing was based upon 81 percent of the company’s original value. Furthermore, on top of this hefty discount on the sale price, the district government agreed to award compensation to the company’s management under various guises such as ’scientific awards’. The total sum handed back to the company’s new owners was 70 million yuan, of which 80 percent was given to Qinghou Zong while the remaining 20 percent was turned into collective shares to be held by workers and staff.
The Term Paper on Company Description of Dewhirst Group Plc
Dewhirst Group Plc manufactures and distributes clothing and toiletries. Operations are carried out in the United Kingdom, Malaysia, Morocco and Indonesia. Manufacture of clothing accounted for 91% of revenues for the year ended 14th Jan 2000 and toiletries accounted for 9%.Competitor AnalysisDewhirst Group Plc operates in the Diversified Apparel Mfrs. sub-industry, which is a sub sector of the ...
Since 2001 Zong has set up a series of off-shore companies controlled by his family in the B.V.I. and the island of Samoa, as the local government still has a 40 percent share in Wahaha Group (i.e. Wahaha is still part of a state-owned company).
These off-shore companies form a complicated network to use the Wahaha brand, to set up manufacturing bases and a distribution network for the Wahaha group at no cost. According to an incomplete investigation, the number of Zong’s off-shore companies is over 30. He has also transformed some domestic companies co-funded by Wahaha Group together with the governments of Sichuan and Hunan, into his own 100 percent private share-holding companies and finally taken over the remainder of state-owned shares of the Wahaha Group.
The story is continues… But no matter what twists and turns occur in this dispute, working people must fight to kick out both the foreign multinationals like Groupe Danone and the so-called ’national capitalists’ such as Zong – and fight for major companies to be publicly owned, not to be run by greedy bureaucrats (like the old Zong) but under democratic workers’ control and management. Source: . |
Part 2. The story behind the Wahaha Danone joint venture dispute
April 17, 2007
After reading China Law Blogs post on the Danone and Wahaha Joint Venture dispute, I just had to translate this 21st Century Business Herald article which ran over the weekend. Its details surpass anything reported so far in the western media, and explains in stunning detail how the Wahaha group and its CEO Zong Qinghou went about setting up mirror companies to steer profits away from the JV and into his pocket. Continue reading for the gory details:
21stCentury Business Herald Reporter Chen Xiaoying, 2007-04-13
When Wahaha went under reorganization, Zong Qinghou had to find help, but while Danone became his best partner, it also sowed the seeds of today’s conflict.
Why does Danone all of a sudden want to buy these “Non-Joint Venture Enterprises” (NJVEs)? Why does Zong Qinghou not hesitate to at all costs resist this move? How were these NVJVE’s formed? And how did they become the cake that both sides are fighting over?
On the 11th of April, after both sides refused to budge and a tit-for-tat war of words, Danone finally decided to hold a press conference and open their mouth in defense. At the news conference, Danone President of Asia Area Fan Yimou not only produced evidence and stressed that the Wahaha brand was part of the Joint-Venture, he also criticised Zong Qinghou for “using public opinion to obtain personal interests.”If you look a little deeper past the ruckus and track down the interests and their origins, you can see very clearly how things developed. The fuse that ignited the bomb between the two is not about trademarks, but rather Wahaha’s non-Joint venture enterprises, and Danone’s demand that they be bought for a price of 4 billion RMB in a forced buy-out.
“Non-Joint Venture Enterprises” became the cake.
Wahaha’s shareholder structure is extremely complicated, according to this newspapers investigation, there are only over 100 companies that have the three letter name “Wa Ha Ha”. According to Zong Qinghou, among them are: the post-restructuring Hangzhou Wahaha Group Co, 39 subsidiary JV companies with Danone, and there are even more employee (management) stock held “NJVEs”
These NJVE’s began to grow in strength after the 2000 reorganization, Danone’s President for Asia Fan Yimou stated: “Especially in the last 18 months” the NJVEs have had explosive growth. Until present, the total sum of these companies has reached 61 with total assets reaching 5.6 billion yuan, and in 2006 only, total profits reached 1.04 Billion Yuan.
The NJVE’s made Danone furious and they put forward the demand of buying 51% of shareholders rights for a price of 4 Billion yuan.
Why have these enterprises made Danone uneasy and move with such quick action? This newspapers reporter was able to find that the products produced by the NJVE’s and the JV’s are nearly identical, with the only difference being in how and where the products were sold. The products made by the JV are mostly distributed in the coastal areas, and the NJVE products are distributed in the mid and western regions of China. Zong Qinghou’s explanation was that these moves were in order to answer the call of the nation and finish the distribution of their products in the mid and western regions of China.
“The Decision makers at Wahaha wanted to participate in the opening up of the west, hand in hand with the state revitalize impoverished areas including the Three Gorge’s Damn reservoir construction project. But Danone had misgivings about the consumption ability of these areas and didn’t want to carry out investment” Zong Qinghou said in his explanation of the formation of these NJVE’s. Furthermore, according to Zong, the profit margins of the NJVE’s clearly exceeds those of the Joint Venture.
According to an industry insiders explanation:”Actually, the biggest costs in the beverage industry lie in sales costs, especially advertising. Because the products made by both companies are the same, the NJVE’s obviously don’t have to pay for any advertising fee’s, so their profit margins are also a little higher.” Danone and Wahaha were both clearly aware of this point, and both parties talked over profit sharing, but in the end were unable to reach an agreement.
Failing to reach an agreement, starting in the second half of last year both sides started to quietly make their moves.
In the past, there have been reporters in the media who have seen copies of the contract Wahaha would give to their dealers. The contract stated, that from November of 2006 they not only have to continue to sign the contract with the JV companies, but they also have to sign a contract with a company named Hangzhou Wahaha Beverage Sales Ltd. Company. Furthermore, besides handling the JV sales companies Gold Card account, the Hangzhou Wahaha Beverage Sales company required them to put the payments for goods into a Gold card account created under the new company. This kind of financial operation is clearly aimed at separating the operation of the JVE’s and NJVE’s and individually settle the sales accounts of the NJVE’s.
In order to resolve the problem of JV companies competing with their NJVE counterparts, Danone decided to take steps on their own and put up 4 billion yuan in capital and buy 51% of Wahaha. But Zong Qinghou and Wahaha were unwilling, and facing Danone’s pressure he angrily rejected this “low price forced buyout.”
Who’s “Non- Joint Venture Companies”?
Now that they are to be included in the buyout, this drags in the problem of ownership with regards to the NJVEs. Now, how exactly did these NJVE’s come about and who after all are the owners?
According to records, the Hangzhou Wahaha Beverage Sales Company was founded on December of last year, with the main stock holder being Zong Qinghou. There are no connections with the Wahaha Group and its Labor Union.
The sole financier of the Hangzhou Wahaha Beverage Sales Company was Hangzhou Hongsheng Beverage Company(杭州宏胜饮料有限公司), which on march of this year changed its name to Wahaha Hongsheng Beverage Group Ltd. Co (娃哈哈宏胜饮料集团有限公司)and put up 3 million RMB in capital. The legal representative of the Hongsheng group is Zong Qinghou’s daughter, Zong Fuli 宗馥莉. Hongsheng’s registered capital is 80 Million RMB and has two shareholders.
One of the shareholders naturally is Shi Youzhen(Zong’s wife)施幼珍, who owns 10% of the company, and the corporate shareholder representative (法人股东)Hengfeng Trade Ltd. Company (恒枫贸易有限公司) holds the remaining 90%. Furthermore, Shi Youzhen is also the number two shareholder of the Wahaha Group. Hengfeng trading was registered in the British Virgin Islands and its legal representative also is Zong Fuli (Zong’s daughter).
The Hongsheng factory was set up inside the Wahaha Xiaoshan (萧山) #2 production base. It produces fruit-vegetable and bottled water beverages. Since its formation in 2003, within a short time Hongsheng’s account accumulated over a billion RMB in profits that were not shared with Danone, and in 2005 it was number 30 on Hangzhou’s list of highest profit earning foreign invested enterprises.
Zong Qinghou in his explanation of these companies, said that Danone acquired similar beverage companies in China and had control over the JV’s commercial secrets. “It brought harm to us.”
Besides NJVE’s producing Wahaha’s traditional beverages, another important component among these NJVE’s is the Hangzhou Wahaha Child’s Wear LItd. Co. (杭州娃哈哈童装有限公司) One of China’s biggest youth clothing companies. Zong Qinghou has previously stated that Hangzhou Wahaha Child’s Wear and the JVE do not have any relation and were exclusively or jointly financed by the Wahaha Group and its Labor Union. From material the newspaper was able to obtain, the shareholders of Hangzhou Wahaha Child’s Wear have been through numerous changes, ultimately ending up in the hands of three shareholders. One is a foreign enterprise named Platinum Net Limited and the other two are Zong Qinghou and his wife. Zong Qinghou holds 65%, his wife 10% and Platinum Net Limited holds 25% whose financier is unidentified.
The helper becomes the competitor
Why did Wahaha hatch out such huge “None-Joint venture Companies” and become the the focus of the conflict? In reality, it is related to Wahaha’s path of reorganization. Starting in 2000, reorganization led the Wahaha Group down the road of privatization.
At that time, Wahaha and Danone had already set up many joint venture subsidiary companies. For the parent company Wahaha, reform was unavoidable which has become connected to the JV subsidiary companies. According to a document titled “Document 1999 #32″; at that time the net assets of the Wahaha Group were about 700 million RMB. After excluding company housing, real estate projects and awards given for scientific achievements, actual net assets were 500 million RMB.
In an asset evaluation report that was made at the time of Wahaha’s reform, the assessor, Zhejiang Assessment Company clearly noted that in the assessment of the groups assets, Wahaha’s trademark, business reputation, production technology, and liquid assets were not included. Thus at that time, Wahaha’s trademark was not put in the assessment report.
“Because at the time of the JV, Wahaha’s trademark was covertly put into the joint venture, this was not only the premise of the JV but also to decrease the difficulty of the restructuring” A legal professional who was familiar with the restructuring stated. If it wasn’t carried out in this way, Wahaha’s restructuring total of sum of money would have been much bigger, and if the managing level wanted to retain the same shareholding proportion they would have had to put up more capital.
The restructuring documents requested that the groups original sole owner, Hangzhou Shangcheng District Government transfer 49% of the net assets to Zong Qinghou who was to be the leading manager and employee. Zong himself put up about 150 Million RMB which accounted for 29.4% of the shares and the workers and staff members(management) put up 19.6% in capital or 100 million RMB. The actual financing was based upon 81% of the original value. Furthermore, already among the peeled off assets, the awards for achievement in science (“科技成果转化奖) became the source of capital for the companies management. The total sum of these awards totaled 70 Million RMB, of which 80% was given to Zong Qinghou and the remaining 20% was turned into the collective shares of the workers and staff.(management).
Although during the restructuring in 2000, Zong Qinghou individually had to pay 60 Million RMB to purchase stock rights which was not permitted to be a bank loan.
Whether it was coincidence or sedulously planned out, at that time it was a win-win for the management of both Wahaha and Danone. Now solely in the hands of Zong Qinghou, shortly afterwards Wahaha was able to get rid of former competitor company Robust (乐百氏) and enter a period of super-speed development.
In may of last year, Zong Qinghou held discussions with the Hangzhou City Bureau of Asset Management to give up their 45% stake in ownership. At that time Zong stated that there wasn’t a timetable, nor would there be any difficulty(in obtaining investment) but in no way was he going to consider foreign investment.
But from the beginning of this year, due to Danone putting forward the plans for purchase of the NJVEs, these negotiations have already stopped.
Some of the opinion has said that when Wahaha went under reorganization, Zong Qinghou had to find help, but while Danone became his best partner, it also sowed the seeds of today’s conflict. Original article (Chinese) http://www.nanfangdaily.com.cn/southnews/sjjj/sjgs/200704130533.asp
“Danone’s China Deal Goes Sour: French Food Firm Accuses A Leading Businessman Of Undermining Venture,” – Wall Street Journal 宗庆后的转折点：掌控娃哈哈 － Xinhua
This entry was posted on April 17, 2007 at 4:43 pm and is filed under Uncategorized.
3 Responses to “The story behind the Wahaha Danone JV dispute” the opinions of others…..
1. A Hagon Says: (April 22, 2007 at 7:36 am)
By any measure it is intolerable for management of a company to compete in business against their employing company.
The acceptance of such behaviour discourages foreign investment.
2. Mishizzle Says: (July 19, 2007 at 7:48 pm)
I think the Wahaha-Danone company would have been a great company but Danone, owning so much of Wahaha’s business ventures, won’t let Wahaha grow. I would like to see Wahaha grow in the US and become a household name just as Danon is. I think Wahaha should have more control over their own business ventures since it is their own company to begin with. This is the imperialistic powers working its way into our society even in our modern, civilized time.
3. Ohconfucius Says: (October 5, 2007 at 2:02 am)
The issue is fundamentally culture clash. Danone operates bureaucratically whereas Zong is an entrepreneur who has succeeded by trial and error in China. Danone did not understand the China market, as witnessed by the destruction of Robust at their hands. Danone thought they could have their cake and eat it by investing in an iron-fisted entrepreneur, whom they could not and did not want to reign in. The trademark issue is but a red-herring, as there is no question in my mind that the Wahaha brand validly belongs to the JV companies.
There have been questions over whether he has dealt fairly with his fellow shareholders in the various reorganisations of group companies. Now, it is clear that Zong has been taken over by greed, and has progressively transferred all the group’s assets from all the shareholders (Danone, Labour Union) to BVI and Cayman companies controlled by himself and his family. Shameful, Zong is so rich he did not have to do this and steal from his shareholders and workers alike.
Source: http://venture160.wordpress.com/2007/04/17/the-story-behind-the-wahaha-danone-jv-dispute
The Question
The Danone Wahaha failed joint venture has to be one of the most widely discussed cases of its kind in modern history. A simple search on Google will reveal a wealth of information and opinion as to what happened along with a diverse portfolio of academic input.
The first thing you need to do after reading the case is search for some detail in this joint venture attempt which interests you most, (please write an introduction which describes the elements of this case which you are going to strategically analyse) then you are required to pull together a written assignment which must answer question one and then deal with the items out lined in two of the remaining five questions. Please sate which questions you answered in you title page.
You finished assignment should be approximately 10,000 words excluding title pages, contents and referencing. You will need to reference in a consistent academic way. Please refer to the guidelines online and to the sample answer.
YOU MUST ANSWER THIS QUESTION.
Question 1 Drawing on your experience with the models and frameworks of the course and those from other International Negotiation and Sales Management courses:
a) Critically evaluate Danone’s approach to Wahaha and their ‘negotiation’ strategies?
b) What would you have recommended to Wahaha in response to the Danone approach? How do think these recommendations would have been received?
NOW ANSWER (ADDRESS) ANY TWO OF THE QUESTIONS BELOW.
Question 2 It could be said that culture and power played a big part in the failure of this joint venture, critically discuss this. It wasn’t a failure – successful until this point. Danone power western and wahaha chinese expertise.
Question 3 In the case the word dispute is used in the title. Was this a dispute or a conflict? Critically discuss in relation to specific conflict management strategies. First was conflict and after dispute – use slides for bullshit.
Question 4 Critically evaluate the utility of the Porter’s Five Forces strategic analysis tool in the development of possible ‘negotiation’ strategies in this case..
Question 5 Clearly the two organisations are very different in their structure. Using Mintzbergs organisational structures discuss how this might affect inter-organisational communication strategy..
Question 6 Critically evaluate the positive benefits that can be derived from international alliances and describe how you could successfully manage such partnerships, where might the difficulties be?
