Entry mode dynamics 2: strategic alliance partners

Case 12.1 Danone’s affair in China
As of 2007, Danone, the French multinational food company, was in a fierce battle with China-based Wahaha Group (the largest beverage producer in China) to win control of their joint ventures (JVs) in China. The fight is reported to have started in 2005 when Danone uncovered some unusual financial figures at the JVs, but this did not become known to the public until 2007, when Danone and Wahaha Group failed to resolve their disputes on the selling price of Wahaha-related non-joint ventures (non-JVs). The quarrel between Danone and Wahaha Group has escalated. It involves disputes on brands, as well as on perceived unequal commitments to the JVs. Lawsuits have …show more content…

Its early success selling nutritional drinks to students won the favour of the Hangzhou city government, whose support paved the way for the firm to acquire the Hangzhou Canned Food Product Co. in 1991. The Hangzhou Wahaha Group Co. was established in 1991, with ‘Wahaha’ referring to the sound of a baby laughing. In 1994, the Wahaha Group acquired three other companies in the province of Sichuan. In the mid 1990s, the Wahaha Group did very well in the Chinese market, with around 2,000 employees, RMB 1 billion in sales (around $200 million US), and RMB 200 million (around $40 million US) in profits. However, it was afraid that it would soon lose its competitiveness in an era when foreign multinationals were entering China, so it was eager to expand its scale and market share in China. Unfortunately, the Wahaha Group lacked the necessary financial capital to expand. Then Danone came into the picture through the introduction of the Hong Kong-based Peregrine Group. Both Wahaha and Danone expected to gain something from the cooperation. Wahaha needed cash, and it also hoped to adopt new technology and managerial