BIZCHINA / Developments
Danone dispute affects sales
By Wang Zhenghua (China Daily)
Updated: 2007-06-23 08:45
SHANGHAI: Falling sales are the latest headache for French food and
beverage giant Groupe Danone SA in its dispute with joint venture partner
Wahaha.
Wahaha's sales staff and distributors across the country have been
opposing Danone's acquisition bid and supporting the Chinese firm's
leader Zong Qinghou.
Related readings:
Danone talks go nowhere
Firm plans lawsuit against DanoneWahaha files for arbitration
Distribution staff in Beijing, Shanghai and a number of provinces are
remaining loyal to Zong, the former chairman of 39 joint ventures between
Wahaha and Danone, threatening to stop selling products made by the
French company.
They have also refused to accept Emmanuel Faber, the French company's
Asia-Pacific region president, as the new chairman.
A two-day emergency board meeting between Danone and new directors
appointed by Wahaha after the resignation of 62-year-old Zong ended in
discord on Wednesday.
"The coverage of the dispute has dampened sellers' confidence," said Ye
Xin, general manager of Wahaha Group's sales company in Northeast China's
Jilin Province. "Overall sales in June are not positive, and some clients
have reported falling sales compared with last year."
In Jilin, profit grew 5 percent this month on 2006, compared with a
combined 30.5 percent surge in the first five months for the joint
ventures, according to the sales company. Shan Qining, Wahaha Group's
spokesman, said production lines at some joint ventures had been halted.
In other provinces, including Heilongjiang, Hunan, Sichuan and Hainan,
thousands of joint venture distribution staff have made statements saying
they will quit their jobs if Zong is no longer chairman.
In South China's Guangdong Province it is feared the takeover will affect
Wahaha's market share, which is currently growing at over 100 percent a
year.
Faber, appointed by Danone as acting chairman of the joint ventures, said
in mid-June that the business would not be affected in the short term.
But he conceded: "Employees' and distributors' morale and unity are
undermined by attempts to stir up emotions as the peak season for sales
has arrived."
Meanwhile, a dozen Chinese executives of the joint ventures have
threatened to break away from Danone to form a separate company.
Earlier this month, employees from a Shanghai-based Wahaha sales company
took to the streets to protest Danone's acquisition bid for Wahaha's 20
businesses beyond their joint ventures for a reported 4 billion yuan.
(For more biz stories, please visit Industry Updates)
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