Case Study: How Danone and Wahaha, which have all to success in China failed?

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[...] Case Study: How Danone and Wahaha, which have all to success in China failed? Summary Presentation of the case 2 Danone: The conqueror 2 Creation of the China JV 3 Problem appears in the “perfect” Joint Venture 4 Litigated cases 5 II) What Danone should have done? 9 Why this joint venture was a Fail? 9 Loss of trust 9 Different laws, different cultures 10 Manage your JV, don't let Chinese 11 Comparison of Hofstede's model 12 Conclusion 13 Bibliography 14 Presentation of the Danone-Wahaha case Danone : The conqueror We are in 1996, DANONE is the number one dairy in the world, and after a merger with BSN in 1973 it became the first food company in France. [...]

[...] Zong Qinghou one of the richest man in China, who is also a member of the Chinese Communist Party, with many influence. So in February 1996 Danone started to conquer China with a new big partner size: Wahaha. Creation of the China Joint Venture For this joint venture is created. With three different parties: Hangzhiu Food Group Co. Ltd . (Wahaha) which is headed by Mr. Zong at 49%. On the other side Baifu and Danone are not directly invest in the joint venture. Danone and Baifu created as a nome Jinjia cooperation. [...]

[...] We can see that Danone has begun legal proceedings in 2007 and was very "aggressive", but can Wahaha has time against the attack, and the two sides engaged in a battle for global trials for months . But either there were other errors, most trials were in favour of Wahaha and not for Danone because it is ill-suited to the local culture and not only broke the contract of joint venture but also the bond of trust between its local partner Wahaha. [...]

[...] We also can see that China as a long term vision in business, or France haven't, that's reliable with the case, the Joint venture were really good, and they had good turnover, but Danone wanted more, to fast, that's why they tend to change, buy competitors, and even go to the court with their allies, so became an enemies. That's against the long-term vision based on trust that Chinese have. Conclusion: In this case, the Joint venture between Danone and Wahaha had a very good start, they had good turnover quickly, but in fact, Danone didn't analyse the cultural differences in China and try to do business as they do in Europe. But to do business in China and China's partner, you have to build a “confidence” and have a long-term vision. [...]

[...] “We can ask the question of the value of a contract in China. There, what matters is the state of confidence when you are confident, you will always find a solution and will therefore not need to contract. It does not always go well with the West: So what they need to succeed is to leave an exit and never humiliate the Chinese. You have to be very careful about the agreements we sign and management failures, otherwise relying on courts to protect "local": the decision on Danone also has a political dimension.”[2] The decision is also political, cause Chinese government protect their “local” company like Gérard Haas confirm, so the Principe of trust is the key, that you don't want to break in the door, otherwise we can not leave the problem. [...]