China will encourage foreign investment while protecting the
rights and interests of Chinese businesses in disputes over foreign
mergers and acquisitions, said Ministry of Commerce spokesman Wang
Xinpei on Wednesday.
Wang was commenting on the soured relationship between domestic
beverage company Wahaha and its business partner, French food giant
Danone.
On Tuesday officials claiming to represent 20,000 Wahaha
employees sent a statement supporting the Hongzhou-based beverage
group in its fight against a possible four billion yuan takeover of
Wahaha's businesses that it set up outside the existing joint
ventures.
In response, Emmanuel Faber, president of Danone for
Asia-Pacific, said Wednesday in Shanghai that the company would
take legal action.
He gave Zong Qinghou, founder of the Wahaha Group, a deadline of
30 days to end the dispute; otherwise, Wahaha's businesses that
were established outside the joint ventures would be sued.
Citing terms of the companies' joint venture contract inked 10
years ago, Faber stressed that the Wahaha brand name belonged to
the joint venture only. Zong, however, insists that the terms were
unfair to the Wahaha Group.
"Danone has pumped over US$170 million into the joint ventures
over the past decade, and has been able to take out US$380 million
in profit sharing," said Zong. "The value of the joint ventures has
risen by 51 percent in that time."
Wahaha, which began as a factory in a small school, has grown
into a conglomerate that produces more than a dozen products
including bottled mineral water, dairy products, and juice
packs.
Wang Xinpei said that the Ministry would handle foreign
acquisition disputes "strictly by rules."
(Xinhua News Agency April 12, 2007)