Danone Tries Again to Milk China Market

From today’s Bloomberg: Danone Invests in Mengniu as Chinese Demand Food Safety

Danone (BN), owner of Activia yogurt and Evian water, will spend about 325 million euros ($417 million) to form a joint venture and invest in China’s biggest dairy producer to expand its brands in the most populous nation.

Danone will have an initial indirect interest of about 4 percent in China Mengniu Dairy Co. (2319), with the aim of increasing that in the future, the Paris-based company said in a statement today. It will also set up a venture with Mengniu for yogurt products in China. Mengniu shares surged the most in four years.


An excerpt from The Fragile BridgeConflict Management in Chinese Business 

Great Moments in Chinese Conflict Management

Groupe Danone of France was a frontrunner in the race to win the China market, striking what it thought was a win-win deal with a well-known Chinese brand, Wahaha. The two companies formed the first of a series of JVs in 1996 using a fairly typical structure of those times that ultimately gave Danone fifty-one percent of the new firm – and rights to the Wahaha trademark – in exchange for an investment of $41 million. Or so the French dealmakers believed. In a move that now seems naïve, Danone maintained the partnership agreement even after Chinese regulators struck down the transfer of the trademark. Instead, the two firms made a private contractual agreement to transfer use of the Wahaha name to Danone – a deal that would later be found insufficient to protect the French group’s interests in China.

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