A dispute between French dairy and water company Groupe Danone SA and its Chinese joint venture partner, which actually started several months ago, last week was escalated when Danone filed a lawsuit in Los Angeles over alleged illegal sales in China.
Danone filed a complaint in the Superior Court of Los Angeles County against BVI-based Ever Maple Trading Ltd., as well as against Hangzhou Hongsheng Beverage Co Ltd., and two individuals related to these companies. One of the two persons named in the lawsuit is Kelly Fuli Zong, said to be the legal representative of Ever Maple. The name of the second person was not given by the company, but probably he is also related to Zong.
Danone said in its legal notice that BVI-registered Ever Maple has the controlling stock of Hangzhou Hongsheng Beverage, the parent company of Danone’s joint venture partner, Hangzhou Wahaha Food and Beverage Sales Co. Danone has accused Hangzhou Wahaha, which is one of China’s biggest domestic beverage makers, of violating its joint venture agreements by illegal selling products identical to those sold by the companies’ joint ventures.
The French-based company has claimed that its objective in filing the claim is to stop the illegal production and sales of products. Danone is not likely to disclose the amount of compensation it is seeking for “loss and damagesâ€.
The conflict between Danone and Hangzhou Wahaha was initiated when the latter rejected the Danone’s plan to buy out some of company’s assets, accusing the French company of attempting a hostile takeover. Earlier Danone filed for arbitration in Stockholm to help resolve the dispute.
Both companies began establishing their joint ventures in China in 1996, and their beverage operation has become one of China’s largest.