Yet another western JV in China is heading for the rocks. This time it is French food giant Danone's JV with Wahaha, which is over a decade old but unlikely to last much longer. That's the Financial Times' reading of the very public row between Danone and Wahaha, whose name is meant to mimic the sound of a baby laughing ($).
But in an interview given to internet portal Sina, Zong Qinghou, founder and chairman of Wahaha, is in anything but humorous mood.
He said the terms of the JV were increasingly “unfair” to Wahaha and accused Danone of trying to take control of parts of the Chinese group not included in the JV. He also threatened to launch a new brand in competition to the Wahaha bottled water sold by the JV which is the market leader in China.
The FT makes the point that disagreements over the fine-print of JVs are commonplace in China. But Zong's very public airing of his grievances in unusual and tinged with nationalistic overtones.
For example, he accuses Danone of not understanding Chinese culture, which is an accusation that could be levelled at every western firm engaging with China, no matter how hard they try to go native.
Wahaha is the company that promotes its products as patriotic brands so one can detect a certain amount of jingoistic posturing behind Zong's outbursts.
Nevertheless, it must be remembered that no matter how “strategic” the parties may paint them, Chinese JVs are doomed to be abrasive and short-lived, for the simple reason that sooner or later, one of the parties feels the relationship has outlived its usefulness.
Zong has made no secret of his desire to expand internationally, so perhaps he feels the time has come for Wahaha to go it alone. Or perhaps he simply wants to negotiate better terms and believes that playing the nationalistic card will cower the French into submission.
($) subscription required