China's biggest beverage maker has marked its firm stand against being taken over by French food giant Group Danone SA and may sever all links, a top company official said.

 

Hangzhou Wahaha Group, in which Danone has a 51 percent stake, is resolutely opposed to the French firm's plan to buy up its remaining assets for 4 billion yuan, Zong Qinghou, chairman of the Chinese beverage maker, said in an online broadcast on Sina.com, the country's most popular portal.

 

"Danone wants to buy our remaining companies that are not included in our joint ventures, and we are not consenting," Zong said.

 

Danone, the world's largest yogurt maker, created five joint ventures with Wahaha in 1996 in an agreement, which prevents Wahaha from producing any foodstuffs that would directly compete with these ventures, or from using the Wahaha brand without Danone's consent.

 

Zong lashed out, saying that "we consider such provisions unfair, prohibiting us from making goods that are produced by the joint ventures while imposing no restrictions on Danone itself."

 

Danone, according to Zong, from an initial investment of 1.5 billion yuan across all ventures with Wahaha, had reaped profits totaling 3.8 billion yuan.

 

Danone were unavailable for comment, only dispatching a public letter to Sina.com, dismissing Zong's comments as "not in line with the facts."

 

Since entering China in 1987, Danone, famous for its aggressive takeovers, has acquired stakes in at least seven leading Chinese food and dairy companies, including Shanghai-based Bright Dairy & Food Co, Shenzhen Health Food Co, Guangdong Robust Group and Shanghai Aquarius Drinking Water Corp.

 

Furthermore, Danone has 22 percent stake in Beijing-based Huiyuan Juice Holdings Co, China's largest fruit juice producer, making the French company the second-biggest shareholder in the Hong Kong-listed firm.

 

Last December, the French dairy maker further widened its empire by creating joint ventures with China Mengniu Dairy Co, the country's biggest liquid milk producer, in which it holds 49 percent of the stake.

 

Accusations have flown at Danone for years for their heavy-handed tactics, which escalated in France until the company was boycotted for a long time by many consumers. In China, critics fear the firm is trying to corner the Chinese beverage market and dump its home-grown brands on local companies after buying them out.

 

In an online poll conducted by Sina.com, 91.68 percent of the 25,000-odd participants agreed that Danone's latest tactic to take over Wahaha is aimed at creating a monopoly.

 

"The government should work out regulations to protect domestic companies from malicious acquisitions," appealed Zong, a teacher-turned entrepreneur.

 

Founded in 1988, Wahaha Group, based in east China's Zhejiang Province, has assets of 8.8 billion yuan and employs about 20,000 people.

 

The net profit of the company, which produces mineral water, tea, fruit juice and baby milk, increased to 2.2 billion yuan in 2006, with pre-tax profits sky-rocketing 48 percent to 3.2 billion yuan.

 

(China Daily April 10, 2007)