International Business
CHAPTER 12 - DANONE IN CHINA
1. What were the intentions of Wahaha Group and Danone when setting up joint ventures in China?
The intentions of Wahaha Group to joint venture with Danone is Wahaha Group expected to adopt new technology and managerial techniques from Danone. The Wahaha Group is also need cash to expand. On the other hand, the Danone has different intentions when deciding do the Join Venture with Wahaha Group. As the foreign companies, Danone has lack of management depth and size to grow quickly in China. However, Danone believes that with local firm support (Wahaha Group is well known as fast growing company at food market in China) will help Danone to grow the sales quickly.
2. How did the relationship between Wahaha Group and Danone change during the 11 years of cooperation? How did the bargaining power of both parties change?
Because the dispute between Wahaha Group and Danone. The rationality of the existence of the non-joint ventures, the ownership of the "Wahaha" trademark and the non-compete clause issue are the key points of the Danone-Wahaha dispute.
The bargaining power change
Ofcourse there is a change in bargaining power between both parties. Danone has the bigger bargaining power because Danone holds 51% of the joint venture’s shares. However, progressively Wahaha Group has become stronger in bargaining power due to the strategy that Wahaha Group applied. Wahaha Group dispute the contract, uses the joint venture to its non joint venture market and make the non joint venture market growth rapidly and finally its become as a competitor for Danone.
3. Did the long-term cooperation between both firms lead to more trust? Did you observe any problems of bounded reliability with the two firms’ cooperation? Was there a vicious cycle of suspicion? Was there a vicious cycle of increasing dependency on a partner?
The long- term cooperation between two firms leads to lack trust because of dispute between both firms. They
1. What were the intentions of Wahaha Group and Danone when setting up joint ventures in China?
The intentions of Wahaha Group to joint venture with Danone is Wahaha Group expected to adopt new technology and managerial techniques from Danone. The Wahaha Group is also need cash to expand. On the other hand, the Danone has different intentions when deciding do the Join Venture with Wahaha Group. As the foreign companies, Danone has lack of management depth and size to grow quickly in China. However, Danone believes that with local firm support (Wahaha Group is well known as fast growing company at food market in China) will help Danone to grow the sales quickly.
2. How did the relationship between Wahaha Group and Danone change during the 11 years of cooperation? How did the bargaining power of both parties change?
Because the dispute between Wahaha Group and Danone. The rationality of the existence of the non-joint ventures, the ownership of the "Wahaha" trademark and the non-compete clause issue are the key points of the Danone-Wahaha dispute.
The bargaining power change
Ofcourse there is a change in bargaining power between both parties. Danone has the bigger bargaining power because Danone holds 51% of the joint venture’s shares. However, progressively Wahaha Group has become stronger in bargaining power due to the strategy that Wahaha Group applied. Wahaha Group dispute the contract, uses the joint venture to its non joint venture market and make the non joint venture market growth rapidly and finally its become as a competitor for Danone.
3. Did the long-term cooperation between both firms lead to more trust? Did you observe any problems of bounded reliability with the two firms’ cooperation? Was there a vicious cycle of suspicion? Was there a vicious cycle of increasing dependency on a partner?
The long- term cooperation between two firms leads to lack trust because of dispute between both firms. They