Danone and Wahaha in China The Interaction of Strategy, Cultural Differences and Organization Design in International Joint Venture Conflict

Munro-Smith, Nigel
October 2008
Proceedings of the Northeast Business & Economics Association;2008, p139
Academic Journal
This case looks into the outbreak of conflict between two joint venture partners, one French and one Chinese, in the Chinese beverage market. The Danone-Wahaha joint venture lasted ten years before in 2007 it descended into acrimonious conflict. Initially the joint venture provided a vehicle for each company to advance its strategic objectives but over time cultural differences and incompatible strategies took their toll. Danone wanted to acquire and major player in the Chinese beverages market whereas Wahaha wanted a foreign partner to provide it with the know-how needed to expand beyond China. The business grew from 5 to 39 partnerships until the French discovered that Wahaha was selling competitive products outside the joint venture. The French then insisted that these businesses be brought into the joint venture, meaning Wahaha had to cede 51% of them. The Chinese severely resented this. The conflict was exacerbated by the personalities involved but a key factor was the organization design of the venture. With hindsight the joint venture could have been better organized and a different organization design is proposed.


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