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Danone/Wahaha -- China Business Lessons To Be Learned

By Dan Harris and Steve Dickinson

As regular readers know, China Law Blog loves the Danone-Wahaha dispute, having written the following posts on it: -- China's Joint Venture Jeopardy -- Danone v. Wahaha -- Which Of Us Is The Most China Rookie? -- Danone and China's Wahaha: A Lecture on How (Not) to Make Allies Enemies -- New York Times And Steve Dickinson On The Danone Wahaha China Dispute And On Avoiding Your Own -- Danone v. Wahaha: China Business/Law Lessons To Be Learned -- Danone vs. Wahaha. Danone vs. China Law Blog. Ogilvy vs. Steve Dickinson. Have I Missed Anyone? -- Danone- Wahaha: An Update -- China's Danone-Wahaha Fight -- The Law Journal Version We love that dispute because within it lies just about every China business or business law issue one might confront. It is, as a lawyer friend of mine so succinctly put it, "China writ large." We are not the only ones with that view. Jingzhou Tao, an attorney in JonesDay's Beijing office, and Edward Hillier, a JonesDay paralegal and loyal CLB reader, co-wrote a superb article on the Danone-Wahaha dispute for China Business Review, entitled, "A Tale of Two Companies." The article is appropriately subtitled: "The Danone-Wahaha partnership once seemed ideal, but the companies? relationship has deteriorated. What lessons can be learned from the dispute?" Tao and Hillier see this dispute as illustrating "issues that foreign-invested enterprises may face in China and the direction of China?s development." This article does a nice job of explaining the dispute, putting it into context, and putting forth lessons to be learned from it. It also does the best job yet in terms of listing out all of the cases around the world between the two warring companies. Who knew that in addition to cases in Sweden, France, Italy, California, China, and the British Virgin Islands, Danone and Wahaha also went at it against each other in the Samoan courts? I particularly liked the writers' sidebar of "Dispute Resolution Tips in China" (though I think they apply just about everywhere):

- Stay calm and do not get involved with personal invective. This will nearly always backfire in the PRC media. - Say as little as possible about the dispute. Any comment can be counter-productive. - Lobbying high-level government officials may not help resolve a dispute because it can give lower-level officials an excuse to do nothing. - Any strategy must be carefully and pragmatically planned based on the circumstances of the dispute. There is no magic formula.

One thing I would add to this (and again, this is true everywhere, not just China), is that if you are in a litigation dispute that is being covered by the press, you must retain top quality outside public relations counsel. The company involved in the dispute is not going to be objective enough to handle the public relations' aspects (even if it has its own in-house public relations people) and we lawyers (despite thinking otherwise) are just not very good at it. Do check it out and let us know what you think.

Full post as published by China Law Blog on June 07, 2008 (boomark / email).