Danone Deals Out Further Blow Against Chinese Partner

23/11/07 The already soured relationship between French food giant Danone and the Wahaha Group has turned bitter after a court froze the assets of two more foreign companies associated with the Chinese drinks maker.

French dairy producer Groupe Danone said Thursday that it has won court orders to freeze certain offshore assets of 10 companies that it has accused of illegally competing with its China joint venture.

A total of eight companies on the British Virgin Islands and another two on Samoa island are now in receivership with their assets frozen after Danone filed relevant claims, said Michael Chu, Danone's spokesman in China.

The 10 companies are the majority shareholders of about 40 China-based firms that Danone has accused of illegally selling the same products as Danone Wahaha, the French company's joint venture with China's Hangzhou Wahaha Food & Beverages Sales Co., Chu said.

"The common understanding is that these (China-based) companies are owned by Mr. Zong," Chu added, referring to Danone Wahaha's former chairman Zong Qinghou.

Multimillionaire Zong is chairman of Hangzhou Wahaha and has disputed Danone's charge in a public letter earlier this year.

Hangzhou Wahaha's spokesman Shan Qining declined to comment on the matter.