In a story I wrote in Feb about how to profit from China's one-child Policy I have recommended Groupe Danone (ADR: DA), a French food company with multiple joint ventures set up in China selling consumer products from fruit juice, dairy products to bottled water. All of Danone's JV partners are Chinese market leading brands.
One of such joint ventures is formed with
Recently the relationship turned sour and Danone is accusing Wahaha for trademark infringement in manufacturing and marketing beverage products under the same Wahaha brand outside of the joint venture which has exclusive right to such trademark.
In a very high profile press conference held yesterday in
In a separate equally high profile public appearance, Wahaha founder Mr. Zong said that the JV agreement was a trap and he was not aware of the trademark assignment consequence when he put his name on the agreement. Danone is giving 30 days to Wahaha to remedy the situation or it will resolve it through legal action.
In return Mr. Zong has organized a national PR campaign asking the Chinese government to protect this well known national Chinese brand from foreign invasion, and has asked all the Wahaha employee and distributors to act together to protect this Chinese company.
The outcome is still remain to be seen, however, this is a very important lesson to all Chinese enterprises about the importance of protecting their own intellectual properties and the commercial consequences of accepting such intellectual property related clauses in the agreement.
As an investor it’s a potential opportunity to buy Danone if it finally succeeded in acquiring full control of Wahaha and became a dominant player in the huge Chinese beverage market. On the other hand, being a Chinese myself it’s sad to see Wahaha learned this lesson a hard way.
It’s high time all Chinese enterprises woke up and learn the basics in intellectual property protection, not only in respecting other's IP, but also developing and protecting their own.