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Last Updated: Monday, 18 June 2007, 10:34 GMT 11:34 UK
Wahaha in Danone arbitration move
Danone products
The row between Wahaha and Danone has been picking up pace
Wahaha, China's largest drinks maker, is to go to arbitration in a trademark dispute with its French food partner, Danone, over who owns the Wahaha brand.

Wahaha is one of China's best-known brands of bottled water and drinks.

Hangzhou Wahaha Group agreed in 1996 to transfer the Wahaha brand to a Danone joint venture, Hangzhou Wahaha Food.

But the move did not get approval from China's state trademark office, Wahaha says, and is now seeking arbitration, in the latest twist of an ongoing row.

Reputation claim

The issue will be heard by the Hangzhou Arbitration Commission, Wahaha said.

"The brand transfer failed and the brand transfer agreement expired. The Wahaha brand still belongs to Hangzhou Wahaha Group," the Chinese firm said.

The two companies have been at loggerheads for over two months, and two weeks ago Wahaha founder Zong Qinghou stood down as boss of Wahaha Joint Ventures.

Mr Zong said he was leaving the joint venture firm because Danone had harmed his reputation.

Wahaha has also said it will not accept Danone's choice of a chairman for the two companies' joint ventures.

The trademark move also comes after Danone claimed Wahaha had been illegally selling copies of its drinks.

Earlier this year Danone filed a lawsuit in the US accusing its partner of breach of contract by using the Wahaha brand on items sold outside of their joint venture.

Water seized

The French firm agreed to set up a joint venture business with Wahaha in 1996.

Under the terms of this deal, Wahaha is prohibited from making products that compete with Danone's range.

Danone recently agreed to invest a further four billion yuan (262m; $519m) in the deal, in return for control over several Wahaha subsidiaries and the right to sell foodstuffs under the Wahaha brand.

It is these subsidiaries that make the disputed products.

The deal with Danone enabled Wahaha to invest in advanced production facilities, doubling its output between 1996 and 1997.

With its headquarters in Hangzhou in Eastern China, Wahaha has 70 subsidiaries spread across 40 manufacturing sites.

Danone, which is France's largest food company, has also faced other pressure from the Chinese authorities.

Last week, customs officials in Shanghai seized thousands of bottles of Evian water, owned by Danone, on the grounds that they contained harmful bacteria.

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