Danone to challenge China ruling

Wahaha is China's biggest drinks company

French food group Danone is to appeal against a decision by a Chinese court that it no longer has any rights to the popular Wahaha beverages brand.

On Monday, a Chinese arbitration commission said a trademark transfer deal signed in 1996 had expired, a ruling that Danone disputes.

Wahaha says it owns the brand rights, but Danone says the brand can only be used by the firms' joint ventures.

The dispute has highlighted risks faced by foreign firms in Chinese ventures.

'Wrong' decision

The dispute centres on ownership of the brand name.

Wahaha and Danone have been partners since 1996 and under the terms of their 11-year agreement, Wahaha is prohibited from making products that compete with Danone's range.

The long-running dispute highlights the riskiness of joint ventures

Danone accuses Wahaha of illegally selling copies of products jointly sold by the two companies.

The decision by a Chinese arbitration commission on Monday to terminate the trademark agreement was "wrong, blatantly illegal and unacceptable," Danone's lawyers said on Tuesday.

"The decision is trampling Chinese laws and seriously hurts Danone's interest," Tao Wuping said.

"We will demand that the decision be cancelled by the relevant court," he added.

Wahaha history

Wahaha, China's biggest drinks maker, was founded in 1987 by chairman Zong Qinghou selling milk products from a school store.

A deal struck with Danone in 1996 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.