A Chinese Executive Wages War with France's Danone

French food conglomerate Danone is embroiled in a bitter dispute with a Chinese joint venture partner. The quarrel reveals just how fragile business deals in China still are today.

The Chinese protestors headed straight for the Portman Ritz Carlton, a Shanghai luxury hotel. They wore yellow caps and yellow shirts, and they were carrying huge protest banners that read, in blood-red characters: "Traitors and watchdogs will come to no good," and "We want Chairman Zong. Under no circumstances do we want Danone." The spectacle was short-lived. The police quickly moved in and removed the troublemakers from the scene. But their anger reverberated into the hotel, just as the protestors had intended. Inside, French food giant Danone was in the process of taking on Zong Qinghou, 62, the founder of Wahaha, a joint venture with the French corporation, in a bizarre mud-slinging contest.

Hardly a day goes by without further escalation in the dispute between the French and Zong, their Chinese partner of many years. Danone accuses Zong of having used his relatives to secretly establish a series of parallel companies that produce mostly identical products. Zong, for his part, accuses the French of forming alliances with domestic competitors and ganging up on him.

Danone has already filed suit in a US court against two of Zong's family members, his daughter and his mother. In response, the enraged Zong resigned as CEO of the joint venture company. He has also managed to stir up popular resentment in China against Danone, and his company,

Danone is losing about $25 million a month because of the quarrel. Its stock has suffered, losing 15 percent of its value since February, both as a result of these losses and of the uncertainty the severity of the dispute has created in the markets.

Just what products do this Zong’s sister and mother produce that they would be suing here in the U.S? It wouldn’t be toothpaste, by any chance, would it. Or, maybe, dog food—toys?

I don’t buy Chinese anymore if I can help it!

“How bizarre.
“How bizarre, how bizarre!
“OOh Baby, it’s making me crazy,
“Every time I look around
“(EverytimeIlookaround...)
“Every time I look around
“Every time I look around
“It’s IN MY FACE.”

So spoke once a famous NZ Poet and Musician yclept “OMC” a few years back. True then, true today.

If nobody bought cheap Communist Chinese kleptocracy junk, they would all go very-expensively broke, like they deserve to do. Then the Taiwanese could take over the country and run the show properly, as *they* deserve to do.

Zong milks his supposed bond with Mao to the fullest, waving little red books in public and evoking images of the Cultural Revolution. He peppers his speech with the language of patriotism, blustering that the Chinese people have risen up, and that the days are gone when the imperial superpowers could conquer China.

This red capitalist has mastered the art of appealing to the growing self-confidence of the Chinese. "Our country has more than $1 billion in currency reserves," he boasts, adding that China should no longer leave it up to others "to divide up our wealth among themselves." His quarrel with Danone, initially a minor business spat, has since acquired a more fundamental character.

Chinese patriots are even celebrating Zong on the Internet as a national hero in the fight against "foreign devils." On one blog, "Hulong," a participant writes: "Let us learn from the honorable Zong and fight to the end against capitalists and imperialists like Danone and Coca-Cola."

It is interesting that one of the leading figures in Red China's economic growth is such a fervent fan of Mao.

(And just as a note, he is off by three orders of magnitude error in the foreign reserves held by Red China --- it's actually over $1 trillion, not merely $1 billion.)

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