Danone still hopes to mend ties with Wahaha despite row

French food giant Groupe Danone still hopes to patch up the rift with its joint-venture partner Wahaha Group despite an increasingly bitter and public dispute over alleged contract violations.

The dispute emerged as Danone sued Wahaha for allegedly breaching their joint-venture agreement. In response, Wahaha chairman Zong Qinghou accused Danone of using the lawsuit as a ploy to take over the successful ventures.

Danone has a 51 per cent stake in the joint ventures and Wahaha holds the remainder, although the French company exercised little control over daily operations.

'We also continue to believe that, with appropriate and adequate government support, an amicable solution is still a possibility,' said Emmanuel Faber, Danone's president for Asia-Pacific and the new chairman of the ventures.

Danone claims Mr Zong, founder of Hangzhou-based Wahaha, set up 20 firms that make and sell products in competition with their ventures.

The unauthorised companies have hurt sales of the joint ventures, which accounted for about 25 per cent of the total, Mr Faber said.

It filed a lawsuit last week in a California court because one of the companies involved was led by Mr Zong's daughter, a US citizen, Danone said. Danone is also seeking arbitration in Stockholm.