Danone tried to take over Wahaha — and lost the Chinese beverage market

In 1996, Danone acquired 51% of Hangzhou Wahaha Group, China's largest non-alcoholic beverage maker. The joint venture was structured as a partnership: Danone provided capital and global expertise, while founder Zong Qinghou ran the business. By 2005, Wahaha was a national phenomenon, and the partnership was worth billions.

But Danone discovered that Zong had built a parallel network of 60+ factories and distribution companies that were producing and selling beverages under the Wahaha brand outside the joint venture. Danone accused Zong of violating non-compete clauses. In December 2006, Zong signed a deal to sell Danone a majority stake in these side businesses — but then backed out, claiming the offer was too low.

Danone escalated: it filed for arbitration in Stockholm in May 2007, sued Zong's family in Los Angeles, and launched a global legal campaign. The Chinese public overwhelmingly sided with Zong, framing Danone as a foreign bully. The dispute dragged on for two years. In 2009, Danone gave up, sold its 51% stake back to Zong, and exited China's non-alcoholic beverage market entirely.