Just before China shut down for the National Day holiday, one of the more extraordinary court cases in recent times drew to a close.
Danone, the French food and drinks giant, finally settled its dispute with Wahaha, its Chinese joint venture partner and agreed to sell off its 51pc stake, handing the Chinese full control.
When Danone and Hangzhou Wahaha joined forces in 1996, it was hailed as a "showcase" joint venture by Forbes. Sadly, as all too many Western companies operating in China have found out, the Chinese attach very little importance to contracts, especially if business is booming.
Wahaha became a huge hit in second and third-tier Chinese cities and rural areas, especially since its fruity-milky drinks are priced keenly and well-distributed. Often, there’s nothing else to buy in a rural supermarket. The joint venture is now worth around $2 billion.
As soon as it became legal to wholly own a company in China, Danone tried to buy out Zong Qinghou, the Wahaha chairman. In 2006, Zong actually signed a deal to allow Danone a bigger stake, but then had second thoughts and reneged, claiming that the French had bid too low.
The full-blown dispute erupted in 2007 when Danone accused Wahaha of secretly operating other companies which sold identical products under the Wahaha brand and siphoning off as much as $100 million from the joint venture. Danone said Zong Qinghou, a Chinese national hero, of carrying out the fraud with the help of relatives and offshore companies.
Zong struck back by taking his outrage to the Chinese media, accusing Danone of being "evil" and of treating Chinese people poorly.
He said Danone had known all along about his other business activities and had merely grown jealous at his success. Danone launched a lawsuit in a court in California, followed by at least ten more, all of which it lost. Several countries, including Italy and France, flatly denied to allow a case.
In December 2007, Hangzhou’s court requested that Danone should terminate its trademark transfer contract with Wahaha. The matter was serious enough for Nicholas Sarkozy to raise it in a meeting with Hu Jintao.
Perhaps realising, however, that he needed the French, Mr Zong went back into negotiations, but the dispute hit the courts again in July 2008 and August 2008. Now the two sides have reached an "amicable" settlement, which may be as high as $500 million (the sum that Danone has floated all along).
It’s an odd battle, with plenty of blame on both sides. In a bid to unsettle Wahaha, Danone has even acquired stakes in a range of competitors, including Robust, Meilin Zhengguanghe, Bright and Huiyuan.
After all these years, there doesn’t seem any reason for the feud to end now, and so suddenly. We’ll just have to wait and see what’s behind it all.