After Losing Money In China, Danone Returns To Lose Even More

In 2005, Danone found out that Zong Qinghou, Wahaha's chairman, was running a parallel operation outside their joint venture that was stealing hundreds of millions of dollars from the partnership. In 2007, Danone realized that, in collusion with the Chinese state, Zong also stole the Wahaha brand from them. In 2009, Danone left the partnership after being extorted to sell its 51% stake in the $11 billion business for just half a billion.

But Danone CEO Franck Riboud has decided that they have not lost enough and they should go back to China because they "are quite nothing in Asia." So they are throwing away $417 million to "invest" in Mengniu. In addition, Danone will provide their yogurt know-how to the Chinese. In essence, Danone is paying Mengniu to take Danone's yogurt know-how. They might as well give their know-how away for free. Niu Gensheng can't be happier as the French has fallen, once again, into another Chinese scheme, which will only benefit Mengniu and bring ruin to Danone.

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