Danone & Wahaha Dispute: Rules of Law May Not Become A Failure !

The Shenzhen Economic Daily of 17 April 2008 made an official comment and review on the subject matter coming to the points, and its contents are cited here for reference.

The Danone and Wahaha' negotiations are still coming to the deadlocks, even though their disputes have always been full of hot points at intervals. Since releasing to the public of the dispute one year ago, the two parties have got used to different sorts of "pouring shits fight". For the time being, Wahaha chairman ZONG, Renqing is deeply involved in the "Tax Evasions Gate', but such kind of fight has also labelled Danone as a "cunning" merchant.

There are no winners in respect for the "flesh fighting war", for Wahaha chairman ZONG, Renqing has suffered from "sick" fame, while Danone has "lost" hearts of the ordinary people. We are happy to see that the Chinese government's stance is still clear and cool about the matter. Media quoted an relevant official from the Chinese Ministry of Commerce as saying yesterday that they can not make any comments on ZONG, Renqing'a personal income tax evasions, but believe that the tax incident and the Danone / Wahaha dispute should not have many connections. For the time being, the Ministry of Commerce(Foreign Investment Division) is performing the governmental duty to mediate therein by offering an negotiation platform. The dispute was originally an economic conflict, then evolved into a "political incident". The Ministry of Commerce's stance has clearly shown its determination of disolving the disputes under the rules of law.

It is no doubt that Wahaha chairman ZONG, Renqing, who has been claiming himself as a "Nationalist Banner Raiser", is in the passive position, for various facts disclosed in the past one year have let the ordinary people cast doubts over the inconsistencies of Mr. ZONG's statement and his actions, e.g. nationalities of ZONG's wife and daughter(s), offshore companies, personal tax evasions at issue, even though all behind may show Wahaha's images, but compared with what Mr. ZONG's highly-profiled statement of "state economic safety", "protections of national brands", etc, all of which have led the ordinary people to form feelings that they have been "made good used of" or "rocked".

The "water mouth fight" has not positioned Danone as a winner, but a loser, for to pour dirty water to the rival party will firstly make dirty of its own hand, too. Danone is also facing a new media challenge. Take the huge amounts of money in relation to Mr. ZONG's "Tax Evasions Gate" for example, the said money was paid by Danone in the form of "service fees", but what is the definition of "service fees" ? Some media state that to analyze the time of payment, the said money could be deemed as commercial bribery. Should the commercial bribery be legally defined and listed, Danone shall not only "shit" Wahaha's chairman ZONG, Qinqing, but also "shit" itself.

The year-long dispute is still of no hope but seemingly indicates mutual failure. Wahaha's chairman ZONG, Renqing may fail, Danone may fail, but the only thing that can not lose is our rules of law.

First of all, there must be a definite definition and explanation about the some hundred millions of evasive taxes. No matter how Mr. ZONG makes explanation in the regard, and despite of the dispute fact between Danone and Wahaha, there can not be any "cunning" things in terms of the tax evasions.

In additions, whether the "service fees" shall be defined as "commercial bribery" shall also require definitions. Once there are sufficient evidences concerned, the responsible persons shall not only be Wahaha chairman ZONG, Renqing, but also Danone.

Last but not the least, from the current Wahaha / Danone dispute, we sincerely hope to be able to establish efficient resolution channels, for it is truly anticipated that there will occasionally be more commercial conflicts among the "national enterprises" and multinational companies, but how to avoid such sorts of commercial disputes to be politicized, and how to build up a fair and transparent dispute resolution option remain to be realistic issues. What has made us feel happy is that the responsible Chinese Ministry of Commerce has been maintaining an objective and rational mind.