Retail expert Paul French comes in Forbes with a few reasons why in the epic battle between French giant Danone and its now former China partner Wahaha, the CEO of Wahaha Zong Qinghou comes out as the winner. Just as in the case of many more foreign companies in China, their Chinese counterparts (competitors, partners or the fatal combination of both) seem to be better able to understand the Chinese customers, and act unrestrained by foreign headquarters.
But perhaps the best is yet to come for Zong and Wahaha. The end of the relationship with Danone will allow the Chinese company to make decisions more freely than when they were working with the Europeans. “It’s great for Wahaha,” says Paul French, marketing director at Access Asia, a consulting company that follows China’s beverage business. In particular, French says, Wahaha is likely to increase the number of unconventionally flavored products it sells through its huge domestic sales channel. “Danone was very conservative [compared with Wahaha] when it came to flavors,” says French.
Wahaha’s research team has fruit-flavored milk in the pipeline that is likely to be a winner, French predicted. “You’re going to see a lot of new subbrands, too,” he says. Because of Wahaha’s huge distribution network in China, Danone’s loss could be bad news for Wahaha’s rivals.
Paul French is also a speaker at the China Speakers Bureau. When you want to share his insights, do let us know.