CHINESE soft drink maker Tianfu Cola Group has won a lawsuit against the Chinese unit of PepsiCo on charges that its former joint-venture partner illegally used its recipe and business secrets.
A court in Chongqing ordered the local subsidiary of PespiCo to immediately stop selling Tianfu Cola and return the recipe to Chongqing-based Tianfu Group. But it rejected Tianfu Group's request for 1 million yuan (US$150,094) in compensation.
Global giant PespiCo said in a statement sent yesterday that it will comply with the court's verdict.
Tianfu Group filed the lawsuit more than one year ago, charging PepsiCo of retaining Tianfu Cola's core technologies even after Tianfu Group pulled out of their joint venture. Tianfu Group said the formula and some manufacturing know-how behind Tianfu Cola were not included in the partnership contract.
"This is only the first battle we have won. We will launch another lawsuit to get back the Tianfu brand on grounds the transferring of the brand is invalid," Qian Huang, general manager of Tianfu Group, was quoted as saying by the Chongqing Evening News.
PepsiCo said in the statement that the Tianfu brand had been transferred to the joint venture with proper government approval.
Tianfu Group and PepsiCo China Investment Co set up Chongqing Pepsi-Tianfu Beverage Co in 1994 to produce soft drinks under both the Tianfu and Pepsi brands.
In 2006, the Chinese company walked away from the venture by selling its 40 percent stake to PepsiCo for 130 million yuan (US$19 million).
"We gained nothing from the JV," Qian said earlier. "The Chinese company is near collapse."
Government regulators said in 1995 that Tianfu-brand beverages should be no less than 50 percent of the JV's total output. Production of Tianfu brands kept shrinking to merely 0.5 percent in 2007 while Tianfu Group was dragged into deep debt because the venture failed to turn a profit.
Chongqing Evening News reported that Tianfu Group will relaunch the brand.
The company is considering starting production through financing and tying up with a consortium.
Tianfu Group was one of China's leading beverage makers in the early 1990s. It owned 108 plants nationwide, most of which have since been shut down.