GROUPE Danone SA said yesterday it still expects an amicable resolution in a dispute with its Chinese partner and urged that a board meeting be held as soon as possible to ease growing tension in the Chinese joint ventures.

"A channel of negotiation should be opened between Zong and Danone," said Emmanuel Faber, who was appointed to replace Zong Qinghou as the new chairman of Danone's troubled Chinese ventures last week.

"We are still expecting to resolve the dispute amicably at the right time with government support and guidance."

The world's largest yogurt maker is expecting to meet two new board members named by Chinese counterpart, Hangzhou Wahaha Group, in the next 10 days, Faber said during a press conference in Shanghai yesterday.

"Before developing our business, it is about protecting the business. The business is under attack by unauthorized companies. Employees' and distributors' morals and unity are also undermined by Zong's attempt to create emotional communication," Faber said.

Before the conference was held, nearly 30 Wahaha's employees protested against Danone outside the building, wearing yellow uniforms, hats and holding placards and slogans that had the words 'Get out of Wahaha' written on them.

So far production hasn't been interrupted but the dispute would harm the business in the long term, according to Faber.

"One of our top priorities is to discuss the management and business development to go through the transitional period. As soon as we convene the board meeting, we would be able to start working in an orderly manner."

Wahaha's Zong, one of the richest men in China, resigned abruptly and issued an open letter to Danone last Thursday just days after Danone filed a lawsuit in Los Angeles and also filed documents over the dispute at an arbitration center in Stockholm.

Paris-based Danone accused the Chinese partner of setting up parallel companies that sell competitive products against their joint ventures, which is a breach of earlier cooperation contracts.

In Zong's letter, he also rebuked Danone, claiming he was forced to quit due to Danone's harassment and assault to his family.

Zong and Danone reached a deal at the end of last year which allowed the French firm to buy 51 percent of the allegedly illegal firms, Danone said.

However, Zong withdrew from the deal in January and in April claimed Danone's four billion yuan (US$519 million) offer for the allegedly illegal firms was too low. He also accused Danone of a hostile takeover.