WHILE Danone is still open to seeking a peaceful solution over a dispute with China's Wahaha Group, the Chinese counterpart has decided to play hard ball.

Zong Qinghou, chairman of Hangzhou Wahaha Group, urged Danone to drop allegedly unfair clauses in their joint venture contracts and also demanded a public apology as pre-conditions to his returning to negotiations, according to Shan Qining, Wahaha's spokesman yesterday.

The allegedly unfair clauses cited by Zong bar Wahaha's wholly-owned units, set up by Zong over the past 10 years, from using the "Wahaha" brand.

Danone claimed Zong's units are selling Wahaha-branded products without license and is a violation of the exclusive joint-venture deal.

Wahaha is also planning to file an arbitration to the Hangzhou municipal arbitration bureau to prevent the joint ventures from using the brand to protect the interest of the famous Chinese name.

Danone and Wahaha established their joint ventures in China in 1996 to make tea drinks, mineral water as well as beverages. Both parts also signed an agreement which allowed the joint ventures to be the only operator of the Wahaha brand and for its transfer to the joint ventures. But the brand transfer hasn't been approved by the Chinese government yet.

"We (Wahaha) have the right to use the brand as it belongs to us," Shan told Shanghai Daily.

Zong's requests were made at Wahaha's first press conference in Hangzhou, Zhejiang Province, on Wednesday after the dispute was publicized to the media in April. They came out just one day after Paris-based Danone said it is still open to negotiations with Wahaha to reach an amicable resolution.

Danone declined to comment yesterday over Zong's requests. Zong abruptly quit as board chairman of the joint venture earlier this month after Danone filed a suit as well as arbitration against Wahaha.

The two firms have been involved in the dispute after Zong publicly rejected a plan by Danone to buy out the profitable non joint ventures, that is, firms set up by Zong.