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Nearly five months after the death of Wahaha founder Zong Qinghou, the identity of Zong Fuli's successor suddenly changed.

"I have decided to resign from the positions of vice chairman and general manager of Wahaha Group from now on and will no longer participate in its operation and management." A "Letter to All Employees of Wahaha Group" signed by Zong Fuli on July 15, 2024, was recently circulated online, once again embroiling Wahaha and Zong Fuli in a vortex of controversy.

Zong Fuli. Image source: IC photo

In the more than 100 days since Zong Fuli took charge of Wahaha, Wahaha has remained popular and has accelerated the deployment of terminal freezers, the promotion of new products, and marketing. However, Wahaha's new products have not yet become popular, and traditional products such as purified water, AD calcium milk, and eight-treasure porridge are still the mainstay.

Resignation and being reported

Under the "Group News" column on the Wahaha official website, the latest information about Zong Fuli is still on March 27, 2024. On this day, Zong Fuli attended the Zhejiang special press conference of the "Promoting High-quality Development" series. When talking about her feelings, Zong Fuli said, "In the future, we must continue to expand the layout of the industrial chain, strengthen the innovation-driven development strategy, promote the integration of digital and real, actively transform and upgrade, explore the enabling role of new quality productivity on the industrial ecology, and promote the development of new production models such as intelligent manufacturing and green manufacturing."

Wahaha's official website shows Zong Fuli's speech on March 27, 2024. Screenshot of the company's official website

More than 100 days later, Zong Fuli was reported to have resigned. A letter to all employees of Wahaha Group circulated on the Internet on July 18, showing that Zong Fuli, vice chairman and general manager of Wahaha Group, resigned from the above position and would no longer participate in management and operation work because some shareholders questioned the rationality of her management. The signature time showed July 15.

Related information about "Zong Fuli's resignation" has been on the hot search list one after another. Regarding the authenticity of the document, the Beijing News reporter contacted the relevant person in charge of Wahaha, but no response was given as of press time, and Wahaha has not issued any relevant response to the incident. A Wahaha distributor told us that there were signs of this matter a long time ago, and Zong Fuli and Wahaha Group shareholders and senior executives have been bargaining and negotiating over equity issues.

At the same time, a letter claiming to be a former Wahaha employee reported that Hongsheng Group President Zong Fuli had embezzled a huge amount of state-owned assets of Wahaha Group. The letter claimed that Hongsheng Group was a Sino-foreign joint venture 100% controlled by Zong Fuli and had always been a contract manufacturer for Wahaha Group.

At present, regarding Zong Fuli's resignation and the report letter, the Hangzhou Shangcheng District State-owned Assets Supervision and Administration Commission told the media that it is currently understanding and verifying the relevant situation. On the morning of July 19, the Beijing News reporter called the relevant person in charge of the Hangzhou Shangcheng District State-owned Assets Supervision and Administration Commission again, but the other party had not responded as of press time.

Wahaha's "Zong Fuli Time"

Zong Fuli entered the food and beverage industry in 2004 and has served as president of Hongsheng Beverage Group since 2007, leading Hongsheng to become one of the top 500 private enterprises in China. Since April 2018, Zong Fuli has served as the head of the brand public relations department of Wahaha Group, and since March 2020, she has also served as deputy general manager of Wahaha Group Sales Company.

As the daughter of Zong Qinghou, Zong Fuli went abroad to study at a very young age and has a distinctive personality. On December 9, 2021, Hangzhou Wahaha Group Co., Ltd. announced that Zong Fuli will serve as the company's vice chairman and general manager, responsible for daily work. This is another adjustment of Zong Fuli's position after she served as the director of the company's brand public relations department in 2018.

On March 6 this year, Zong Fuli attended the annual meeting of the China Beverage Industry Association in Shanghai and gave a speech. This was her first public appearance since Zong Qinghou's death, and it also announced that Wahaha had officially entered the "Zong Fuli era." In her speech, Zong Fuli said that she was both a "veteran" who had explored the industry for 20 years and a "newcomer" who had taken over the "baton" of corporate management.

Wahaha also welcomed a wave of huge traffic this year, and it became a hot-selling product for a while, and was sold out in many areas. In early March, a "Letter to All Sales Staff" issued by Hangzhou Wahaha Group Co., Ltd. was uploaded on social media, showing that Wahaha Company has introduced the most powerful deposit reward policy, launched the "Wahaha invites you to drink water" promotional activities, mobilized all staff to form a terminal distribution assault project team, hoping to achieve a new breakthrough in sales performance.

Zong Fuli proposed at the 2024 sales work conference that Wahaha will focus on health in 2024, adhere to the big health development strategy, and establish a characteristic product chain and sales network.

She is also promoting innovation in Wahaha products. Wahaha has also plunged into the hot sugar-free tea this year. On March 5, the Douyin account of Wahaha's official flagship store released a video, launching four new flavors of Wahaha sugar-free pure tea.

Judging from the existing information, Zong Fuli is trying her best to maintain Wahaha, which was created by her father.

However, a person close to Wahaha told the Beijing News reporter that after the death of founder Zong Qinghou, some capable executives, group regional managers, etc. left Wahaha.

According to Blue Whale Finance, Zong Qinghou's brother Zong Zehou publicly said in his circle of friends that Zong Fuli's resignation was "a good thing" and that she should first consider how to do good things and charity, and then naturally let most people recognize her succession. However, she did the opposite and fired on all cylinders, showing her edge.

Tianyancha information shows that there has been no change in the equity of Hangzhou Wahaha Group Co., Ltd., and Zong Fuli does not hold any shares. The three shareholders are still Hangzhou Shangcheng District Cultural, Commercial and Tourism Investment Holding Group Co., Ltd. with a 46% stake, Wahaha founder Zong Qinghou with a 29.4% stake, and Hangzhou Wahaha Group Co., Ltd. Grassroots Trade Union Joint Committee (Employee Stock Ownership Association) with a 24.6% stake.

More than 100 companies under his name

Faced with shareholders' doubts about the rationality of her management, Zong Fuli "resigned" very resolutely. The above-mentioned person analyzed to the Beijing News reporter that Zong Fuli might be retreating to advance and strive for greater shareholder authorization and related rights and interests.

Tianyancha information shows that among Zong Fuli's more than 170 affiliated companies, more than 160 are still in existence. In addition to serving in Hangzhou Wahaha Group Co., Ltd. and some of its subsidiaries, most of Zong Fuli's affiliated companies are Zhejiang Qili Investment Co., Ltd., Zhejiang Zhenzong Investment Co., Ltd., Hangzhou Wahaha Hongzhen Investment Co., Ltd., Zhejiang Hengfeng Investment Co., Ltd. and other subsidiaries. Although some of these companies are held by the grassroots trade union joint committee of Hangzhou Wahaha Group Co., Ltd., they have no direct equity relationship with Hangzhou Wahaha Group Co., Ltd. and its major shareholder Hangzhou Shangcheng District Cultural, Commercial and Tourism Investment Holding Group Co., Ltd.

The Hongsheng Beverage Group Co., Ltd. mentioned in the report was established in October 2003. Its legal representative is Zhu Lidan and its executive director is Zong Fuli. Its registered capital is US$10.25 million. Its business scope includes food sales, food additive sales, plastic product sales, food production, beverage production, etc. It is jointly held by Hengfeng Trading Co., Ltd. and Zhejiang Hengfeng Investment Co., Ltd. According to its foreign investment information, the company holds shares in more than 50 companies, of which more than 40 are still in existence.

It is worth mentioning that since the end of April this year, the company has invested in and established 15 companies, 9 of which were established within the past month, including Tianjin Hongsheng Hengfeng Beverage Co., Ltd., Xianyang Hongsheng Hengfeng Food Co., Ltd., Zhengzhou Hengfeng Beverage Co., Ltd., etc. Zong Fuli served as a director or executive director in all of the above companies.

However, there may still be some uncertainty for Zong Fuli. Tianyancha shows that on July 5, the management of Hongsheng Beverage Group Co., Ltd. changed. Two directors, Shi Lijuan and Shi Youzhen, withdrew, and Zong Fuli's position changed from chairman to executive director. At the same time, the business scope changed to add "leisure and sightseeing activities". Public information shows that Shi Youzhen is the wife of Wahaha founder Zong Qinghou and the mother of Zong Fuli.

The test of performance growth

Zong Fuli, who took over Wahaha, had to first solve the problem of carrying the banner of performance growth. Currently, problems such as declining performance and insufficient innovation still plague its development.

Data disclosed by Wahaha at the 2023 Annual Commendation Conference showed that Wahaha's performance in 2023 was about 50 billion yuan. On the list of "Top 500 Chinese Private Enterprises in 2023" released by the All-China Federation of Industry and Commerce, Wahaha's sales performance in 2022 was 51.202 billion yuan, a decline of 700 million yuan compared with 2021. As early as 2013, Wahaha achieved a revenue of 78.28 billion yuan.

According to data from Mashangying, the dairy beverage category, as the largest category in beverages, has been in a downward trend from 2021 to 2023. This is also the largest category that accounts for more than half of Wahaha's sales. Although the instant porridge category is not in a downward trend like the dairy beverage category, it has also been in a state of fluctuation in 2022 and 2023, with no growth. For Wahaha, 80% of its sales come from the above two categories, the situation of the two categories does not point to a thriving future.

In addition, Wahaha also failed to catch the "overwhelming traffic." Feigua data shows that from March 2 to March 9 this year, the number of fans of Wahaha's Douyin official account soared all the way, from 1 million to 5 million. The sales of Wahaha brand products on Douyin e-commerce continued to grow from February 25 to March 4, reaching a peak, an increase of more than 10 times compared to before February 25. But two months later, according to Feigua data, on April 27, Wahaha product sales were 750,000 to 1 million, a decline of more than 80% compared to March 4.

At No. 160 Qingtai Street, Hangzhou, Zong Qinghou, 42 years old at the time, faced a life choice. He eventually became the manager of the Wahaha distribution department of a contracted school-run enterprise, and built Wahaha into a leading food and beverage company in China.

Today, Zong Fuli, who is just 42 years old, is also making a major choice that may affect her life.

Beijing News reporter Wang Ziyang

Editor: Zhu Fenglan

Proofread by Chen Diyan