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The aftermath of Wahaha’s succession issue is still ongoing.

On July 18, 2024, a "Letter to All Employees of Wahaha Group" circulated online, which mentioned that Zong Fuli "decided to resign from the positions of Vice Chairman and General Manager of Wahaha Group and no longer participate in its operation and management." Interestingly, just four days later, the news changed to "Zong Fuli continued to perform her duties."

A commercial struggle has caused a stir in the city. The most discussed topic is,As the eldest daughter of Zong Qinghou and a second-generation entrepreneur, can Zong Fuli take over the baton of Wahaha?

This issue is both simple and complex. It may seem like a family dispute, but it actually concerns the development model of private enterprises.

1

Chu Shijian and Liu Chuanzhi

Before discussing the Zong family, let’s first look at the stories of two other entrepreneurs.

One is Chu Shijian.

Chu Shijian can be said to be one of the most controversial entrepreneurs in China. Chu Shijian was born in a peasant family in Yunnan in January 1928. His growth experience was extremely rough:

He lost his father when he was young and dropped out of school to farm; he joined the army in his youth and fought in the hail of bullets; in his middle age, he was labeled a "rightist" and sent to various places for labor reform.

At the age of 36, he was transferred to the sugar factory as deputy director. Chu Shijian turned the sugar factory, which had been losing money for years, into a profitable one in just one year. During his 16 years at the sugar factory, he impressed many people.

At the age of 52, he was transferred to the Yuxi Cigarette Factory. During his 17 years at the factory, Chu Shijian brought a local cigarette factory to the first place in Asia and the fifth place in the world, with accumulated profits and taxes of more than 80 billion yuan, and the annual tax paid accounted for 60% of Yunnan's fiscal revenue. In 1994, he was named one of the "Top Ten Reform Figures" and the "Tobacco King".

At the age of 67, a letter of denunciation brought Chu Shijian to the bottom of the valley. Due to financial problems, Chu Shijian, who was approaching 70, was thrown into prison and sentenced to life imprisonment. His daughter also committed suicide in prison in Henan, and his wife was also imprisoned.

At the age of 74, Chu Shijian received medical treatment and made a comeback. He raised 10 million yuan from his friends and rented a 2,400-acre farm in Ailao Mountain to grow oranges. At the age of 84, the annual turnover of his "Chu Orange" exceeded 100 million yuan.

Chu Shijian is full of controversy. Public data shows that Chu Shijian contributed more than 140 billion yuan in profits and taxes to the country during his time running Hongta, but his personal total income was only one million yuan. After Chu Shijian was imprisoned, the corresponding income distribution policy was also adjusted.

The other is Liu Chuanzhi.

Liu Chuanzhi was born in April 1944 and was once called the "godfather of contemporary Chinese business" by China's mainstream media.

Liu Chuanzhi's masterpiece is Lenovo. In the early days, Lenovo was the domestic agent of IBM computers. Later, it developed the Lenovo Chinese card and then produced Lenovo computers. In the late 1990s, it became the number one in the domestic market. By 2013, Lenovo had become the world's largest PC manufacturer.

The reputational Waterloo of the "Godfather of Contemporary Chinese Enterprises" occurred in 2021. At that time, the big V Sima Nan released six videos in a row questioning Lenovo's Liu Chuanzhi and Yang Yuanqing for embezzling huge amounts of state-owned assets. Then, a series of "black materials" about Liu Chuanzhi were exposed.

Both Chu Shijian and Liu Chuanzhi are a collection of contradictions, and their public reputations are polarized.

Chu Shijian turned the tide at Hongta Group and was called the "Tobacco King", but he could not escape the fate of being imprisoned; Liu Chuanzhi led Lenovo to defeat monsters and upgrade all the way, and was named the "Godfather of Contemporary Chinese Enterprises", but he still lost his integrity in his later years.

It can be said that they are the epitome of a type of entrepreneur.

2

Zong Qinghou's reputation

In comparison, Zong Qinghou is lucky.

Zong Qinghou's first half of life was also rough. He was born in Xuzhou, Jiangsu in 1945. At the age of 16, he entered the society due to family financial difficulties. He repaired cars, sold fried rice and sweet potatoes. After 1963, Zong Qinghou also did heavy physical labor on multiple farms for 15 years.

At the age of 33, Zong Qinghou returned to Hangzhou and took over his mother's position as a worker in the Gongnong Paper Box Factory run by Youdian Road Primary School in Shangcheng District.

The real turning point came when he was 42 years old. The Hangzhou Shangcheng District Education Bureau wanted to outsource the sales department of the school-run enterprise. With courage, Zong Qinghou borrowed 140,000 yuan and took the initiative to contract the school-run enterprise that had been losing money for years.

From delivering stationery and selling popsicles on a tricycle, to entering the market by processing oral liquids, and then to acquiring the state-owned Hangzhou Canned Food Factory in 1991, Wahaha has grown stronger step by step.

Under the leadership of Zong Qinghou, Wahaha quickly became the leader of China's food and beverage industry and even went abroad.

His personal wealth also rose. From 2010 to 2013, Zong Qinghou topped the Forbes China Rich List three times. In 2013, Wahaha's sales reached a peak of 78.3 billion yuan.

In 2018, Zong Qinghou was selected into the list of "100 Outstanding Private Entrepreneurs in 40 Years of Reform and Opening Up" jointly recommended and promoted by the Central United Front Work Department and the All-China Federation of Industry and Commerce, becoming a representative figure of Zhejiang businessmen. Overseas, the media praised him as a "Chinese business master."

On February 25, 2024, Wahaha officially announced that Zong Qinghou, the founder and chairman of the group, died at 10:30 a.m. on February 25, 2024 at the age of 79 due to ineffective treatment. At his memorial service, many citizens spontaneously lined up to mourn, and many even came from other places.

It is not difficult to find that both official and private evaluations of Zong Qinghou are relatively high.A role model for entrepreneurs, a generation of Zhejiang businessmen... these titles are used to describe him.

In this atmosphere, people have added a filter to Wahaha and Zong Fuli. After the resignation incident, a voice was widely circulated: Zong Qinghou's body is still warm, and the veterans are anxious to force him to abdicate without caring about their manners.

But if you look deeper, this filter is inseparable from the efforts of Wahaha shareholders.

3

The "Symphony" of State-owned Assets and Private Enterprises

Is Wahaha a private enterprise?

For this question, 9 out of 10 people will probably give a positive answer, because in everyone's impression, Zong Qinghou is the soul of Wahaha, and from the management model, it is more like a family business.

But few people know that Zong Qinghou is not the major shareholder of Wahaha.Industrial and commercial information shows that the equity of Wahaha Group consists of three parts:

Hangzhou Shangcheng District Cultural, Commercial and Tourism Investment Holding Group Co., Ltd. accounts for 46%;

Zong Qinghou accounts for 29.4%;

The grassroots trade union joint committee (employee shareholding association) of Hangzhou Wahaha Group Co., Ltd. accounts for 24.6%.

Zong Fuli, who is seen as the successor, currently does not hold any shares in Hangzhou Wahaha Group Co., Ltd.

That is to say, although Zong Qinghou holds less than 30% of the shares of Wahaha Group, he still controls the company for a long time. The Hangzhou Shangcheng District State-owned Assets Supervision and Administration Commission, which holds 46% of the shares, is the largest shareholder but has almost no presence.

Is this the charm of Zong Qinghou? No, this is the pattern of Hangzhou state-owned assets.

Judging from past media reports, Zong Qinghou enjoys absolute authority in Wahaha. He once said that all successful Chinese companies are headed by a dictator who is dictatorial but open-minded. As the largest shareholder, the Hangzhou Shangcheng District State-owned Assets Supervision and Administration Commission has always been tolerant and supportive. Well-known media person Bi Yajun even said bluntly:

(Hangzhou State-owned Assets) has always been willing to stay behind the scenes, allowing Wahaha to be privately operated openly and confidently, and also allowing Zong Qinghou to be privately operated openly and confidently.

It can be said that it is this kind of "retreat" and "non-intervention" that has made Wahaha so successful.

On the other hand, Wahaha does not seem to have reciprocated the favor to its largest shareholder.

Wahaha loves dividends. Zong Qinghou previously said in an interview with the media that all of Wahaha's nearly 20,000 employees hold shares, and some middle-level managers receive dividends of hundreds of thousands of yuan each year.

According to media reports and estimates, Wahaha Group's net profit over the past 35 years was approximately 100 billion yuan.Logically speaking, as the largest shareholder of Wahaha, shouldn’t the state-owned assets in Hangzhou Shangcheng District receive more dividends?

However, according to the analysis of "No. 9 Observation", in the "investment income" item of financial data, the income of Shangcheng District's culture, commerce and tourism from 2019 to 2023 was 1.67 million, -10.36 million, 108 million, 131 million and 132 million respectively.

This shouldn’t be the case. As the largest shareholder of Wahaha, shouldn’t Shangcheng District Culture, Commerce and Tourism receive equity dividends for a long time?

In addition, industrial and commercial information also shows that Zong Fuli currently holds positions in 178 affiliated companies. Most of these companies have Hongsheng, Hengfeng and other companies as parent company shareholders, and these companies are actually controlled by Zong Fuli.

According to media investigations, these upstream and downstream companies have no equity relationship with the Wahaha Group, but have a large number of off-balance sheet related transactions and also use the "Wahaha" trademark.Because of this, some people even reported Zong Fuli for "embezzling state-owned assets."

From a historical perspective, the growth of Wahaha is a microcosm of reform and opening up and the market economy. In this process, Hangzhou Shangcheng District State-owned Assets has demonstrated its true grace and pattern with practical actions. This is a symphony played by state-owned assets and private enterprises.

If we want to continue playing this piece well, it depends on the joint efforts of all parties.