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author｜dou wenxue editor｜ziye

after a month and a half of turmoil, a series of industrial and commercial changes at wahaha declared that zong fuli had won a phased victory.

qichacha shows that recently, hangzhou wahaha group co., ltd. has undergone industrial and commercial changes. zong fuli replaced zong qinghou as the legal representative, chairman and general manager of wahaha, and acquired all the shares originally held by zong qinghou.

at the same time, wahaha's senior management also underwent a major reshuffle. the four directors and three supervisors from the zong qinghou era were all replaced. among the newly appointed senior executives, only one was the deputy general manager of wahaha. the rest were new faces, and there is little public information.

just when the outside world thought that everything had been settled, wahaha was once again exposed to internal conflicts.

according to southern metropolis daily, a number of former and internal employees of the wahaha group formed a rights protection committee and collectively filed a lawsuit against wahaha and zong fuli to protect their rights.

the cause of the incident was that after taking over, zong fuli transferred contracts and purchased shares of the employee committee for zero yuan, preventing employees from receiving dividends from the company. this triggered strong resistance from employees and also brought up the "old grudge" from previous share repurchases.

although wahaha officially denied the above reports in a statement, the incident is still attracting attention.

since zong fuli took over the group, the conflicts within wahaha have never stopped. prior to this, an internal letter of zong fuli's resignation and a letter of accusation that zong fuli had embezzled huge amounts of state-owned assets of the wahaha group had circulated on the internet. these events had more or less affected wahaha and zong fuli.

zong fuli’s pressure does not only come from within.

currently, wahaha relies solely on a few old popular products to support its performance. although its annual revenue is still higher than that of its competitor nongfu spring, the gap between the two is narrowing.

looking at the entire industry, wahaha, which lacks innovation, is not only under great pressure in the involutionary drinking water market, but is also impacted by competitors in its beverage product business. change is imminent.

but judging from the current situation, zong fuli's radical style is not compatible with wahaha. can she eventually solve wahaha's internal and external troubles?

1. internal troubles are a problem that zong fuli needs to solve urgently

the temporary victory in the "palace fight" did not alleviate the challenges faced by zong fuli, but instead made some voices against her more rampant.

recently, southern metropolis daily reported that a number of former and internal employees of the wahaha group have spontaneously formed a "wahaha rights protection committee" and sued hangzhou wahaha group co., ltd. and zong fuli in the hangzhou shangcheng district people's court.

according to reports, the main reasons for the lawsuits mostly revolve around equity repurchases, labor contract amendments and other matters.

a wahaha employee revealed that in march this year, zong fuli asked wahaha group employees to change their labor contracts to hongsheng beverage, which she controlled, but the matter was stopped because some employees opposed it at the time.

however, in june, the employee received another verbal notice asking him to change his contract to hongsheng beverage. according to the employee, employees in more important positions such as department heads, regional general managers, and provincial general managers (i.e. sales general managers in each province) were all asked to change their contracts.

once the contract is revised, the "dry stock dividend" benefits enjoyed by these employees in the wahaha group will be completely cancelled.

it is understood that wahaha company and hongsheng beverage have two different salary systems. the salary of wahaha group employees is composed of "base salary + bonus + dry stock dividend", while hongsheng beverage is an annual salary system.

the above-mentioned employee said that the income from stock dividends of wahaha employees can account for more than half of the annual income. after the implementation of the annual salary system, the annual salary of employees will be reduced by about 20%-30%.

due to the contract revision controversy, a share repurchase incident in 2018 was also implicated.

it is understood that wahaha was restructured in 1999. after the restructuring was completed, in order to thank employees and let employees enjoy the dividends of the company's development, all employees who met the shareholding conditions could hold shares. the number of shareholders accounts for about 50% of all employees.

in 2018, wahaha group repurchased employee shares, and since then until this year, the employee dividends have been changed to "dry stock dividends." this has resulted in employees no longer receiving dividends based on the number of shares they hold, but rather based on their performance that year, and the income from dividends has also been significantly lower than before.

now, zong fuli wants to directly cancel the stock dividend by re-signing the contract, which has caused dissatisfaction among employees.

therefore, the rights protection committee requested that the 2018 equity repurchase be declared invalid.

in addition, a change in equity of hangzhou xiaoshan shunfa food packaging co., ltd. (hereinafter referred to as "xiaoshan shunfa") has also become one of the causes of this dispute.

according to qichacha, on august 16, xiaoshan shun underwent industrial and commercial changes. the grassroots trade union joint committee of hangzhou wahaha group co., ltd. (hereinafter referred to as the "employee shareholding association") withdrew from the ranks of shareholders. the company is now wholly owned by zong fuli.

reports show that employees of the rights protection association said that the employee shareholding association's shares in xiaoshan shunfa were all transferred to zong fuli's personal name at a price of zero yuan, and questioned whether the transfer process was compliant and whether the price was reasonable.

regarding the events described in the above reports, wahaha released a statement on its official weibo account, responding to all the contents of the above reports.

the statement said that the employee stock ownership association had never heard of any information about the "wahaha rights protection committee" and had not received any information about the lawsuit filed by the so-called "wahaha rights protection committee"; the employee stock ownership association's previous repurchase matters were approved by the unanimous resolution of the members' representative assembly, and there was no situation that harmed the shareholding members.

regarding the equity transfer of xiaoshan shunfa, the employee shareholding association also stated that this is a change that complies with relevant laws and regulations, and is not due to any special reasons speculated by the outside world.

wahaha issued a statement. image source: wahaha official weibo

but at present, this incident is still continuing to ferment.

since zong fuli took over, a series of rectifications have been carried out internally, and voices of opposition from within have also been heard one after another.

according to the 21st century business herald, an employee of wahaha group revealed that wahaha group has merged or eliminated multiple departments, including the business management office, brand public relations department, logistics department, security department, political department (responsible for corporate culture), second sales company (responsible for new products and health industry, etc.), mechanical and electrical research institute (responsible for equipment research and development), etc. a considerable number of "optimized" employees are currently on standby.

in july this year, zong fuli's internal resignation letter was leaked. although the "resignation storm" ended after a week with zong fuli's return, and the "questions of some shareholders" in the resignation letter were changed to "friendly negotiations among shareholders" in the official statement, this incident undoubtedly made wahaha's internal conflicts more public.

previously, a letter of complaint titled "hongsheng group president zong fuli embezzled huge amounts of state-owned assets from wahaha group" was circulated online, and the spearhead was directly directed at zong fuli.

these incidents are all waiting for zong fuli to give a proper solution.

2. under competitive pressure, wahaha has little time to adjust

wahaha, which is in turmoil, is also facing a lot of external pressure.

wahaha has two business "magic weapons" for its survival. one is the huge "joint sales" channel system, and the other is the popular products that transcend cycles.

but the first magic weapon is no longer suitable for the current market operation situation.

it is understood that wahaha's joint sales model has multiple advantages of rapid terminal distribution and low-cost fission, but due to too many levels and too long profit chain, it has been significantly impacted in the era of "decentralization" of e-commerce and "no middlemen to make a profit from the price difference."

in addition, this model has the disadvantages of being too long and having too many distribution levels, which makes it increasingly difficult for wahaha to promote new products.

fortunately, wahaha still has two major products, pure water and ad calcium milk, to support its performance. however, without new products and a new growth curve, wahaha's performance has shown a downward trend.

judging from the current public information, wahaha has not yet announced its performance in 2023. only the "top 500 chinese private enterprises in 2023" list previously released by the all-china federation of industry and commerce announced wahaha's sales performance in 2022, which was 51.202 billion yuan. in 2013, wahaha's revenue reached 78.3 billion yuan.

looking at the entire industry, wahaha faces considerable challenges both in packaged drinking water and in the beverage sector.

in terms of packaged drinking water, its market share has been squeezed by competitors.

according to a report by csi consulting cited by southern metropolis daily, wahaha's share of china's packaged drinking water market will be 5.6% in 2023, which has dropped to fourth place. the top three are nongfu spring, yibibao and jingtian, accounting for 23.6%, 18.4% and 6.1% respectively.

the internal competition among friendly competitors is becoming more and more intense. in the purified water segment, major brands have expanded into channels, technology, and packaging, and have explored every dimension of purified water products, benchmarking against competitors while attracting consumers' attention.

for example, in 2016, jinmailang launched its first "cooked water" product - boiled water, which prompted companies such as master kong, nongfu spring, and want want to enter the "cooked water" market. for a time, products such as boiled water, boiled water, and boiled water emerged in an endless stream.

not long ago, nongfu spring launched green bottled purified water, which directly competed with wahaha's purified water.

in order to seize market share, nongfu spring also launched a "price war", further squeezing the profit margin of pure water.

according to the xin wanbao report, in a supermarket in a third-tier city in hubei, the suggested retail price of a pack of 12 550ml green-bottle drinking water from nongfu spring is only 11.8 yuan, with a single bottle costing less than 1 yuan.

under the influence of nongfu spring, major pure water companies could no longer sit still and returned to the 1 yuan era. according to a report by china economic net in july, wahaha pure water 596ml×12 packs only cost 11.99 yuan, equivalent to less than 1 yuan per bottle; master kong drinking water 550ml×12 packs cost 9.9 yuan, equivalent to 0.825 yuan per bottle; even baisuishan, which usually retails for 3 yuan, has reduced its price to 1.8 yuan.

in addition to traditional brands, the packaged drinking water track has also welcomed many cross-border entrants, such as haitian, pangdonglai, oriental selection, yuanqi forest, yili, etc.

on the other hand, wahaha is slightly inferior in the layout of the beverage business chain, and its presence in the beverage market is getting lower and lower.

at present, in addition to the above-mentioned bottled water giants, there are also nongfu spring, uni-president china, dongpeng beverage, reignwood group, juneyao health, yuanqi forest, etc. each company is increasing its r&d efforts and continuously launching new products.

competitors are eyeing the market, and new players are gaining momentum.

for wahaha, every business line cannot relax. how to lead wahaha to compete for the cake in the market is the core question that zong fuli must answer.

3. zong fuli is anxious, but "changing dynasties" is not easy

zong fuli and zong qinghou have completely different management styles.

zong qinghou is known for being "lenient and lenient to his subordinates", but zong fuli does not agree with her father's "patriarchal" style. she believes that the company is not a home, zong qinghou cannot be in charge of everything, nor can he treat employees as family members. the company must rely on systems to operate.

she is strong-willed, independent-minded and innovative, and has also openly expressed her disagreement with her father's ideas on many occasions in public.

zong qinghou also described his daughter in his book "zong qinghou: the principle of universal gravitation", saying that she doesn't like to hear words like "i'll help you clean up afterward". "she is very confident and sometimes thinks she is better than me. i believe she will definitely be better than me, although there may still be a long way to go. her personal charm as a chinese business leader is taking shape, and she is also adapting to 'chinese-style management' in dealing with people."

as time went by, zong fuli's mentality of proving herself to her father gradually changed to speaking with performance. zong qinghou once revealed that in 2021, the profit of hongsheng beverage, which zong fuli was solely responsible for, was higher than that of wahaha, reaching 30%.

in 2018, zong fuli volunteered to serve as the director of wahaha's brand public relations department and officially joined the wahaha group's management system.

during this period, she accelerated the pace of new product development and launch, replaced wang leehom, the long-time spokesperson for wahaha pure water, and changed the packaging of wahaha pure water products - from the previous red and white to sea blue, intentionally making the product packaging more youthful.

after zong qinghou passed away, zong fuli, in addition to being sad, immediately launched a series of reform measures within wahaha.

she has always hoped to overturn the joint sales model, intending to get wahaha's new product development back on track as soon as possible.

on august 30, wahaha's official website released a "refrigerator maintenance and market launch demand bidding announcement", involving the maintenance of 61,735 refrigerators of different years and the bidding of 100,000 smart refrigerators. this is also considered by the industry as a major move by zong fuli to promote the new model.

but it is worth noting that the wahaha official website has deleted the above announcement information.

in addition to "making changes" to the channel model, she also frequently replaced the company's management.

according to a report by the paper in july, a wahaha distributor revealed that zong fuli has frequently replaced company managers since taking office, and has already replaced 6 to 7 people. such large-scale changes have caused dissatisfaction among some old employees. "it is difficult for her (zong fuli) to control everyone after taking office."

it can be seen from the changes in senior management records updated by qichacha on august 29 that wahaha has undergone a major reshuffle of senior management.

the previous four directors, wu jianlin, pan jiajie, yu qiangbing and zhang hui, have all withdrawn, and the three old supervisors have also been replaced. these seven people are all "old ministers" of the zong qinghou era.

the four new directors are ye yaqiong, hong chanchan, wang guoxiang and fei junwei, and the three supervisors they replaced are kong qinming, yin xuqiong and xu simin.

among them, only director wang guoxiang previously served as deputy general manager of wahaha and was a former core executive of wahaha. the others are all new faces, and most of them came from hongsheng beverage previously headed by zong fuli. there is not much public information about them.

wahaha executive change information, source: qichacha

but judging from the current situation, zong fuli is still a little anxious. she is eager to "change the dynasty" and lead wahaha into a new development cycle.

there is no doubt that zong qinghou has laid a solid foundation for wahaha. this foundation is deeply rooted, and the company's interest structure is also intricate and complex, with one move affecting the entire body.

in addition, the current situation of wahaha being controlled by state-owned assets also means that zong fuli's progress in promoting reform will be hindered.

now, perhaps zong fuli needs to seek stability first and then progress, solve the many practical problems caused by previous radical changes, and lead wahaha step by step into the "zong fuli era."