**-Why did Wahaha replace Wang Leehom as its brand ambassador? -Can I say it? It's too hurtful to say. -The contract was terminated because Wang Leehom is getting old, and audiences will experience aesthetic fatigue. Zong Fuli, the new public relations director of Wahaha Group, answered the host's questions on camera, but she has another identity: the daughter of Zong Qinghou, the helmsman of Wahaha. In 2004, at the age of 23, she joined the Wahaha Group founded by her father. At that time, the media asked Zong Qinghou when he planned to let his daughter take over. The 60-year-old Zong Qinghou said with a smile: "Wait until I'm 70. I'll help her get on the horse and see her off, then I can take a break." Fifteen years have passed, Zong Qinghou is now 74, Zong Fuli is 37, and Wahaha is 32 years old. Today, Wahaha has eliminated Wang Leehom, but it has not yet eliminated Zong Qinghou. At 74, Zong Qinghou still works the hardest and longest hours at Wahaha. From 7 a.m. to 11 p.m., 7 days a week, 365 days a year. In the past two years, when the media asked Zong Qinghou about retirement, he changed his tune and said, "At 70, I'm still in my prime. I can work another 20 years."
-01- No other Chinese richest man is as proficient in all kinds of farm work as Zong Qinghou. Due to family background issues, Zong Qinghou dropped out of junior high school. His first job was selling popcorn and roasted sweet potatoes on the streets. In 1963, when the Mamu Farm in Zhoushan was recruiting educated youth in Hangzhou, regardless of family background, anyone could sign up. Without much thought, he put down his basket and boarded the bus to the farm without hesitation. Initially, at the age of 18, Zong Qinghou dried sea salt, dug ditches, repaired dams, carried manure, grew vegetables, and even learned to butcher pigs at Mamu Farm. Later, he transferred to a tea farm in Shaoxing, starting from learning to grow tea, and did all kinds of manual labor, including harvesting rice, firing kilns, and quarrying. Crossing mountains and seas, he worked for 15 years. In the 15 years that burned through his youth, he earned a total of 5,000 yuan in wages. In 1978, Zong Qinghou returned to the city at the age of 33. After returning, he took over his retired mother's position and entered a cardboard box factory run by a workers' and peasants' school. At the age of 40, Zong Qinghou went from carrying a basket on his back to carrying factory products on green trains. Fate took a long time to prepare opportunities; this period of dormancy lasted another ten years. When the turning point in life appeared, Zong Qinghou was already 42. In 1987, he borrowed 140,000 yuan and, together with two retired teachers, contracted the school-run enterprise distribution department of Shangcheng District in Hangzhou, which had been losing money for two consecutive years. The business did not deviate from his most familiar line of work: producing popsicles and selling them on the streets. In 1988, Zong Qinghou's school-run factory was OEM-producing pollen oral liquid for "China Baoling." This was a popular adult nutritional oral liquid at the time. While selling popsicles, Zong Qinghou learned that many children had poor appetite and malnutrition, which was the most headache-inducing problem for parents at the time. Why wasn't there a nutritional oral liquid specifically designed for children on the market? On an ordinary summer afternoon, opportunity quietly arrived at Zong Qinghou's side. In 1988, with the help of Zhu Shoumin, a nutrition professor at Zhejiang Medical University, the first nutritional liquid specifically designed for children in China was launched. At that time, Zong Qinghou publicly solicited brand names in newspapers. The children's song "Wahaha" was popular across the country. Among the letters, someone suggested calling it "Wahaha." Zong Qinghou made the final decision.
-02- This was almost a dark horse comeback with no suspense. When the first batch of Wahaha nutritional liquid came off the production line, Zong Qinghou had only 100,000 yuan left. At that time, the annual advertising fee for Hangzhou TV was 210,000 yuan. Without hesitation, he borrowed the money and spent it all on advertising for Wahaha. The classic slogan "Drink Wahaha, and your meal will be delicious" quickly spread to thousands of households. With TV advertising, Zong Qinghou used his street-vending skills to personally train the first batch of ground promotion personnel. These ground promoters could conquer a region in less than two months. After "capturing" a certain area, Zong Qinghou would immediately mobilize those "pioneer troops" to other places to continue ground promotion, leaving only one or two staff members to follow up on distribution, payment collection, and market consolidation. Through frequent attacks, by 1988, Zhejiang had become Wahaha's bridgehead. In the following six months, "Wahaha" became a habit in the lives of children and parents. It was recorded that Wahaha sold 300,000 boxes per month in Beijing alone. To expand influence, Zong Qinghou invited experts and scholars to appear in major newspapers to give positive evaluations of the nutritional liquid. This undoubtedly became the best endorsement, and Wahaha indirectly gained authoritative support. In just a few months, Wahaha's sales reached 4.88 million yuan. In three years, Zong Qinghou expanded Wahaha's production capacity by 60 times, profits soared by 100 times, and Wahaha's annual output value reached 20 million yuan. Subsequently, to expand Wahaha's scale, he merged the state-owned Hangzhou Canned Food Factory, which had a debt of 67 million yuan and inventory backlog of 17 million yuan. Such proud achievements were by no means accomplished only through advertising and ground promotion channels. Wahaha also had its own "wealth creation code." Low-cost, large-scale imitation was a common strategy during China's野蛮 growth period in the 1990s. In 1991, Wahaha targeted Robust and launched its second product—"Fruit Milk"—which sold over 100 million units in just one year. By 1996, Wahaha directly launched an upgraded product for Robust's calcium milk—AD Calcium Milk. This AD Calcium Milk remains one of Wahaha's signature products to this day, enduring for a long time. Seeing the popularity of cola, Wahaha also imitated Coca-Cola and launched Future Cola. Leveraging price advantages and Wahaha's massive marketing network, it quickly penetrated the rural market, positioning itself as "Chinese people's own cola," and played the national card, which was warmly received by the market. Later, at its best, Wahaha's "Future Series" carbonated beverages sold 620,000 tons, accounting for about 12% of the national carbonated beverage market, once approaching Pepsi's sales in China. Through imitation and marketing, in 1995, Wahaha's annual output value exceeded 1 billion yuan, with total profits and taxes reaching 180 million yuan. That year, China's beverage industry entered a golden development period. Wahaha, Robust, Beibingyang, Tianfu, and other beverage factories were all rapidly expanding their territories and establishing a foothold in their respective provinces. The battle between Wahaha and Robust in the fruit milk market was also in a stalemate. To consolidate its leading position in the industry, it was necessary to introduce advanced foreign technology and expand reproduction. After several comparisons, Zong Qinghou set his sights on the French brand Danone.
-03- No one expected this marriage to lead to a cross-century, protracted commercial dispute. In 1996, Wahaha, France's Danone Group, and Hong Kong's Peregrine Investments jointly established five joint ventures. Peregrine later sold its overseas equity to Danone, giving Danone an absolute controlling stake of 51% in the joint ventures. Initially, the cooperation between Zong Qinghou and Danone was not entirely pleasant, but it was acceptable. Later, in an interview, Zong Qinghou said, "We held a board meeting with Danone every month. You just tell them your ideas, and they basically support what they can, although the progress of support may not be ideal." From beginning to end, the trust between Wahaha and Danone was just for show. At that time, Wahaha and Danone also signed a trademark licensing agreement, stipulating that without the consent of the joint venture's board of directors, Wahaha Group could not license the trademark to other companies, and only the joint venture could use it exclusively. But Zong Qinghou ignored this. Wahaha established dozens of wholly-owned enterprises that had no relationship with Danone. These enterprises had been using the Wahaha trademark, and their products were all sold through the joint venture. Danone turned a blind eye to this. From 1996 to before 2000, there were eight non-joint venture companies. In the following years, the number of Wahaha's non-joint venture companies surged, and profits also surged, gradually matching the joint ventures. In 2006, the Danone-Wahaha joint venture had profits of 1.09 billion yuan, while non-joint venture companies had profits of 1.04 billion yuan. Faced with such considerable profits, Danone decided to acquire Wahaha's non-joint venture companies. In April 2006, Danone demanded to acquire 51% of Wahaha's non-joint venture companies at a net asset price of 4 billion yuan. Wahaha strongly resisted, and the Danone-Wahaha dispute broke out. This business war took ten years to go from brothers to enemies, and involved everyone from Chinese consumers to the heads of both sides to the leaders of China and France. The two sides engaged in a "war of words." Danone accused Zong Qinghou of using the Wahaha trademark without permission, while Zong Qinghou accused Danone of setting a trap to maliciously acquire Wahaha, with international capital trying to dominate a "national brand." In a letter to the board, Zong Qinghou said bluntly: "I am Chinese and have the dignity of a Chinese person. I don't have to do whatever you ask. We are equal. This is not the time of the Eight-Power Allied Forces burning down the Old Summer Palace." Danone was not to be outdone. It conducted long-term surveillance at multiple production bases in Hangzhou, Wahaha's headquarters, recording a large amount of video and text materials related to Wahaha, and told the media that Zong Qinghou's family had all emigrated to the United States and had been evading taxes for a long time—highly damaging information. Over more than two years, the two sides experienced dozens of lawsuits and arbitrations at home and abroad. With the intervention of both governments, Wahaha and Danone reached a settlement. In September 2009, Danone sold its 51% stake in the joint venture to Wahaha for $450 million, thereby withdrawing from the joint venture. From then on, Zong Qinghou developed a strong aversion to capital. Wahaha also completely embarked on a special path of no debt, no bond issuance, no loans, and no listing, relying entirely on its own funds for operation.
-04- The victory in the Danone-Wahaha war unexpectedly earned Wahaha the status of "the pride of domestic products." Everything became smooth again. In 2008, Wahaha Group's operating income reached 32.83 billion yuan; in 2009, 43.6 billion yuan; in 2010, 54.88 billion yuan; in 2011, 67.86 billion yuan; in 2012, it briefly declined to 63.63 billion yuan; and in 2013, it peaked at 78.28 billion yuan. Such achievements allowed Zong Qinghou to top Forbes' China Rich List for three consecutive years. He was only one step away from the 100-billion-yuan goal he had set. But starting in 2014, the rise of internet e-commerce made everything suddenly uncontrollable. Retail giants like Walmart, RT-Mart, and Carrefour faced a harsh winter, and offline channels changed overnight. Competitors' products with new packaging and new flavors began to emerge endlessly, while the products that brought Wahaha revenue were still the purified water launched in 1996, Nutrition Express launched in 2005, and Wowai Wowai produced in 2006. During the three years from 2014 to 2016, sales of these three products almost halved. Wahaha worked as hard as before, but the path was still the old one from decades ago: copying others' products plus its own dealer channel combination punch. Wahaha quickly launched new products, trying everything from dairy drinks, bottled water, carbonated drinks to tea drinks and fruit juices. In 2013, Wahaha launched Qili functional drink to compete with Red Bull. But now Qili has disappeared, surpassed by later products like Lehu and Dongpeng Special Drink. Just last year, Wahaha tried to launch an eye-care drink called "Tianyan Jingjing." In April last year, Zong Qinghou appeared twice to endorse this drink. Not to mention the health benefits of this drink, but when it was launched, it chose the micro-commerce channel, leaving everyone at a loss. The result was predictable: a wave of complaints from micro-commerce agents seeking rights protection online. Of course, there were also new products like Maoyuan Coffee and Qingtou Coconut Water targeting white-collar workers in first- and second-tier cities. But obviously, the times have turned the page, and the old "wealth creation code" strategy has failed. Facing bottlenecks, Zong Qinghou did think about diversifying. He tried every cross-industry venture he could think of. In 2010, he entered the milk powder industry, launching the high-end infant formula "Edison," which has shown no improvement to date. In 2012, he ventured into retail. Wahaha Group announced its high-profile entry into commercial real estate, jointly establishing Wahaha Commercial Co., Ltd. with several dealers, planning to open 100 chain stores nationwide within five years. By 2014, news of heavy losses and unpaid rent broke out. In 2013, when the liquor industry bid farewell to its "golden decade," Wahaha invested 15 billion yuan to enter the liquor industry, targeting the sauce-flavored liquor of "A-share king" Moutai. The production site was also set in Maotai Town, named "Lingjiang Guojiu." However, years later, the 15 billion yuan did not make a splash in the liquor market. After trying so many paths, the results were even more fatal. On supermarket shelves, apart from Nutrition Express, AD Calcium Milk, bottled water, and eight-treasure porridge, you can't find more Wahaha products. Channels have changed, consumers have changed, the times have changed, but people are still drinking beverages. This 70-year-old former richest man in China, who only sits in second-class seats on high-speed trains and buys 30-yuan long johns at street stalls, needs someone to help him understand what has happened in the world and what Wahaha should do about it.
-05- It seems that his daughter Zong Fuli is the best candidate. This girl, who joined Wahaha in 2004 and worked her way up from the grassroots, also has her own achievements at Wahaha. According to public information, from 2009 to 2012, the annual revenue growth rate of Hongsheng Group, independently managed by Zong Fuli, exceeded 30%. Now, Hongsheng Group's revenue exceeds 10 billion yuan, contributing about one-third of the entire Wahaha Group's sales. Zong Fuli took over her father's cross-industry journey. To bring Wahaha back into the view of young consumers, she attempted a more aggressive move. In the summer of 2016, Zong Fuli launched a product named after her English name, KellyOne. This is a customized fruit and vegetable juice product that can be mixed online. To this end, a WeChat mini-program was specially developed to facilitate consumers' personalized customization. This fruit and vegetable juice, with a minimum price of 28 yuan, has a trendy packaging and was first piloted in Shanghai. According to Zong Fuli, she hopes this product can break away from Wahaha's original old route in third- and fourth-tier cities and directly reach consumers in first-tier cities. But to date, KellyOne's popularity is minimal, and Wahaha has almost done no promotion for it. Later, in an interview, when a reporter mentioned this product to Zong Qinghou, he said bluntly: "This can't be big; the shelf life is very short. I'm not quite sure what she's doing." If this is just a small step for Zong Fuli to lead Wahaha, then getting Zong Qinghou, who insisted on not listing for over a decade, to soften and say "Wahaha will also consider listing" is her biggest and most important effort in the past two years. In April 2017, China Candy, listed in Hong Kong, announced that Hangzhou Hengfeng Flavor & Fragrance Co., Ltd. planned to acquire no less than 50% of the company's shares. The ultimate beneficial owner of Hengfeng Flavor & Fragrance is Zong Fuli, Zong Qinghou's only daughter. The first reaction was "Wahaha is going to backdoor list," and China Candy's stock price reacted immediately, soaring to HK$0.45, an increase of over 100%. But just three months later, the acquisition ended in failure. There are many explanations for the failure, but compared to Huiyuan Juice's low-key and secretive listing preparation more than a decade ago, Zong Fuli's operation was indeed too high-profile. However, Wahaha claimed that this acquisition was Zong Fuli's personal act and unrelated to the group. But in a situation with no way back, it seems that combining with the capital market is an unavoidable choice for Wahaha now. During the 2018 Spring Festival, to clear obstacles for the company's IPO, Wahaha cleaned up employee shareholdings in a very short time, buying back nearly 15,000 employees' shares at 2.6 yuan per share. Last year, Zong Fuli became the head of Wahaha's public relations department. Previously, Zong Fuli did not hold a position in Wahaha Group. This was also seen by the outside world as the arrival of the Zong Fuli era for the Wahaha brand. Wahaha's cross-industry ventures also seem to have shown a slight improvement. From AD Calcium Milk lava mooncakes and zongzi to cross-industry makeup palettes, and this year's "retirement" of Wang Leehom, Zong Fuli is doing her utmost to make the 32-year-old Wahaha younger. On the 13th of this month, Wahaha, which never did new media marketing, registered a new account on Douyin. And the "Wahaha offline milk tea shop" franchise recruitment video also appeared on Douyin. Generally, it's not hard to see that Wahaha's offline store franchise model seems similar to the previously popular CoCo and 1點點. Industry dividends are gradually disappearing, but whether it's Zong Fuli or the younger Wahaha team, they have never given up round after round of new attempts. However, Zong Qinghou's evaluation of his daughter's various brand marketing attempts is: "It's very lively, but it hasn't directly reflected in sales." In response, Zong Fuli said in an interview, "My dad seems dissatisfied."
-06- The differences between Zong Qinghou and Zong Fuli have always existed. Zong Qinghou has always been a tough "dictator." For years, Wahaha has not had a vice president; all decisions are made by Zong Qinghou alone. In the early years, there were rumors that even buying a broom at Wahaha required Zong Qinghou's signature. Later, he gradually delegated authority, and the approval limit increased from 50 yuan to 2,000 yuan. The authenticity of the rumors cannot be verified, but it is true that every Wahaha product, from taste and packaging to every advertisement, must be personally reviewed by Zong Qinghou. Zong Fuli went abroad to study after junior high school, and the eight most important years of her life were spent growing up with Western thinking. Zong Qinghou advocates a "family culture" and never actively fires employees. When an old subordinate from out of town was transferred back to headquarters, Zong Qinghou specially created an advisory position for him, but Zong Fuli said bluntly: "It's better to let them take a sum of money and retire." An employee in the import-export company managed by Zong Fuli received bribes from a supplier. Because the contract explicitly prohibits bribery, Zong Fuli felt there was no room for negotiation and the contract should be terminated. However, the supplier found Zong Qinghou, and the business later took a turn for the better. Zong Fuli felt her father's approach was wrong; this was a bottom line that should not be compromised. The differences between Zong Qinghou and Zong Fuli are differences between human feelings and rules, and more specifically, between Chinese-style business and Western-style manager operations. Facing these differences, Zong Fuli has also said many times that her greatest frustration comes from her father's lack of recognition. Zong Qinghou is already 74, and Zong Fuli still hasn't entered Wahaha's core management. In 2011, on the show "Gaopeng Manzuo," the host asked Zong Fuli: What does Wahaha minus Zong Qinghou equal? Zong Fuli said: "Equals zero." Eight years later, on the show "At Least One Hour," where she said Wang Leehom was too old and needed to be eliminated, when asked what kind of existence Zong Qinghou is at Wahaha, Zong Fuli replied: "An existence like a god." The past eight years have been extraordinary; they were eight years when Wahaha fell from the mountaintop, experienced loss and anxiety, and moved forward with heavy burdens. And despite everyone's efforts and attempts, the 32-year-old Wahaha still hasn't let go of Zong Qinghou's crutch and learned to walk on its own.
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