Click the image for details Now over 72 years old, Zong Qinghou is still the helm of Wahaha Group. His daughter, Zong Fuli, as the only heir in the family, has responded to the ongoing topic of succession by "starting a new venture." The Wahaha baton has been held by both father and daughter, Zong Qinghou and Zong Fuli, for a full 13 years. The former has not let go, and the latter has not sprinted. On the track of China's beverage industry, Zong Qinghou once led Wahaha to the forefront. Now, the 35-year-old "Wahaha Princess" Zong Fuli, since returning from the United States in 2004 after her studies, has progressed from grassroots management at Wahaha to serving as Chairman of Hongsheng Beverage Group Co., Ltd. and General Manager of Wahaha Import and Export Company. However, she has not yet taken over the baton from her father. Is it that Zong Qinghou, still fighting on the front lines, refuses to delegate power, or is it that Zong Fuli, witnessing Wahaha's slowing pace, is unwilling to follow in her father's footsteps? The Mismatch of Western Education As the daughter of former richest man Zong Qinghou, Zong Fuli keeps a much lower profile. Her most recent moment in the spotlight came from ranking 13th on Forbes China's "2017 China's Most Outstanding Business Women List" released on February 6, making her one of the few post-80s on the list. Her first public appearance dates back to the 2006 Zhejiang Entrepreneurs Conference. At that time, at 24, she was already serving as Deputy Director of the Management Committee of Wahaha's Xiaoshan No. 2 Base, and concurrently as General Manager of Hangzhou Wahaha Children's Clothing Co., Ltd. and Hangzhou Wahaha Kaqianna Daily Chemical Co., Ltd. ▲ Zong Qinghou's daughter Zong Fuli (first from left), President of Hongsheng Beverage Group. Earlier, after finishing junior high school, Zong Fuli went to the United States to study, graduating in 2004 from Pepperdine University in Los Angeles with a degree in International Business. After returning to China, she did not parachute into Wahaha's senior management but started as an assistant to the director of the management committee of the Xiaoshan No. 2 Base. Zong Fuli cannot escape the label of "second-generation rich," but she has always proven herself with an independent and strong-willed attitude. She once told Oriental Morning Post, "My ten years of accumulation at Hongsheng were carved out by my own fists and feet; my father didn't help me at all. What he gave me was an order; he only solved the sales source, and the rest was up to me to handle." Like Zong Qinghou, Zong Fuli is also a workaholic. According to employees at the Xiaoshan No. 2 Base she manages, Zong Fuli is always the first to arrive and the last to leave. On the other hand, in stark contrast to her father, Zong Fuli is planned, efficient, and adheres to systems. These traits are attributed to her eight years of Western education, but within Wahaha, a traditional Chinese enterprise known for its "family culture," Zong Fuli has always felt a sense of "mismatch." In the eyes of Wahaha employees, Zong Qinghou is an approachable elder, while Zong Fuli is a tough boss. In daily work, Zong Fuli is strict with employees and assigns tasks directly. "If some employees make mistakes, I am not very tolerant, because the company's system is here." ▲ Zong Qinghou, founder of Wahaha Group. When some core members who started the business with Zong Qinghou return to Wahaha's Hangzhou headquarters after years stationed elsewhere, Zong Qinghou would tailor positions for them, adding advisory roles. Zong Fuli, however, often cannot understand this. She believes that according to modern management principles, they should receive generous pensions upon reaching retirement age and no longer participate in company business. Valuing personal connections and hands-on involvement are Zong Qinghou's work credo, but not for Zong Fuli. She trusts data, embraces the changes of the times, or rather, she wants to be the vane of traditional enterprises under the changes of the times. Is Inheritance Not the Only Option? Since Zong Fuli returned to China and entered Wahaha, questions about whether and when she would take over have never ceased. "Since the daughter has entered the beverage industry, who else would manage Wahaha if not her?" Zhou Jiuming, production director of Hongsheng Group, once speculated. In 2010, Zong Fuli integrated the import and export related businesses of Wahaha's supply department, engineering department, and other departments, and became the General Manager of the Import and Export Company, while also overseeing the group's external investments, beginning to promote the internationalization of the Wahaha brand. In the eyes of the father and daughter, this arrangement was merely a clarification of different roles, not a precursor to succession. Facing the Chinese market and Wahaha's corporate culture, Zong Fuli felt she was not ready. At that time, 65-year-old Zong Qinghou also said he could work for another 20 years. On October 26, 2013, Zong Fuli received the "Zhejiang Business New Star Award" at the World Zhejiang Entrepreneurs Conference. Coincidentally, it was Zong Qinghou who presented the award to her. ▲ Zong Qinghou (sixth from left) presents the award to his daughter Zong Fuli (fifth from left). Zong Fuli, who gladly accepted the award from her father, expressed that she did not wish to take over Wahaha Group. According to Bloomberg Businessweek, Zong Fuli once said, "I don't want to inherit a company, but I can own it. If I succeed, I hope to acquire Wahaha." Wahaha, which grew up with Zong Fuli, achieved operating revenue of 67.8 billion yuan in 2011, a year-on-year increase of 23.65%, and topped the Chinese beverage industry for 14 consecutive years in various economic indicators. That year, Zong Qinghou boldly claimed to achieve sales revenue of 100 billion yuan within three years and turned his attention to diversified development. However, the good times did not last. Wahaha hit a turning point in 2014. The 100 billion yuan vision not only failed to materialize but also faced a cliff-like decline in performance. In 2015, Wahaha's operating revenue was 49.4 billion yuan, a decrease of 22.6 billion yuan year-on-year, and its ranking in China's top 500 private enterprises plummeted from 31st to 70th. ▲ Wahaha Group's operating revenue from 2010 to 2015. Zong Fuli, holding the other end of the baton, naturally saw Wahaha slowing down in the long race of the beverage industry, even losing direction—aging brand and products, blank e-commerce channels, lack of planning in new product development, and so on. In fact, Zong Fuli and her father Zong Qinghou often have different understandings of business strategies. Wahaha once dominated the market through the dealer system that Zong Qinghou spread across the country. With changes in social structure and market environment, Zong Fuli believes that Wahaha Group's control over dealers is not as strong as before. On the contrary, she believes that the e-commerce channels, which should be developed in line with the trends of the times, have not been rolled out by Wahaha. Moreover, multiple projects under Zong Qinghou's diversification strategy have ended in failure. Before this, Zong Fuli said in an interview with Phoenix Finance that she "does not support" Wahaha's blind development into the retail industry, which it had never been involved in, and that it "has nothing to do with me." "It needs an internal cleanup, both in personnel and market structure, and then the entire thinking needs to be readjusted," Zong Fuli said in an interview with Oriental Morning Post. If she were to take over this traditional enterprise with a dominant position in China's beverage industry, Zong Fuli knows she must assess the situation and readjust the layout. However, the ultimate decision-maker at Wahaha is still Zong Qinghou. Setting the Rules of the Game Having been in the beverage industry for ten years, Zong Fuli has always hoped to follow her own path rather than adhere to Wahaha's original model. After taking control of Hongsheng Group, Zong Fuli's market strategy started with OEM manufacturing. She proactively took OEM orders from international beverage companies so that the export business team could quickly familiarize themselves with the culture, regulations, and sales channels of the UK and US markets, and after understanding whether the market accepts a new product, decide whether to launch a similar product under its own brand. At the beginning of 2016, Zong Fuli, who had been engaged in production and manufacturing for ten years, came up with the idea of making customized fruit and vegetable juices and began to try the front end. After nearly half a year of preparation, a creative beverage product that allows consumers to choose their own fruit and vegetable combinations and ingredient ratios was launched. Unlike the Wahaha beverage products launched under Zong Qinghou's leadership, this beverage, named "KellyOne," accepts orders through internet channels, provides sales services, and facilitates social sharing, with a high price of 28-48 yuan. ▲ KellyOne, a customized fruit and vegetable juice brand that can be freely matched. Zong Fuli has publicly stated that she is a proud person, with superior material conditions and growth background compared to her peers, and she hopes to express her personality boldly. "Customizing a fruit and vegetable juice is a process of self-expression, reflecting what kind of mood you are in," she said in a media interview. It is worth noting that the "KellyOne" beverage is named after Zong Fuli's English name "Kelly," and the positioning of KellyOne is clearly her personal productization. "I don't need to follow the rules of the game now; I need to set the rules of the game. I want to use my limited strength to change or even drive the development of the entire industry," Zong Fuli once said. According to Beijing Morning Post, Zong Fuli expressed hope that the KellyOne series products would achieve revenue of several billion yuan by 2020. However, since its launch in July 2016, KellyOne's delivery range is still limited to Shanghai. When Wumian Finance contacted Hongsheng Group's PR and KellyOne's WeChat customer service to inquire about sales performance and future market plans over the past six months, they said it was not convenient to disclose. ▲ Distribution of Hongsheng Beverage Group's subsidiaries. At a time when Wahaha urgently needs transformation and breakthrough, this beverage with almost no Wahaha genes may just be a small attempt. What Wahaha and Zong Fuli need is a winning move to reverse the decline. On October 29, 2016, according to the UK's Financial Times, Hongsheng Beverage Group intended to acquire Dean Foods, the largest dairy company in the United States. The acquisition news has since fizzled out, but Zong Fuli's "Wahaha Princess" long-distance race is still far from over. In the future, how will this pragmatist, born with a silver spoon, lead Wahaha's transformation? Perhaps the answer will be revealed when she takes over the baton. -END-