Source | Snow Finance ID | snowfinance666 Author | Qin Le
In 2025, Chinese business history could have recorded the latest chapter of an era-defining company. But unfortunately, it may be the beginning of a period of sustained chaos for this enterprise.
Less than 20 months after the sudden death of Mr. Zong Qinghou, the vast business empire he built—Wahaha—has run aground in a seemingly calm but turbulent power transition, landing in a surprising situation: Zong Fuli, the eldest daughter once seen as the heir and meeting public ethical expectations, announced her resignation from all positions, abruptly ending her succession path.
This is not just a change of corporate leadership; it is a "tragedy" of an era-defining company whose internal contradictions were fully intensified and ultimately spiraled out of control after the fading of the founder's charismatic aura.
Fundamental Contradictions Out of Control
Mr. Zong Qinghou, with his extraordinary personal charisma, paternalistic leadership style, and precise grasp of market trends, transformed Wahaha from a school-run factory into a giant in China's beverage industry. However, this highly personalized success model also laid deep hidden dangers for the company after his death. As I argued in a previous article, Wahaha has three fundamental contradictions that, after Zong Qinghou's death, were not resolved but rapidly intensified under the aggressive strategies of the new generation successor.
First, the game between family interests and corporate interests: how to handle the "shadow" of the external Hongsheng Group.
This is perhaps the most intricate contradiction within Wahaha. During Zong Qinghou's lifetime, to avoid risks, operate flexibly, or isolate interests, he created an "external" entity deeply tied to Wahaha—Hongsheng Group. Hongsheng Group not only undertook a large amount of Wahaha's production and R&D tasks, but its employee system was also deeply integrated with Wahaha's staff, forming a special pattern of "one team, two brands." Under the shadow of Zong Qinghou's strong personal authority, this blurred boundary was maintained.
However, when Zong Qinghou passed away and Zong Fuli attempted to take full control as the "eldest legitimate daughter," the interest boundary between Hongsheng Group and Wahaha immediately became sharp and irreconcilable. The widely rumored interest struggle between Zong Fuli and her half-siblings centers precisely on the ownership of Hongsheng Group's vast assets and profits. If in Zong Qinghou's era, Hongsheng was the "right-hand man" for Wahaha's flexible operations, then during the succession, it became a "shadow property" difficult to cut apart, with its equity structure, profit distribution, and business dealings with the main Wahaha entity all becoming potential conflict points.
As our previous article noted, the shareholders of the Wahaha system and Hongsheng Group are not the same, so the profits they generate flow to different entities. This obvious conflict has long remained unresolved.
For Zong Fuli to fully control Wahaha, she had to properly handle the interests of Hongsheng Group. In fact, to resolve this fundamental contradiction, Zong Fuli had to concede her own interests in any case; that is the prerequisite for resolving all contradictions.
Because key production lines, R&D departments, and even trademark ownership within Wahaha are not entirely controlled by "Hangzhou Wahaha Group"; a considerable portion is undertaken by external companies like Hongsheng Group. It is not hard to foresee that Hongsheng Group, as a key entity deeply integrated into Wahaha's industrial chain, will face huge uncertainty in its cooperative relationship with the main Wahaha entity after Zong Fuli's departure.
The deep integration of staff from the two camps may now become deep opposition between two camps. The internal and external entities may become two independent camps. Then who holds production rights? Who holds brand authorization? Who has the right to ship to distributors? All these will fall into long-term uncertainty. If the interest handover is not handled properly, Wahaha's production, R&D, and even the stability of the entire industrial chain could lead to an operational crisis.
Second, the conflict between the professional manager system and family-style management: old retainers vs. new master.
In Zong Qinghou's era, Wahaha, despite its large scale, had management with strong family business, even personal, characteristics. Core executives were mostly "old retainers" who had followed Zong Qinghou for years; they were not just professional managers but also Zong Qinghou's "brothers" or "nephews." They were loyal to Zong Qinghou himself and knew Wahaha's business well, but their power boundaries and incentive mechanisms often bore the imprint of Zong Qinghou's personal will.
Zong Fuli's succession meant she needed to take real power from these old retainers and push the company toward modern, professional management. However, her personality, qualifications, and abilities clearly failed to effectively bridge this contradiction.
Third, personality and qualifications. Whether Zong Fuli entered Wahaha actively or passively, she was in fact committed to building her own "Hongsheng faction," and her style leaned toward modernization and process orientation. She wanted "Hongsheng Group" to be a different enterprise from Wahaha.
This clashed with Wahaha's traditional "human touch" family management model and the habits of the old retainers. She lacked the shared experience and emotional foundation of fighting alongside these veterans, making it difficult for her to gain their heartfelt support when implementing reforms.
Fourth, capability and trust. Although the outside world does not know what achievements Zong Fuli actually made at Hongsheng Group, within the larger Wahaha system, she had not yet fully proven she could comprehensively manage all aspects from production, sales, to brand and R&D, as her father Zong Qinghou did.
This "pending verification" state of capability, coupled with the trust gap with the old retainers, made her more likely to be seen as a "challenger" rather than a "leader" during reforms.
Zong Fuli did not choose to fully communicate and coordinate interests with these old retainers; instead, she adopted a relatively aggressive approach, trying to quickly establish her authority. This "aggressiveness" may have been reflected in adjustments to old processes, reallocation of key positions, or even touching certain vested interests.
This approach undoubtedly intensified the dissatisfaction and resistance of the old retainers, ultimately leading to a complete breakdown of internal power balance.
Zong Fuli's departure means she failed to win the support of these veterans and instead provoked their resistance. A Wahaha without a stable core management team will find it difficult to maintain sustained stability in its operations.
In addition, I believe she did not receive support from any other parties at the shareholder level.
The Dilemma of Change and No Change
As we stated in a previous article, Wahaha's success largely benefited from the "joint sales system" model personally built by Zong Qinghou—a highly dispersed but highly loyal channel network covering the whole country. This network was not only a sharp tool for Wahaha's products to penetrate lower-tier markets but also its core competitiveness.
Distributors established a deep emotional and interest bond with Zong Qinghou; they were Wahaha's "hands and feet."
However, with the rise of new channels such as internet e-commerce and community group buying, the traditional distributor system faces huge impacts. Zong Fuli knew that Wahaha needed channel reform to adapt to the times. But such reform would inevitably touch the vested interests of the joint sales system distributors, challenging their "interest binding" with Zong Qinghou and their shared honor and disgrace in the face of competitors.
Zong Fuli's aggressiveness may have been in pushing online channel construction too quickly, introducing new sales models, or failing to find a new balance in profit distribution with distributors. For example, to promote brand rejuvenation and efficiency, she began to try to weaken traditional channels, such as taking back some provincial agency rights, raising assessment thresholds, and requiring distributors to submit digital reports.
These practices made distributors, who were already wary of new channels, feel uneasy and even a sense of crisis of being abandoned.
With Zong Qinghou's death and Zong Fuli's personal authority not yet fully established, "radical" reforms to the distributor system could easily lead to cracks in the stability of the distributor network, which is its core competitiveness.
Zong Fuli's departure means she failed to manage the contradiction between change and tradition. The loyalty of the distributor system was originally based on Zong Qinghou's personal charisma; now, without Zong Fuli as the successor, distributors will face new uncertainties.
Will they still rally closely around Wahaha as they did in the past? This weakening of core competitiveness forces Wahaha's future development into a situation of "removing firewood from under the pot."
How Did It Come to This?
We have every reason to believe that Zong Fuli did make efforts. Without delving into whether her series of aggressive actions were entirely driven by "power struggles" or "profit grabbing," I am willing to believe she had ample motivation to try to push Wahaha's modernization and change some old models.
However, her personality, qualifications, and abilities, as evidenced by the results, failed to find a balanced solution when facing Wahaha's deep-rooted three contradictions; instead, they accelerated the intensification of these contradictions.
She clearly vastly underestimated the importance of founder-level authority and skill in this enterprise, which her father possessed but she did not.
During Zong Qinghou's lifetime, with his absolute authority and superb balancing skills, he could suppress and coordinate internal contradictions among various parties, including the distribution of interests among different shareholders. He also knew well the "ways of the jianghu" in Chinese private enterprises, knowing how to combine favor and authority, and how to balance the interests of all parties.
As a successor, Zong Fuli lacked this founder-level authority and skill. She failed to find a new balance point in the complex interest relationships like her father did; instead, she may have broken the original delicate balance by seeking quick changes.
It seems that based on an overly idealistic approach and lacking control over the situation, she was eager to push radical plans in one fell swoop. From the results, Zong Fuli clearly chose a strong or even decisive path in handling the three contradictions. For instance, in the interest handover with different shareholders, she may not have adopted soft negotiation and transitional plans but sought thorough control once and for all, triggering strong backlash.
In her relationship with the old retainers, she likely did not give enough respect and buffer but tried to quickly establish her own leadership team, leading to a breakdown of internal trust. In the reform of the distributor system, she may have touched the fundamental interests of distributors too early or too hastily, thereby shaking the core competitiveness.
These "aggressive" actions are not all wrong, but for a company like Wahaha, where the founder's personal authority highly binds all stakeholders, any radical reform that deviates from the original "human network" may trigger huge backlash.
Zong Fuli's dilemma is that she neither had Zong Qinghou's personal authority to "suppress" contradictions nor sufficient flexible skills to "resolve" them, ultimately leading to contradictions spiraling out of control, and she herself became a victim of this "war without winners."
No Winners
We believe Zong Fuli's resignation is only a temporary truce in Wahaha's power struggle, and it is likely to be the beginning of a new round of more intense games. We consider this the worst option because no party is a winner; instead, everyone is plunged into deeper difficulties.
For Zong Fuli, this is a complete failure of her succession path. After her father's death, she was placed with high hopes, but ultimately failed to stabilize the situation and ended with resignation. This is not only a huge denial of her personal abilities but also deprived her of the stage to realize her ambitions within Wahaha. She originally hoped to run Wahaha in a more modern way, but reality proved she failed to balance the interests of all parties, ultimately leading to her "exit."
For the stakeholders behind Hongsheng Group, future operations will largely be independent of Wahaha. The two sides should have been de facto interest communities, even de facto the same enterprise, but the current situation may lead both companies' operations into chaos and uncertainty.
Hongsheng Group and Wahaha's business are deeply integrated; Zong Fuli's departure means this integration will inevitably be affected. The cooperation model, interest handover, and personnel allocation between the two camps will face huge uncertainty. This internal friction and division will directly affect Wahaha's production efficiency, R&D investment, and market competitiveness.
In the short term, Zong Fuli may gain an advantage in the distribution of Hongsheng Group's interests, but in the long run, a declining Wahaha will greatly reduce the value of Hongsheng Group.
For Wahaha's professional manager team and distributor system, this is even more of a disaster. Losing a clear leader, the stability and cohesion of the executive team will face severe tests. They originally expected that after Zong Fuli's succession, Wahaha would move toward more standardized modern management, but now they are in a state of cohesion dispersion.
Distributors can hardly avoid confusion; the "Wahaha patriarch" they trusted and relied on has passed away, and the new helmsman failed to stabilize the situation. This uncertainty may lead to the loss of core distributors, thereby affecting Wahaha's market channels and sales performance.
Most importantly, for Wahaha as a company, this is the worst outcome.
First, the governance foundation of the entire enterprise. Turmoil in the core management, uncertainty in cooperation with key business segments (such as production and R&D undertaken by Hongsheng Group), and potential loss of the distributor system will all lead to uncertainty in Wahaha's operations. In a fully competitive beverage industry, such internal turmoil is fatal.
Second, brand reputation. Negative information such as high-level power struggles and the departure of the successor will seriously damage Wahaha's brand image and consumer confidence. A national brand once full of positive energy is now equated with family infighting and management chaos, which is a huge drain on brand assets.
Third, and most long-term damage, if Wahaha loses its private enterprise vitality, what kind of company will it become? We believe that Wahaha's success was due to the victory of its flexible mechanism as a private enterprise. If the ultimate result of this crisis is that Wahaha's operating mechanism gradually becomes "state-owned enterprise-like," losing its private enterprise vitality and market flexibility, it will be a huge regression for maintaining competitiveness in the fully competitive beverage industry.
The market is cruel; once innovation capability and rapid response mechanisms are lost, any giant may be surpassed by rising stars.