At this point, one can't help but marvel: the situation is indeed stronger than the individual! A few years ago, Zong Qinghou, who had topped the Hurun Global Rich List (mainland China) three times, was somewhat disapproving of Jack Ma's e-commerce model. Now, at the age of 74, he has finally turned to embrace e-commerce, registering Hangzhou Wahaha E-commerce Co., Ltd. with 200 million yuan. From resisting e-commerce to embracing it, the years Zong Qinghou has traversed have witnessed earth-shaking changes in China's business ecosystem. -01- "Jack Ma is really good at spinning tales!" In China's business history, Zong Qinghou is a special presence: after engaging in various low-level occupations, he built his fortune on a bottle of Wahaha priced at 2 yuan, and in 2010, 2012, and 2013, he topped the Hurun Global Rich List (mainland China) three times. Wahaha's success is largely due to its "joint distribution system" model: Wahaha established nearly 10,000 distributors, hundreds of thousands of wholesalers, and over 3 million retail terminals nationwide, enabling it to roll out new products to every small shop in the most remote rural areas within a week. However, after the advent of e-commerce, the advantages of the "joint distribution system" have been diminishing. On one hand, e-commerce platforms can brutally lower product prices through subsidies; on the other hand, e-commerce comprehensively overwhelms physical stores in marketing scope and coverage, ruthlessly diverting some foot traffic away from physical stores. Therefore, when e-commerce rose, Zong Qinghou habitually viewed it as the antithesis of the real economy. For instance, at the 2014 Yabuli China Entrepreneurs Forum, Zong Qinghou publicly "attacked" the e-commerce industry: "Online stores have disrupted the existing price system, causing products to be unsellable and profits to plummet. Some companies have even had to shut down, leading to more unemployment." Going back a year to 2013, Wahaha's sales reached as high as 78.3 billion yuan, making it the undisputed leader in the food and beverage industry. But by 2014, Wahaha's revenue suddenly dropped by 6 billion yuan, and this loss of 6 billion yuan must be related to the rise of e-commerce! But the problem is: some brands that committed to e-commerce channels have seen rapid growth in market and sales. For example, Three Squirrels, because it believed from the start that e-commerce's potential was far greater than offline retail, quickly discovered vast growth space online and became a leading brand in leisure snacks. Jack Ma also said long ago: E-commerce is never the antithesis of the real economy, but a supplement to it. Unfortunately, Zong Qinghou might not have taken this to heart at the time. Two years later, during a CCTV program, Zong Qinghou was very dismissive of Ma's "Five New" concepts—New Retail, New Manufacturing, New Finance, New Technology, and New Resources—saying: "Apart from new technology, the rest is all nonsense. (Ma) is not in the real economy; what can he manufacture?" On another occasion, in an interview with Phoenix TV host Wu Xiaoli, Zong Qinghou said: "Jack Ma is really good at spinning tales; I know that!" At that time, Zong Qinghou simply felt that Ma always liked to use new buzzwords to fool people. This is also normal; even Liu Chuanzhi said: "The concepts Ma talks about are too big; I couldn't understand them at first, but later I felt they were good, and after continuous reflection, I realized his power!" Fortunately, now Zong Qinghou has been "fooled" by Ma into doing e-commerce. -02- The Business Logic Behind Wahaha's Embrace of E-commerce It wasn't until 2018 that Zong Qinghou's view on e-commerce began to change. In June of that year, he said: "We don't resist e-commerce, nor do we embrace it." That year, Wahaha launched "Wahaha Tianyan Jingjing" fermented milk based on the IP of the anime character "Tianyan," and the product was marketed through WeChat business channels, which was also considered Wahaha's first step into e-commerce. However, Zong Qinghou's attitude at the time was still hesitant: on one hand, he denied that this model was e-commerce, saying it was just a new sales method adapted to young people ordering via mobile phones; but he also acknowledged the advantages of e-commerce platforms in information dissemination, admitting that e-commerce could sell more goods to farther places. In September 2018, Wahaha quietly launched a lactic acid bacteria drink called "Youyoujun" on Pinduoduo, marking its official entry into the e-commerce field. Recently, with the registration of an e-commerce company with 200 million yuan, Wahaha has stopped being coy about e-commerce. So, what business logic lies behind Wahaha's embrace of e-commerce? First, the situation is stronger than the individual! Whether Zong Qinghou likes it or not, after more than a decade of development, e-commerce has borne abundant fruits: Alibaba and JD.com have become influential global internet giants because of e-commerce, and social e-commerce platforms like Pinduoduo are unstoppable. During the years of rejecting e-commerce, Wahaha also experienced its most stumbling period. If it doesn't transform, Wahaha will have no retreat. Second, Wahaha needs to find new growth points. After reaching a high of 78 billion yuan in revenue in 2013, Wahaha has not been able to return to its peak in subsequent years. It is said that Zong Qinghou set a revenue target for 2019 of 50% growth over the previous year, breaking the 70 billion yuan mark again. Given that traditional offline channels have not achieved new breakthroughs for years, this new growth point can only be realized through e-commerce channels. Also, more practical reasons such as the pandemic severely impacting physical stores. At the beginning of 2020, the sudden outbreak of the pandemic dealt a huge blow to offline stores, and online e-commerce transactions became a lifeline for people's daily needs. This pandemic also made more companies realize that the real economy indeed has terrible shortcomings, and e-commerce can effectively fill these gaps. Therefore, as an entrepreneur with keen business acumen, even if Zong Qinghou has reservations about e-commerce, he should have long seen that e-commerce is an irreversible trend. However, for Wahaha and Zong Qinghou, embracing e-commerce now might still be a bit too late, because e-commerce itself is undergoing reform and innovation, and e-commerce models are also in a precarious situation. -03- In the Next 10 Years, Not Only the Real Economy but Also E-commerce Will Face Difficulties! Jack Ma once said: "Many people lose because they can't see, can't understand, look down upon, and act too late." As someone born in the 1940s, Zong Qinghou sold popcorn and roasted sweet potatoes after dropping out of junior high, dried sea salt and carried manure during the Down to the Countryside Movement, worked as a worker in a carton factory after returning to the city, and later opened up the market with purified water. Throughout his life, Zong Qinghou has firmly practiced the principle of "prospering the nation through industry," believing that the real economy is the backbone of the national economy. However, compared with entrepreneurs of the post-70s generation like Jack Ma and Pony Ma, this generation of entrepreneurs has limitations in vision. After traveling to the United States and returning, Jack Ma predicted that the rise of internet e-commerce was unstoppable, thereby building Alibaba's business logic. Pony Ma, after attracting a wave of free users with QQ, also found Tencent's business logic through years of exploration. Perhaps in the eyes of the older generation of entrepreneurs, this business logic seems somewhat absurd. Just as Zong Qinghou believes that the real economy is the support of the national economy, this is not wrong. But the real economy and e-commerce should not be mutually exclusive; they should complement each other, because after all, the real economy is the foundation of e-commerce! So, what defeats physical stores is not e-commerce, but rising rents, young people increasingly disliking shopping in physical stores, and the slow operational efficiency of physical stores. At this point, e-commerce, which does not bear rent costs, suits young people's consumption habits, and has higher operational efficiency, appearing in life is an unstoppable development trend. Moreover, after more than a decade of development, e-commerce now faces problems such as the disappearance of online dividends and difficulty in improving service experience. If these problems are not solved, e-commerce will be replaced by other models. Therefore, as early as April 2017, Jack Ma said: "In the next 10 years, pure e-commerce and pure offline enterprises will face difficulties." Jack Ma also asked: "Why are there so few century-old enterprises in China? They have to face the 'robbery' of every era!" So, entrepreneurs in China, who are in an ever-changing era, should never go against the trend. Only by doing so can they fear when others cheer and be greedy when others fear! Thus, they can survive every era's 'robbery' and build century-old Chinese enterprises!