Let business be more valuable. Zong Fuli, stepping down? On the morning of July 18, an internal letter about Zong Fuli's resignation circulated wildly on social media. Within a few hours, multiple related topics such as "Wahaha Zong Fuli," "Zong Fuli's rumored departure," and "Former Wahaha executive confirms Zong Fuli's resignation" dominated the hot search lists. Amid the uproar, Wahaha remained silent, neither denying nor responding directly. A person close to Wahaha told the author: "The online notice is true, but Zong Fuli went to Hongsheng yesterday." Hongsheng Group is fully managed by Zong Fuli. The Paper also cited insiders saying that Zong Fuli's resignation is true, but it was sudden, and company executives were unaware beforehand. Currently, shareholders and management are in further consultation. In the letter "To All Employees of Wahaha Group," Zong Fuli stated: "The People's Government of Shangcheng District, Hangzhou, and some shareholders of Hangzhou Wahaha Group Co., Ltd. have questioned the reasonableness of my management of Wahaha Group since the death of Chairman Zong Qinghou, making it impossible for me to continue fulfilling my management duties for Wahaha Group and its holding companies. Therefore, I have decided to resign from the positions of Vice Chairman and General Manager of Wahaha Group from this date, and will no longer participate in its operation and management." The letter bears her handwritten signature, dated July 15, 2024. Counting from Zong Qinghou's death in February, Zong Fuli had been at the center of Wahaha's power for 144 days. During this period, the outside world believed she would usher in the "Zong Fuli era of Wahaha," and under her leadership, Wahaha's market presence grew daily in the first half of the year. But unexpectedly, after more than four months, she had not yet secured her position. The public disclosure of the internal letter indicates that the power transition between the Zong father and daughter is far more difficult than imagined. After the internal letter stirred up a whirlwind of public opinion, the responses from relevant parties were thought-provoking. The largest shareholder did not deny the authenticity of the letter. Staff at Hangzhou Shangcheng District Cultural, Tourism, Business and Investment Holding Group Co., Ltd. told The Paper that relevant personnel are further verifying with Wahaha. Wahaha's Hangzhou and Liaoning offices responded that they had "not received" and "not heard" about it. "The internal and external contradictions at Wahaha are very complex, hard to explain in a few words. Let's wait and see," an insider lamented. It is worth noting that after Zong Qinghou's death, Zong Fuli has taken over the legal representative positions of more than 20 companies under her father's name, including Hangzhou Wahaha E-commerce Co., Ltd., Zhejiang Qili Investment Co., Ltd., Zhejiang Zhenzong Investment Co., Ltd., and Hangzhou Xiaoshan Hongsheng Food Co., Ltd. Tianyancha App shows that a week ago, she also took over Lhasa Wahaha Food and Beverage Marketing Co., Ltd., serving as legal representative, director, and manager, but so far she does not hold shares in Wahaha Group. As of now, the legal representative of Wahaha Group, established in 1993, remains Zong Qinghou. Moreover, since Zong Qinghou's death, the position of Chairman of Wahaha Group has been vacant, and Zong Fuli still only serves as Vice Chairman and General Manager. Tianyancha App shows that Wahaha Group's direct shareholders consist of three parties: Hangzhou Shangcheng District Investment Holding Group Co., Ltd. holds 46%, Zong Qinghou holds 29.4%, and Wahaha Group Grassroots Union Joint Committee (Employee Stock Ownership Association) holds 24.6%. Hangzhou Shangcheng District Investment Holding Group Co., Ltd. is 100% indirectly controlled by the Finance Bureau of Shangcheng District, Hangzhou, and is state-owned. After Zong Qinghou's death, his shares were not transferred or changed, so Zong Fuli does not directly hold shares. Currently, in Wahaha Group's senior management team, the Chairman is Zong Qinghou; directors are Yu Qiangbing, Wu Jianlin, Zhang Hui, and Pan Jiajie; supervisors are Jia Tun, Jiang Lijie, and Guo Hong. Zong Fuli's name is not among them.

Full Succession Is Not Easy

Since Zong Qinghou's death, Zong Fuli has been the default successor to Wahaha in the eyes of the outside world. In many previous reports, Zong Fuli frequently appeared as the heir. However, the resignation incident indicates that Zong Fuli's full succession is not easy, with the primary challenge being her conflict with long-standing employees.

At the same time the internal letter circulated, a complaint letter against Zong Fuli was also made public. In this complaint, the complainant, claiming to be a former Wahaha employee, accused Zong Fuli of using various means to transfer Wahaha's state-owned assets after Zong Qinghou's death, including entrusting external processing factories under Hongsheng Group, transferring water production lines, and eight-treasure porridge orders for profit. "It is true that Wahaha's money was used to buy water lines for Hongsheng," an insider told the author. "Zong Fuli has always required Wahaha personnel to go to Hongsheng for production guidance and to invest in related water lines." However, some industry insiders told the author that after Zong Qinghou's death, the public's enthusiasm and willingness to consume Wahaha products were high, and in the short term, water line supply was insufficient, so it is understandable that Hongsheng took on part of the production. As early as late January, Wahaha held a workers' congress, where Zong Fuli led the meeting and made plans and deployments for Wahaha's development direction in the new year. According to a Qianjiang Evening News report in early February, the workers' congress revealed that to improve corporate efficiency, Wahaha would adjust and optimize its management system and organizational structure. According to the author's understanding, after Zong Qinghou's death, Zong Fuli launched a series of reform storms internally, which ultimately caused dissatisfaction among many. Some employees said that after Zong Fuli took office, she required employees to extend working hours. The department originally worked from 9 a.m. to 5 p.m., but now it is 8:30 a.m. to 5 p.m., and the lunch break was shortened from one and a half hours to one hour, effectively adding an hour of work without a pay increase. Additionally, rumors circulated among employees that Zong Fuli planned large-scale layoffs. An insider told the author that in May this year, Zong Fuli demoted more than thirty middle-level managers from full department level to deputy department level, while also bringing in some former Hongsheng Group managers. According to Yicai, a person close to Wahaha said that in the past period, several senior executives left. The author learned from insiders that recently, a batch of veteran employees did indeed leave Wahaha one after another. These include Cai Lei, who had entered Wahaha's senior management; Liu Hai, who served as General Manager of Wahaha's Northeast region; and Pan Jiajie, who was seen as one of the veteran officials assisting Zong Fuli and served as Executive Vice President, currently holding the position of Director of the Zong Qinghou Memorial Hall. The author also found that in December 2022, Shenyang Wahaha Rongtai Food Co., Ltd. had a personnel change, adding Zong Jichang and Zong Jieli as directors. This was the first time the two appeared in a Wahaha subsidiary. From their names, they are of the Zong clan, but their kinship with Zong Qinghou has not been publicly disclosed. Before joining Wahaha, Zong Jichang became a director of Zhejiang Chengxin Plastic Co., Ltd. in February 2022, whose legal representative is Zong Qinghou's younger brother Zong Yuhou. After Zong Qinghou's death, Zong Jichang successively took on director positions in four companies, including Dali Wahaha Beverage Co., Ltd., Shuangcheng Wahaha Dairy Co., Ltd., and Tianjin Wahaha Food Co., Ltd., and these four companies share a common director—Du Jianying. Du Jianying is a soul figure in the hearts of Wahaha old employees. An internal Wahaha source revealed that Du Jianying is humble, a veteran of Wahaha, very capable, and also the chairman of Wahaha's Employee Stock Ownership Association. Many branch companies belong to her, and internally they are called the Rongtai system. Public information shows that Du Jianying was born in 1966, graduated from Zhejiang University, and in 1991 served as Secretary of the Party Committee and Director of the General Office of Wahaha Group. In 2010, Du Jianying founded Sanjie Investment Group, venturing into industrial investment, supporting biomedicine, new energy, new materials, and other industries. However, at Wahaha, Du Jianying continued to serve as a director until 2019 when she stepped down.

Holding Many Resources

The author found that although Zong Fuli intends to resign at the Wahaha Group level, in reality, she is already the actual controller of many core enterprises under and related to Wahaha Group.

At Wahaha, Zong Fuli gradually moved toward the center of power starting in 2018. From April 2018, she served as Minister of Wahaha's Brand Public Relations Department; from March 2020, she concurrently served as Deputy General Manager of Wahaha Sales Company. In December 2021, Zong Fuli became Vice Chairman and General Manager of Wahaha, responsible for daily work. Through years of effort, she has grasped many resources. An important company under Wahaha Group—Hangzhou Wahaha Food Co., Ltd.—was established in October 1992, four months earlier than Wahaha Group itself. Tianyancha App shows that Hangzhou Wahaha Food Co., Ltd. has a registered capital of 242 million yuan, with the legal representative still being Zong Qinghou. Wahaha Group holds 39%, Zhejiang Wahaha Industrial holds 10%, and Wahaha Hongzhen Investment holds 51% as the controlling shareholder. After Zong Qinghou's withdrawal and change in March, Wahaha Hongzhen Investment is now 100% held by Zong Fuli, with Zong Fuli as legal representative. Therefore, the actual controller of Hangzhou Wahaha Food Co., Ltd. is currently Zong Fuli. Additionally, Zong Fuli's name appears on the board of Zhejiang Wahaha Industrial. That is to say, although at the group level Zong Fuli does not directly hold shares and is not on the board, only serving as Vice Chairman and General Manager, she already holds actual control in important companies under the group. Tianyancha App shows that Zong Fuli is associated with more than 170 enterprises, of which over 160 are in existence, all being subsidiaries or upstream/downstream companies of Wahaha Group, covering beverages, food, e-commerce, logistics, packaging, marketing, advertising, investment, and other fields. For these core food and beverage production capacities, Zong Fuli often serves as chairman, director, or manager. Does Zong Fuli have the ability to lead Wahaha to the next level? Judging from her actions over the past four months, she has done a lot. In early March, Wahaha sent a letter to all sales personnel, mentioning: "Now is a moment of unprecedented attention for Wahaha. To support the sales battle, the company has formed a terminal distribution突击 project team, with the goal of 'making Wahaha products visible and purchasable by everyone.'" After Zong Qinghou's death, Zong Fuli began restructuring offline sales channels and actively expanding the market. In March, many terminal merchants wanted to sell Wahaha purified water but couldn't find supply. At that time, many terminal merchants said: "C'estbon and Nongfu have their own terminal salespeople. I've been in business for years and have never seen a Wahaha salesperson. Wahaha's business strategy is too backward and inflexible." After Wahaha launched its sales campaign, soon many areas where Wahaha purified water was previously hard to find began selling it, even small shops and newsstands on Beijing streets displayed Wahaha purified water. As an important "weapon" for sales terminals, freezers have always been a focus of competition among beverage giants. Wahaha began deploying freezers in March, launching the terminal battle. A Wahaha market person in a Beijing area told the author in early July that Wahaha has already deployed two batches of freezers this year, with the latest batch in June. Wahaha was once the leader in the bottled water market for many years, but later Nongfu Spring gradually became the industry leader through a series of marketing strategies. In recent years, Wahaha purified water has been relatively quiet. This year, Wahaha finally has another opportunity for development. From the series of actions in the first half of the year, it can be seen that Zong Fuli also wants to seize the moment to revive Wahaha purified water. In early March, Zong Fuli made her first public appearance after her father's death, attending the annual meeting of the China Beverage Industry Association as Vice Chairman of the association and Vice Chairman and General Manager of Wahaha Group, delivering a keynote speech. At the meeting, she mentioned that she is both a "veteran" who has explored the industry for 20 years and a "new general" who has taken over the baton of enterprise management. Whether in the role of "veteran" or "new general," Zong Fuli is ready to make a big push. But now, internal conflicts seem to have erupted to the point where Zong Fuli has to submit her resignation. Yet, it is currently midsummer, when the bottled water market is fiercely competitive. Nongfu Spring is vying for market share in purified water, and Wahaha's "sales battle" is only half fought. It is time to concentrate on the battle. Wahaha needs to resolve the succession issue as soon as possible. From August 20-22, 2024, the "2024 6th China FMCG Conference" with the theme "Crossing the Era of Shrinkage," along with the "3rd China FMCG Hard Discount Conference" and the "3rd China FMCG Distributor Conference," will be grandly held in Shanghai. At this conference, all roles in the FMCG industry chain will gather, allowing you to see industry trends at a glance, understand hot track indicators, penetrate industry resources, precisely connect with leading brand owners, top retail platforms, and national excellent distributors with over 100 million in sales, providing you with precise decision-making, efficient cooperation opportunities, and on-site learning of exclusive methodologies from FMCG giants! Keynote speeches, roundtable dialogues, report interpretations, closed-door salons, and networking dinners—this thousand-person event is sure to have something for you!