"Over the years, Zong Qinghou has persistently refused the capital market approach, likely due to the shadow cast by the failed cooperation with Danone," industry insiders analyze. Whether Wahaha will eventually go public through a backdoor listing depends on the next steps of his only daughter, Zong Fuli. From the perspective of the GEM listing rules and the share structure of China Candy Company, it is not difficult for Zong Fuli to acquire China Candy, which was listed on the Hong Kong GEM in 2015, but for now, everything is just speculation. Zong Qinghou's aversion to the capital market In September 2009, Zong Qinghou, founder and chairman of Wahaha, stated at a press conference in Beijing: "Wahaha is not short of money; our bank deposits exceed 10 billion yuan. So we are not considering and have no plans for an IPO." In February 2013, Zong Qinghou topped the Hurun Global Rich List for the third time with a fortune of 82 billion yuan, once again becoming the richest person in mainland China. "In China's capital market, many companies go public just to raise money. You see many companies are well-packaged, but shortly after listing, their performance deteriorates. The stock market does not reflect the true value of enterprises, and many companies cheat ordinary people out of their money." In March of the same year, Zong Qinghou, as a deputy to the National People's Congress, reiterated at a press conference in Beijing that Wahaha was not short of money, had no bank loans, and had substantial deposits, so it would not seek an IPO. According to statistics from China Economic Net, at that time, more than 800 companies were queuing for domestic IPOs. All this happened after 2007, when Danone's "forced acquisition" of Wahaha failed and led to a trademark lawsuit. In 1996, Wahaha signed a strategic agreement with Danone, a world-renowned enterprise, to establish five joint ventures, in which the foreign party held 51% of the shares and legally held the Danone brand, while "illegally" using the Wahaha brand. Over the next 10 years, Wahaha used its control of the Chinese market to manage the joint ventures and operate non-joint ventures for profit. As a result, Wahaha received 3.077 billion yuan in dividends, while Danone gained a 23% share of China's bottled water market. Ten years later, Danone proposed to Wahaha to transfer the Wahaha trademark to the joint venture. Zong Qinghou mistakenly thought that even after the transfer, it would return to their own brand, and Wahaha would become a joint venture with a larger share. "Because at that time I didn't understand capital operations, it has become a big problem..." Zong Qinghou said then. The Trademark Office did not approve the transfer, so it was halted. In subsequent lawsuits, Danone lost all cases, including trademark ownership and non-compete clauses, with all domestic judgments ruling in Wahaha's favor. On September 30, 2009, Danone announced that it had reached a friendly settlement with Wahaha Group, and as part of the settlement, Danone and Wahaha would terminate their joint venture relationship. At the same time, Danone agreed to sell its 51% stake in each Danone-Wahaha joint venture to the Chinese partner. Industry insiders point out that the root cause of the dispute was that Chinese local enterprises only know how to do marketing, not how to think and handle problems strategically, while foreign enterprises only know how to resolve conflicts according to market rules and have not learned to rely on unspoken rules in mainland China. According to Danone's announcement at the time, the final resolution of the dispute was largely due to negotiations "with the support of the Chinese and French governments." Nevertheless, the relationship between Wahaha and Danone after that could be described as "never interacting again." "Due to the unclear understanding of the significance of trademarks and brands at the time, Wahaha's development fell into a trap carefully set by Danone." In 2011, Zong Qinghou said in a media interview that Danone had hidden clauses in the joint venture agreement, and after the transfer of the 'Wahaha' trademark was rejected, it required Wahaha to obtain the consent of Danone or the joint venture's directors to use the trademark for production and sales. A clash of two business styles On the issue of going public, Zong Qinghou and his daughter once reached a tacit understanding. In January 2011, China Entrepreneur reported an exclusive interview with Zong Fuli, noting that she agreed with her father's approach: "No introduction of high-level managers from outside, no plans for an IPO." At that time, Zong Fuli said that because Wahaha has a strong 'family culture,' outsiders cannot adapt, and the things he advocates are not recognized by employees. "The possible consequences are what we don't want to see. Instead of that, it's better to gradually change our employees. For us, it can only be adjustments from internal personnel, starting from the boss's ideas, and slowly adjusting employees' thoughts." Now, after working at Wahaha for 8 years and serving as chairman of Hongsheng Beverage Group Co., Ltd., a subsidiary of Wahaha, and president of Hangzhou Wahaha Import and Export Co., Ltd., Zong Fuli has clearly accepted some of her father's ways. However, from her exclusive interview with Phoenix Finance in 2013, Zong Fuli expressed dissatisfaction and frustration with Wahaha's weak distributor system, lack of long-term products, proliferation of diversified businesses, and the personnel structure and internal management centered on her father. In 2010, Zong Qinghou announced plans to enter the retail industry, aiming to open 100 shopping malls or complexes within 3-5 years. Earlier reports suggested that Zong Fuli was responsible for this business, but she explicitly denied it: "It has nothing to do with me," "I don't know why he started this; it has nothing to do with me. I actually don't support him doing this." "We launch many categories a year, and the more we launch, the more we push ourselves into a dead end," "A product usually lasts only six to seven months." What makes her pessimistic is that the Nutrition Express product, which accounts for a large share of Wahaha's revenue, is also nearing the end of its product cycle based on market performance. She said: "I have data to support me." "I think the government needs to face our generation; our generation can never be like my father's generation." When Phoenix Finance asked if she would move the entire company abroad, Zong Fuli retorted, "It's really possible. You know Li Ka-shing has already moved out. Why can't I move out in the future?" In 2004, Zong Fuli returned to China after graduating from Pepperdine University's business school. This university is considered an aristocratic school among top American universities, with the smallest undergraduate enrollment among the top 50 schools in the United States. Notable alumni include Jet Li's daughter Jane Li, Chase Crawford (star of Gossip Girl), Tom Cruise (star of Mission: Impossible 5), and Oscar Munoz, president of United Airlines. According to information, Pepperdine places great emphasis on students' entrepreneurial spirit, and its business school has been rated as the "Best Business School for Women." After returning to China, Zong Fuli went directly to Wahaha's Xiaoshan Second Base to be responsible for production management, serving as assistant director of the management committee. Before that, she had spent seven or eight years in the United States, receiving education at San Marino High School in California and Pepperdine University's international business program, developing a complete theoretical system and lifestyle habits of Western market economy and social culture. In 2011, Ren Shaoying, head of external relations at Hongsheng Group, said in an interview with China Entrepreneur that Zong Fuli's main change after returning to China was "democracy." She lets employees call her Kelly or Fuli, and her business cards do not have titles, but this does not prevent her from making final decisions when she cannot convince employees, saying, "Then it's definitely my call." But she still shows the occasional girlish side. Ren said, "She sometimes doesn't eat meals and just snacks instead." When she disagrees with her father, she might sulk and give him the cold shoulder for two or three days. Over the years, Miss Zong's sense of achievement and frustration have both come from her father. "His inability to recognize me is my biggest frustration. Even if you are a professional manager, if your boss doesn't recognize you, you would feel sad, right?" One frequent disagreement is that Zong Fuli, with her modern management approach, believes Wahaha should assign people based on positions, while her father, a local entrepreneur, believes in assigning positions based on people. Some veteran employees who have been stationed in other places for years return to Wahaha's Hangzhou headquarters when they get older. Zong Fuli naturally thinks they should retire with generous salaries, but Zong Qinghou always creates advisory roles for them to stay in the company. "I haven't been very successful in convincing my dad on this point, but I haven't changed my mind either." In daily personnel management, Zong Fuli also prefers directness. For this, she heard employee evaluations: "They think I am much harder to get along with than my dad; my requirements are stricter." She believes her father is more gentle and moderate with cadres. "This is a clear difference. When I use people, I tell them directly what I want them to accomplish. If some employees make mistakes, I won't tolerate it easily because the company's rules are here." Phoenix Finance pointed out that in Zong Fuli's view, Wahaha's current management situation is due to "her father's personality." "I think my dad likes to work that way, so if you ask him to change, he would be uncomfortable, and the people below would also be uncomfortable." Her father, Zong Qinghou, has always played the role of the patriarch of Wahaha Group, strong-willed, stubborn, and conservative. "They wait every day for the boss's (Zong Qinghou's) instructions, and if they suddenly don't get them, they think, 'What should I do today? I don't know.'" Zong Fuli said: "The company has rules, but these rules are virtually nonexistent. People are used to waiting for the boss's fax every night, then writing 1, 2, 3, 4, 5, 6, 7, and then who does what." Her father is in charge of domestic affairs and lets her handle international matters. Regarding Zong Fuli's acquisition of China Candy, some media quoted Wahaha's response, saying "That is her personal behavior." "I don't want to be a successor. Why must I inherit? I don't want to inherit a company, but I can own it. If I succeed, I hope to acquire Wahaha. That is ownership, not inheritance, right?" Last June, Zong Fuli said in an interview with Oriental Morning Post. "I don't mind being an internet celebrity, but I want to be a different kind of internet celebrity. I still want to take the path of an entrepreneur." She is planning to launch her first product, named after herself and endorsed by herself, completely her own. In Zong Fuli's view, a happy life is "living as you please, of course, doing whatever you want." "I can stay here longer if I like, or fly out to play if I don't. This is the only right I have as a rich second generation." In 2013, Zong Fuli explained in an interview with Phoenix Finance that she knows what she wants. "I hope to study abroad. When I made this decision, I accepted all its consequences." Zong Fuli, a Capricorn, seems to have the same clear-cut, straightforward, and serious style as in 2004, which even surprised the media person who interviewed her at the time. Source: Caishi Media -END-