---
title: "Zong Qinghou: \"Chinese people are hard to manage because they are smart and all want to be emperor\"!!"
description: "Despite the overall economic downturn, Zong Qinghou remains confident in Wahaha's operations and management model. On August 27, at the 2016 China 500 Enterprises Summit, Zong stated that Wahaha has no bank loans and holds substantial bank deposits, which he considers an innovation in management. He also revealed that in the first half of 2016, despite negative growth, Wahaha paid 3.1 billion yuan in taxes. Although affected, he believes the problems are not significant overall."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2016-08-28"
language: "en"
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---

# Zong Qinghou: "Chinese people are hard to manage because they are smart and all want to be emperor"!!

> Despite the overall economic downturn, Zong Qinghou remains confident in Wahaha's operations and management model. On August 27, at the 2016 China 500 Enterprises Summit, Zong stated that Wahaha has no bank loans and holds substantial bank deposits, which he considers an innovation in management. He also revealed that in the first half of 2016, despite negative growth, Wahaha paid 3.1 billion yuan in taxes. Although affected, he believes the problems are not significant overall.

**Despite the overall economic downturn, Zong Qinghou remains confident in Wahaha's operations and management model.**
On August 27, at the 2016 China 500 Enterprises Summit, Zong Qinghou, Chairman and General Manager of Wahaha, stated that Wahaha currently has no bank loans and holds substantial bank deposits, which he considers an innovation in management.
Zong revealed that in the first half of 2016, despite negative growth, Wahaha still paid 3.1 billion yuan in taxes. "Although affected, overall the problems are not significant. No matter what, the key is to make good products and manage the enterprise well," Zong said.
When discussing management experience, Zong said Wahaha practices "decentralized authorization under highly centralized management," with "major powers concentrated, minor powers dispersed."
**He lamented that Chinese people are difficult to manage because they are too smart.**
Zong Qinghou, Chairman and General Manager of Wahaha, attended the 2016 China 500 Enterprises Summit.
(Images in the article are from The Paper's reporter Zhang Xiaoxiang)
**Zong Qinghou summarized Wahaha's management philosophy: major powers concentrated, minor powers dispersed**
The outside world has always considered Wahaha conservative in corporate development, but Zong still believes that Wahaha's steady development strategy is feasible.
Zong said Wahaha has attempted other diversified industries but insists on developing its main business. "I think it's better to do business honestly, so I haven't done other things. We take small steps but move quickly; we are cautious at first, but once an opportunity arises, we invest on a large scale and run fast. Over the years, we have been relatively steady and haven't had major problems. When doing business, you need a good mindset. If you try to earn money you shouldn't, you might lose your capital," Zong said.
At the summit on August 27, Zong was dressed in his usual light blue short-sleeved shirt and leather sandals, appearing quite simple.
Zong summarized Wahaha's management philosophy as "decentralized authorization under highly centralized management," with "major powers concentrated, minor powers dispersed."
Zong clarified that Wahaha is no longer at the stage where every matter and reimbursement requires his approval, as reported by the media. "At the beginning of entrepreneurship, indeed everything needed my approval. At that time, there was no money. Now it's impossible for me to approve every small matter; Wahaha has implemented decentralized authorization."
Zong admitted that Wahaha had not set up deputy general manager positions before, and he served as both chairman and general manager, and also as party secretary for a period. "Wahaha's branches, nominally branches, are actually workshops, managed centrally by the headquarters."
Regarding Wahaha's management model, Zong believes that introducing innovation and independent innovation are also important. Wahaha, often considered too traditional, has begun intelligent production. Zong revealed that Wahaha has started making beverage production lines intelligent. "That is, we use sensors and systems to automatically adjust key technologies, which better ensures product quality," Zong said.
Zong revealed that Wahaha's profit margin was around 30% before, and now it is 20%. "Generally, enterprises don't have such high profit margins," Zong believes. Zong joked that Wahaha produces 54,000 bottles of water per hour, and even if each bottle earns only one cent, the profit is considerable.
**"Wahaha employees fear me but don't hate me"**
When speaking on "Eastern Wisdom in Enterprise Growth," Zong believes that many Western management theories can be borrowed, but due to different national conditions and cultures, there are differences.
Zong insists that good Chinese enterprises basically have an enlightened leader who is both strong in management and caring for employees. "I think you need to make employees fear me but not hate me. If you don't fear me, I can't manage you. But I also care about you, I don't play tricks on you, I don't punish you; as long as you correct your mistakes, it's fine. I treat you well, so you fear me but don't hate me. We say business is like a battlefield; now enterprises are fighting battles every day. Enterprises need combat effectiveness and strict discipline," Zong said.
Zong believes that Chinese enterprises should combine incentives and competition, and be people-oriented, making employees admire you. "Chinese entrepreneurs must have substance, be authoritative and trustworthy. Some are authoritative but untrustworthy," Zong said.
Zong lamented that Chinese people are actually difficult to manage because they are smart and all want to be "emperor."
Regarding the next step in Wahaha's management, Zong believes it should move from rule by man to rule by law. "I am older now, and I encourage subordinates to act first, then correct them if they do wrong, gradually building up the management team."
Zong reflected on his long-standing "autocratic" management style: "Over the years, I have explored every step myself, touched every link, and made no major mistakes in major decisions. Employees trust me. Of course, problems have arisen: employees rely on me too much."
Zong delivered a speech at the "Eastern Wisdom in Enterprise Growth" sub-forum.
**"Ren Zhengfei's management is effective"**
Zong specifically mentioned the trouble rumors cause for enterprises. "Since the melamine incident, there have been rumors that drinking Wahaha's Nutri-Express causes leukemia. These are rumors. Our brand has been doing well over the years," Zong said.
In his speech, Zong expressed admiration for Huawei founder Ren Zhengfei: "Ren Zhengfei has a set of management methods. He is a military veteran; I have heard his speeches."
Indeed, Zong and Ren have similarities: both implement "strongman governance" and stick to their main businesses. In daily work and life, their styles are similar; the media has repeatedly captured Ren dragging his suitcase alone at the airport waiting for a taxi.
Yan Xuefeng, General Manager of Wahaha's Hunan branch, told The Paper that on this trip to Changsha, Zong came alone without assistants. The Paper learned that Zong arrived at Changsha Huanghua Airport at around 3 p.m. on August 26, and arrived at Wahaha's Changsha production base for inspection and dinner after 4 p.m.
In the 2016 China 500 Enterprises list, Wahaha Group ranked 271st with revenue of 49.475 billion yuan. In 2013, Zong Qinghou was ranked China's richest person on the Hurun Rich List with assets of 82 billion yuan.
**The following is an exclusive dialogue between The Paper and Zong Qinghou:**
**The Paper:** How many more years do you plan to stay in management?
**Zong Qinghou:** I am gradually delegating authority and cultivating a management team that can manage Wahaha when I step down. Previously, Wahaha's management team had me as chairman and general manager, then ministers, without deputy general managers. But now we have two deputy general managers. I have worked hard all my life.
**The Paper:** Are you feeling pain as you gradually delegate authority?
**Zong Qinghou:** No, there are many new things to research.
**The Paper:** What are the "many new things" you mentioned?
**Zong Qinghou:** I have new plans in equipment manufacturing. We already have two machinery factories of our own. Previously, we made molds and accessories for imported equipment. Now we can make many equipment ourselves, and we have also made robots (23.950, -0.08, -0.33%). But we don't have a big advantage in machinery factories because key components still need to be imported. Regarding robots, we need to view them rationally. If there are too many robots, what about employment? Also, many small enterprises can't afford robots.
**The Paper:** Recently, your daughter Zong Fuli launched a new brand named after her English name Kely: "Kelyone" personalized custom fruit and vegetable juice, already launched in the Shanghai market, limited to 300 portions per day, with a uniform specification of 300ml, priced at 28, 38, and 48 yuan. Some think the price is too high and it can't compete with fresh juice on the market; this market strategy is bound to fail. What do you think?
**Zong Qinghou:** You all should give more opinions. She doesn't come to talk to me, and I don't interfere with her. Young people, one failure is no big deal.
-END-
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