Chinese Beverage Heir’s Resignation U-Turn Shows Corporate Complexities at Wahaha

By Sun Yanran, Feng Yiming and Wang Xintong

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Zong Fuli. Photo: VCG

Zong Fuli’s sudden return to her positions at the Chinese beverage giant Wahaha just days after she resigned as vice chair and general manager highlights the company’s internal power struggles and complex shareholder structure.

Zong decided to return to Hangzhou Wahaha Group Co. Ltd. after “friendly negotiations among shareholders,” according to a company statement released Monday, which noted her decision will “ensure the smooth and healthy development of the company.”

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Zong Fuli returned as vice chair and general manager of Wahaha after resigning due to power struggles and shareholder conflicts.
Wahaha's ownership includes a 46% stake by a district government investment arm and 24.6% by an employee organization, adding complexity.
Zong’s leadership challenges are heightened by declining sales, increased competition, and unclear control over her father’s shares.

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Who’s Who

Hangzhou Wahaha Group Co. Ltd.: Hangzhou Wahaha Group Co. Ltd. is a Chinese beverage giant founded by the late Zong Qinghou, once China's richest man. The company faces internal power struggles, notably involving Zong Fuli, his daughter, who recently returned to her positions after resigning. Wahaha's complex shareholder structure includes a 46% stake by a district government investment company and stakes by Zong's family and an employee organization. The company has struggled with declining sales in a competitive market.

Nongfu Spring Co. Ltd.: Nongfu Spring Co. Ltd. is Wahaha's main domestic rival. Founded by beverage tycoon Zhong Shanshan, Nongfu Spring has risen to prominence in the Chinese beverage market. Zhong Shanshan is currently China's wealthiest person, highlighting the company's success and competitive edge over Wahaha in recent years.

Danone SA: Danone SA is a French food giant that partnered with Wahaha in the 1990s and 2000s to form joint ventures targeting China's beverage market. The partnership later soured, leading Danone to file copyright infringement lawsuits against Wahaha in 2007. The litigation was settled in 2009 when Danone sold its 51% stake in the JVs for 300 million euros ($325 million) and ended the partnership.

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What Happened When

July 15, 2024：: Zong Fuli resigned as Wahaha’s vice chair and general manager and was no longer involved in managing the company.

July 20, 2024：: A domestic media outlet TMTPost reported that a Wahaha executive said it was 'impossible' to get the government-funded shareholder to divest from the company.

July 22, 2024：: A company statement released on Monday noted Zong Fuli's decision to return to Hangzhou Wahaha Group Co. Ltd. after friendly negotiations among shareholders.

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