Zong Qinghou

Zong Qinghou (Chinese:宗庆后; born 1945) is a Chinese billionaire businessman, and the founder, chairman and CEO of the Hangzhou Wahaha Group, China's leading beverage company.[2] As of March 2022, his net worth was estimated at US$8.7 billion.[3]

Zong Qinghou
宗庆后
BornOctober 1945 (age 77–78)
Hangzhou, Zhejiang, China
OccupationBusinessman
TitleChairman & CEO, Hangzhou Wahaha Group
SpouseShi Youzhen
Children1 daughter[1]
In this Chinese name, the family name is Zong.

Biography

Zong was born into a poor family in Zhejiang,[4]: 75  and he had little formal education. Because of the family's poverty, Zong had to drop out of middle school.[4]: 75  Zong was part of the sent-down movement and worked in Zhoushan[4]: 75  at a salt farm. In his spare time, Zong read and studied communist texts including The Collected Works of Mao Zedong and How the Steel was Tempered by Nikolai Ostrovsky.[4]: 75 

He returned home in 1979 on the retirement of his mother, who was a school teacher.[5] He eventually returned to Hangzhou, and only found menial work at a local school due to the low level of his education. In 1987, he targeted a minigrocery in a school in Shangcheng District,[5] Hangzhou, selling milk. Zong headed the embryonic Wahaha business, which distributed fizzy soft drinks, ice and stationery.[5] Together with two retired schoolteachers, he borrowed the sum of CNY 140,000, to start producing milk drinks for distribution.

He obtained independence from an early government partner by stressing his links with Danone.[6] With his autocratic style[6] and workaholic ethic, he built Wahaha into the largest beverage manufacturer in the People's Republic of China.[7]

The WHH joint venture entered into with Groupe Danone involved the inward investment of US$70 million in five joint venture companies[2] in exchange for 51% Groupe Danone ownership in each company. The trademark agreement signed on 29 February 1996 gave the JVs the exclusive rights of production, distribution and sales of products under the Wahaha brand.[8] Collaboration has grown into 39 joint venture entities by 2007.[7]

In 2007, the relationship turned sour. Danone had accused Wahaha of "secretly operating a set of parallel companies that mirrored the joint venture’s operations with virtually identical products and siphoned off as much as $100 million from the partnership." Danone and Wahaha reached a settlement and dissolved their partnership. Zong resigned as Chairman of the joint ventures on 5 June 2007.[9]

Forbes named Zong as China's richest man in 2010.[10] He was ranked as China's richest man in 2012 and second-richest in 2013, according to the China Rich List, published by Hurun Report.[11]

Personal

Zong has served as a delegate to the Chinese National People's Congress since 2002. He was re-elected in 2007.[12]

He is married to Shi Youzhen (施幼珍), and they have one child, a daughter, Fuli (Kelly) Zong (宗馥莉). Shi is purchasing manager at Wahaha.[6] Zong formerly held permanent resident status in the United States, which he obtained to make it easier for him to travel to the country and look after his investments there.[13] His daughter attended Pepperdine University in Southern California and naturalized as a U.S. citizen, but later moved back to China and in 2007 began the procedure to renounce her U.S. citizenship.[14][15] Zong gained wide support as he played the role of "David" against a French "Goliath" gobbling up Chinese companies. However, with the revelation of his green card in 2008, public perceptions changed and his reputation suffered.[16] In 2013, he stated that because he did not re-enter the U.S. for several years, his status was thus deemed abandoned.[13]

Zong states that he lives on less than $6,000 per year, attributing his thriftiness to the teachings of Mao Zedong.[4]: 97  Zong also emphasizes cost-cutting measures in his approach to business, describing cost control as a key element in Wahaha's operations.[4]: 97–98 

Tax evasion allegations

Zong claimed to have been paid a salary of 3,000 EUR and 100,000 EUR annual allowances plus a bonus worth 1% of the annual profit of the joint ventures, totaling 70 million yuan of income every year.[17]

Caijing reported in April 2008 that Zong was being investigated for allegedly evading taxes amounting to some ¥ 300 million. An investigator had alleged that Zong "...earned far more than this and hasn't fully reported the tax for years". Caijing implied there may have been less than transparent payments through web of Hong Kong-registered accounts of Zong, Shi, daughter Fuli; and the former Party secretary of Wahaha, Du Jianying. Zong had apparently paid more than 200 million yuan in back taxes in October 2007, after the investigation kicked off. However, the magazine suspected Zong still owed millions more.[17]

Honorary titles

List of titles:[18]

  • National Excellent Entrepreneur
  • National Excellent Manager
  • Model of Patriotism to Support the Armed Forces
  • Outstanding Builder of Socialism with Chinese Characteristics
  • The First Chinese Entrepreneurs Entrepreneurship Prize

References
  1. "Forbes Forum: Asia's Power Business Women". 1 March 2012. Retrieved 2 July 2012.
  2. "Danone set to sue Wahaha over breach of contract". South China Morning Post. Hong Kong. 11 April 2007. p. B3.
  3. "Forbes profile: Zong Qinghou". Forbes. Retrieved 18 March 2022.
  4. Marquis, Christopher; Qiao, Kunyuan (2022). Mao and markets the communist roots of Chinese enterprise. Kunyuan Qiao. New Haven: Yale University Press. ISBN 978-0-300-26883-6. OCLC 1348572572.
  5. "娃哈哈"的新童話 Archived 25 April 2008 at the Wayback Machine(轉載自証券日報) People's Daily, (in Chinese)
  6. Russell Flannery, "How To Lose In China", Forbes, 18 June 2007. Retrieved 21 June 2007.
  7. "Danone and Wahaha vie for the last laugh". South China Morning Post. Hong Kong. 11 June 2007. p. B3.
  8. "Groupe DANONE confirms being in negotiations with its Chinese partner in beverages, Mr. Zong" (Press release). Danone Group. 10 April 2007. Retrieved 11 April 2007.
  9. "current developments regarding Wahaha dispute" (Press release). Danone Group. 12 June 2007. Retrieved 21 June 2007.
  10. "Zong Qinghou tops Forbes' mainland rich list" China Daily, 12 March 2010
  11. Rich List 2013, Hurun Report, China Rich List, 5 August 2014
  12. Eric Mu, "Wahaha chairman has US green card", Danwei, 24 June 2008. Retrieved 3 July 2008.
  13. "宗慶後：已無綠卡 不會移民海外" [Zong Qinghou: I have no green card and will not emigrate]. World Journal. 4 March 2013. Retrieved 4 March 2013.
  14. "宗庆后女儿为啥不早点放弃美国国籍" [Why Zong Qinghou's daughter didn't renounce U.S. citizenship sooner]. China Business Times. 20 July 2007. Retrieved 4 March 2013.
  15. Angie Kaminski, Internal Revenue Service (10 November 2010). "Quarterly Publication of Individuals, Who Have Chosen To Expatriate, as Required by Section 6039G". Federal Register. 75: 69160. Retrieved 4 March 2013.
  16. Ma Wenluo, "The Great Green Card Debate in Greater China", Chinastakes.com, 23 June 2008. Retrieved 3 July 2008.
  17. Wang Zhenghua, "Drinks magnate probed over tax", China Daily, 15 April 2008. Retrieved 3 July 2008
  18. Nick Rosen (8 June 2011). "China's billionaires: Zong Qinghou, boss of Wahaha". BBC.

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