Knowledge | Posted by Aye Myat Thu
Zong Qinghou was born in poor circumstances at Suqian in Jiangsu province on November 16 1945.
Having dropped out of school to help support his family, he was sent during Mao Zedong’s cultural revolution to work in a salt factory on Zhoushan island, south of Shanghai, where he stayed for 15 years.
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.
In 1979, Zong returned home upon the retirement of his mother, who was a school teacher.
He eventually returned to Hangzhou, and only found menial work at a local school due to the low level of his education. And then he found work as a soft-drinks salesman.
Having taken over a small shop attached to a school, selling drinks and ice cream to pupils, in 1989 he raised a loan to buy a canning factory and began to market a milk-based drink with supposed nutritional benefits under the Wahaha brand.
At about the same time he founded the Wahaha Group and teamed up with a nutrition expert at a local hospital to develop the company's first product, a nutritional drink for children.
In 1991, with support from the Hangzhou government, the company acquired an indebted State-owned enterprise, the Hangzhou Canned Food Product Co.
Zong’s company, Wahaha (which means “laughing child”), was a major distributor of milk- and tea-based beverages, and controlled almost a quarter of China’s bottled water market.
Its success was built on a partnership signed in 1996 with Danone, the French foods group – hailed at the time as a showcase joint venture between Chinese and western interests – to distribute Wahaha products throughout China.
The company's idea involved the upfront guarantee of money from the distributors to the producers, with the products delivered at a later date.
This ensured a steady cash flow for the producers and fostered their loyalty to the distributors.
The money guarantee was usually the equivalent of 10 percent of estimated annual sales and was refunded with interest at year's end by the producers.
This innovative risk-sharing model became a case study at many business schools.
At its peak, Wahaha boasted more than 7,000 distributors, over 100,000 wholesalers and 5 million sales outlets across China. In 1996, the company extended its portfolio to include bottled water, which solidified its market presence.
In 2013, the company made 78.2 billion yuan ($10.8 billion) in revenue, still the highest annual revenue recorded for China's beverage market.
(A worker checks the quality of bottled water on a production line at a branch company of the Wahaha Group on Feb 15, 2017. (ZHANG GUORONG / FOR CHINA DAILY)
In recent years, Zong's daughter Zong Fuli, 42, has emerged as a prominent figure in the company, gradually assuming key roles and responsibilities.
Since 2007, Zong Fuli, who studied in the United States from the age of 14.
Ref: Zong Qinghou, Wahaha ‘laughing child’ soft-drinks tycoon, once one of China’s richest men – obituary (telegraph)
Photo Credit: ZHANG GUORONG, Getty Images
