Zong Qinghou Explained

Zong Qinghou
Native Name Lang:zh
Birth Date:11 October 1945
Birth Place:Suqian, Jiangsu, China
Death Place:Hangzhou, Zhejiang, China
Occupation:Businessman
Delegate to the National People's Congress
Party:Chinese Communist Party
Spouse:Shi Youzhen
Children:Zong Fuli (; Kelly Zong, daughter)[1] [2] [3]
Term Start:2002
Term End:2018
Module:
Child:yes
Order:st
P:Zōng Qìnghòu

Zong Qinghou (; 11 October 1945 – 25 February 2024) was a Chinese billionaire businessman, and the founder, chairman and CEO of the Hangzhou Wahaha Group, China's leading beverage company.[4] As of March 2022, his net worth was estimated at US$8.7 billion.[2]

Biography

Zong was born on 11 October 1945,[5] [6] into a poor family in Zhejiang,[7] and he had little formal education. Because of the family's poverty, Zong had to drop out of middle school. Zong was part of the sent-down movement and worked in Zhoushan 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.

In 1979, Zong returned home upon the retirement of his mother, who was a school teacher.[8] 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, Hangzhou, selling milk. Zong headed the embryonic Wahaha business, which distributed fizzy soft drinks, ice and stationery. Together with two retired schoolteachers, he borrowed the sum of CNY 140,000, to start producing milk drinks for distribution.[9]

Zong obtained independence from an early government partner by stressing his links with Danone. With his autocratic style and workaholic ethic, he built Wahaha into the largest beverage manufacturer in the People's Republic of China.[10]

The WHH joint venture entered into with Groupe Danone involved the inward investment of US$70 million in five joint venture companies[4] 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.[11] Collaboration has grown into 39 joint venture entities by 2007.[10]

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.[12]

Forbes named Zong as China's richest man in 2010.[13] 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.[14]

Personal life

Zong served as a delegate to the Chinese National People's Congress from 2002 to 2018.[15]

Zong was married to Shi Youzhen, and they had one child, a daughter, Fuli (Kelly) Zong . Shi was purchasing manager at Wahaha.[16] Zong once held permanent resident status in the United States, which he had obtained to make it easier for him to travel to the country and look after his investments there.[17] His daughter attended Pepperdine University in Southern California and was naturalized as a U.S. citizen, but later moved back to China and in 2007 began the procedure to renounce her U.S. citizenship.[18] [19] 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.[20] In 2013, he stated that because he did not re-enter the U.S. for several years, his status was thus deemed abandoned.[17]

Zong stated that he lived on less than $6,000 per year, attributing his thriftiness to the teachings of Mao Zedong. Zong also emphasized cost-cutting measures in his approach to business, describing cost control as a key element in Wahaha's operations.

Zong Qinghou died on 25 February 2024, at the age of 78.[21]

Tax evasion allegations

Zong claimed to have been paid a salary of €3,000 and €100,000 annual allowances plus a bonus worth 1% of the annual profit of the joint ventures, totaling 70 million yuan of income every year.[22]

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 a 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.[22]

Honorary titles

List of titles:[23]

Notes and References

  1. News: Chen Ziyan . 7 February 2017 . Who Are China's Most Powerful Businesswomen? . . 3 . 29 February 2024.
  2. Web site: Forbes profile: Zong Qinghou . Forbes . 18 March 2022 . 24 June 2020 . https://web.archive.org/web/20200624024212/https://www.forbes.com/profile/zong-qinghou/ . live .
  3. Web site: Kelly Zong . https://web.archive.org/web/20121029235912/http://www.forbesasiaconferences.com/forbeswomenforum2012/speaker/kelly-zong . 29 October 2012 . dead . Forbes Forum: Asia's Power Business Women . 1 March 2012 . 29 February 2024 .
  4. News: Danone set to sue Wahaha over breach of contract . 11 April 2007 . . Hong Kong . B3.
  5. Web site: zh:宗庆后：解剖"娃哈哈"20年 . dfzjsh.com . 6 March 2019 . http://www.dfzjsh.com/xy/ShowArticle.asp?ArticleID=536 . https://web.archive.org/web/20190306111654/http://www.dfzjsh.com/xy/ShowArticle.asp?ArticleID=536 . 6 March 2019 . dead . 25 February 2024.
  6. Web site: Ci Yuzhou . zh:《宗庆后：万有引力原理》. Universal Gravitation: Zong Qinghou's Business Law. 2015 . Red Flag Publishing House . http://www.hongqipress.com/bookabstract/201610/t20161010_1964159_5.shtml.
  7. Book: Marquis . Christopher . Qiao . Kunyuan . 2022 . . Kunyuan Qiao . 978-0-300-26883-6 . New Haven . 1348572572 . Christopher Marquis.
  8. http://unn.people.com.cn/BIG5/41495/41500/3037676.html "娃哈哈"的新童話
  9. Web site: Kong . Dimsumdaily Hong . 25 February 2024 . China's leading beverage mogul and founder of Wahaha Group, Zong Qinghou, passes away at the age of 79 . 26 February 2024 . Dimsum Daily . en-US . 25 February 2024 . https://web.archive.org/web/20240225071002/https://www.dimsumdaily.hk/chinas-leading-beverage-mogul-and-founder-of-wahaha-group-zong-qinghou-passes-away-at-the-age-of-79/ . live .
  10. News: South China Morning Post . Hong Kong . Danone and Wahaha vie for the last laugh . 11 June 2007 . B3.
  11. Groupe DANONE confirms being in negotiations with its Chinese partner in beverages, Mr. Zong . Danone Group . 10 April 2007 . 11 April 2007 . 27 May 2007 . https://web.archive.org/web/20070527000608/http://www.danone.com/wps/portal/jump/DanoneCorporateIntl.Press.Commun2004PressReleases?ref=CMS.DanoneCorporateIntl.Press.2006PressReleases.Trimestre1.CP_100407 . dead .
  12. current developments regarding Wahaha dispute . Danone Group . 12 June 2007 . 21 June 2007 . 27 September 2007 . https://web.archive.org/web/20070927210545/http://www.danone.com/wps/portal/jump/DanoneCorporateIntl.Press.Commun2004PressReleases?ref=CMS.DanoneCorporateIntl.Press.2006PressReleases.Trimestre1.CP_120607 . dead .
  13. http://www.chinadaily.com.cn/m/hangzhou/e/2010-03/12/content_9583215.htm "Zong Qinghou tops Forbes' mainland rich list"
  14. http://hurun.net/EN/HuList.aspx Rich List 2013
  15. Web site: 25 February 2024 . Zong Qinghou, Chinese billionaire founder of Wahaha beverage group, dead at 79 . 25 February 2024 . South China Morning Post . en . 25 February 2024 . https://web.archive.org/web/20240225060002/https://www.scmp.com/business/china-business/article/3253122/zong-qinghou-billionaire-founder-chinese-drinks-giant-wahaha-group-dies-79 . live .
  16. Russell Flannery, "How To Lose In China", Forbes, 18 June 2007. Retrieved 21 June 2007.
  17. News: http://www.worldjournal.com/view/aChinanews/21863284/article-%E5%AE%97%E6%85%B6%E5%BE%8C%EF%BC%9A%E5%B7%B2%E7%84%A1%E7%B6%A0%E5%8D%A1-%E4%B8%8D%E6%9C%83%E7%A7%BB%E6%B0%91%E6%B5%B7%E5%A4%96. zh: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. 4 March 2013. 8 May 2013. https://web.archive.org/web/20130508235331/http://www.worldjournal.com/view/aChinanews/21863284/article-%E5%AE%97%E6%85%B6%E5%BE%8C%EF%BC%9A%E5%B7%B2%E7%84%A1%E7%B6%A0%E5%8D%A1-%E4%B8%8D%E6%9C%83%E7%A7%BB%E6%B0%91%E6%B5%B7%E5%A4%96. live.
  18. News: http://finance.sina.com.cn/review/20070720/10533805164.shtml. zh: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. 4 March 2013. 14 October 2013. https://web.archive.org/web/20131014053057/http://finance.sina.com.cn/review/20070720/10533805164.shtml. live.
  19. Quarterly Publication of Individuals, Who Have Chosen To Expatriate, as Required by Section 6039G. Angie Kaminski, Internal Revenue Service. Federal Register. 75. 69160. 10 November 2010. 4 March 2013. 12 October 2013. https://web.archive.org/web/20131012080532/https://www.federalregister.gov/articles/2010/11/10/2010-28316/quarterly-publication-of-individuals-who-have-chosen-to-expatriate-as-required-by-section-6039g. live.
  20. Ma Wenluo, "The Great Green Card Debate in Greater China", Chinastakes.com, 23 June 2008. Retrieved 3 July 2008.
  21. News: 25 February 2024 . zh:娃哈哈创始人宗庆后病逝 . Zong Qinghou, the founder of Wahaha Group, passed away . https://www.zaobao.com.sg/realtime/china/story20240225-1470234 . zh . . 25 February 2024 . https://web.archive.org/web/20240225041848/https://www.zaobao.com.sg/realtime/china/story20240225-1470234 . live .
  22. Wang Zhenghua, "Drinks magnate probed over tax", China Daily, 15 April 2008. Retrieved 3 July 2008
  23. Web site: China's billionaires: Zong Qinghou, boss of Wahaha. Nick Rosen. BBC. 8 June 2011. 20 June 2018. 31 March 2018. https://web.archive.org/web/20180331235310/http://www.bbc.co.uk/news/business-13427392. live.

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