Wahaha's major shareholder, I can't bear it

Jinjiao Finance

·July 18, 2025 16:30

Why did Hangzhou's state-owned assets hastily sell off in less than a year after Zong Fuli succeeded to the throne, despite decades of peaceful coexistence during the reign of Zong Qinghou? A further question is: why do we now have to intervene in the inheritance and grievances of the Zong family after unsuccessful attempts to get rid of them?

The dispute over Zong Qinghou's inheritance continues to ferment, but the plot quietly reaches a turning point.

On July 17th, the Finance Bureau of Shangcheng District, Hangzhou City responded to the media that a special team has been established to intervene and handle disputes related to the inheritance of Zong Qinghou. This means that the silent major shareholder of Wahaha, the state-owned enterprise holding 46% of the shares, has finally taken a crucial step away from watching coldly.

Just three days ago, Wahaha insisted that "family affairs have nothing to do with company operations" and refused to provide any response.

The nature of this family feud is undergoing a transformation from being a power game within the family to a storm core involving public interests and corporate governance, from "the company is irrelevant" to the involvement of a special team in state-owned assets.

Major shareholder changes face

Many people do not know that Wahaha, which has been controlled by the Zong family for many years, is actually a mixed ownership enterprise of state-owned assets and family.

According to Qichacha data, the largest shareholder of Hangzhou Wahaha Group Co., Ltd. is Hangzhou Shangcheng District Wenlvshang Investment Holding Group Co., Ltd., which is affiliated with the Shangcheng District Finance Bureau. This means that 46% of Wahaha Group's shares are real state-owned assets.

But for decades, this major shareholder who holds nearly half of the shares has been almost invisible.

Zong Qinghou leads the management and strategy of Wahaha, forming a complete closed-loop system of strongman culture and family governance. State owned enterprises do not intervene in operations or participate in management, acting more like an "invisible investor" who claims to "support the development of private enterprises" externally, while internally letting Zong Qinghou "make decisions alone".

This "strongman led+state-owned assets backed" structure operated well in the era of Zong Qinghou. But when Zong Qinghou passed away, there was a vacuum in the focus of governance, and there was fierce competition for heirs. The complexity and risks of the problem were truly revealed, and the major shareholders of state-owned assets could no longer remain silent.

In July 2024, a resignation letter from Zong Fuli was circulated online, which mentioned that "the People's Government of Shangcheng District, Hangzhou City and some shareholders of Wahaha Group have questioned the rationality of Wahaha Group's operation and management since the death of Zong Qinghou, the chairman. Zong Fuli has decided to resign from her positions as vice chairman and general manager of Wahaha Group and no longer participate in its operation and management.

This caused a huge uproar, coupled with the prevailing public opinion at the time, forming a wave similar to "Princess Chang is isolated and helpless". The major shareholder of state-owned assets responded hastily, saying that "they were not aware of Zong Fuli's resignation, but the leadership is verifying it".

If this response only breaks the previous silence, then the upcoming trademark transfer event is even more worth pondering.

In February 2025, Hangzhou Wahaha Group issued a statement on the transfer of "Wahaha" series trademarks, stating that a total of 387 "Wahaha" series trademarks are being applied for by the China National Intellectual Property Administration to be transferred from Hangzhou Wahaha Group Co., Ltd. to Hangzhou Wahaha Food Co., Ltd., in other words, from the state-owned major shareholders to the company controlled most by Zong Fuli.

However, this matter changed in May. According to a report by Phoenix Network's "Storm Eye", Shangcheng District Culture and Tourism Group has been in continuous negotiations with Zong Fuli regarding the Wahaha trademark matter. They intend to transfer their 46% stake in "Hangzhou Wahaha Group Co., Ltd." to Zong Fuli, but the price has not been agreed upon.

This is interesting, upgrading from "transferring 387 trademarks" to "transferring 46% equity", the major shareholder of Wahaha has taken such a big step and is about to transform Wahaha from a state-owned enterprise to a private enterprise.

Why did Hangzhou's state-owned assets hastily sell off in less than a year after Zong Fuli succeeded to the throne, despite decades of peaceful coexistence during the reign of Zong Qinghou?

A further question is: why do we now have to intervene in the inheritance and grievances of the Zong family after unsuccessful attempts to get rid of them?

No longer endure

Wahaha's major shareholder has always had their own difficulties.

From Wahaha's revenue perspective, it can be considered a very high-quality asset. For example, in the past three years, sales have consistently exceeded 50 billion yuan, with an estimated return to 70 billion yuan in 2024, a year-on-year surge of approximately 20 billion yuan.

In theory, Hangzhou Shangcheng District State owned Assets, which holds 46% of the shares, should receive considerable dividends every year, but the fact is quite surprising.

According to an article published by the Economic Reference News, a subsidiary of Xinhua News Agency, titled "Suspected Damage to the Rights and Interests of State owned Shareholders and Employees, Wahaha's' External 'Puzzle to be Solved", as of the end of 2022, the total assets of the domestic' Wahaha Group '(including external companies) were 37.047 billion yuan, and the net profit was 4.767 billion yuan; However, the total assets of Wahaha Group, which is jointly owned by state-owned enterprises, are only 5.807 billion yuan, with a net profit of only 18.7128 million yuan.

That is to say, the scale of this external company is much larger than that of Wahaha Group, where state-owned assets are located. The former's profit is 254 times that of the latter, so it can be inferred that the dividends that state-owned major shareholders can receive are quite limited.

It should be pointed out that over 100 Wahaha external companies are not related to state-owned assets, but they conduct commercial activities around Wahaha products, with the controlling power behind them pointing to Zongjia.

|There are countless enterprises under Zong Fuli's name that are independent of Hangzhou Wahaha Group.

The report further stated that from 2008 to the end of 2022, Wahaha Group did not sign any preferential policies with the government of Shangcheng District. Wahaha Group did not distribute profits on its books, but issued formal shareholder resolutions every year. The dividends of the management and employee stock ownership association were taken in the name of "fund transactions", while state-owned shareholders did not distribute dividends.

According to several employees of the shareholding association, after the restructuring, the management and employees who have invested in Wahaha will receive an annual dividend of no less than 0.8 yuan per share. If this ratio is applied, the largest shareholder, Shangcheng Wenlv (holding 242 million shares), should receive an annual dividend of about 200 million yuan.

So, on the other hand, since the major shareholders of state-owned assets have not received fair dividend rights for many years, why can they live peacefully in the era of Zong Qinghou, but no longer tolerate it after Zong Fuli succeeded to the throne?

Some senior lawyers in the industry believe that this is because corporate taxation has gradually replaced national (public) stock dividends as the main source of government revenue. For local governments, the taxes and fees paid by enterprises within their jurisdiction are the key factors that have a greater impact on the increase of local finances. In this situation, the attention of local governments to whether state-owned shareholders can receive sufficient dividends in Wahaha Group is relatively reduced, and local governments are even the weaker party when facing investment pressure from other local governments on local star enterprises.

In other words, as long as the enterprise develops steadily locally, contributes to taxation and creates employment, it is the greatest contribution to the local government. In the era of Zong Qinghou, enterprises were stable and governance was dominated by strong people. Local governments chose to "tacitly approve" and even tolerate the existence of increasingly large "external companies" controlled by families.

One sentence: If the founder manages well, let him do as much as possible; In the event of a storm, I also hope that the 'family affairs can be resolved', so as not to cause greater turmoil.

So now that the state-owned assets have stepped forward, it indicates that the turmoil that has emerged is not just a "family matter", but may affect the stable development of Wahaha, and further affect local taxation and employment. According to a report by Southern Metropolis Daily, a Wahaha distributor stated that the Wahaha family dispute has had an impact on product sales and market confidence. "As a distributor, can I continue this year

In terms of product sales, third-party data platforms show that after the Wahaha family dispute incident was exposed, the e-commerce platform Wahaha's sales declined on July 14th and 15th, with daily sales falling from the range of 10000 to 12000 to the range of 5000 to 7500. The number of related live broadcasts decreased from 317 on July 12th to 91 on July 15th, and the number of live influencers dropped from over 200 before to 75 on July 15th.

Chinese food industry analyst Zhu Danpeng believes that this public opinion crisis has had a significant impact on the future of Wahaha, including its sales and overall development.

Moreover, Wahaha itself has become a symbol of national brands, and state-owned enterprises cannot afford the consequences of national brands crashing into their hands.

Why did the specialized class come here

The shift in attitude of major state-owned shareholders from 'unsuccessful exit' to 'intervention' is driven by a more realistic consideration: Wahaha's equity structure has become too complex, to the point where they can no longer stand idly by.

This may also be the reason why state-owned assets in Shangcheng District, Hangzhou once attempted to divest and clear their positions. Wahaha has too many factories and companies with complex equity structures. If a third-party company takes over, it will require a great deal of effort to sort them out. A former employee of Wahaha mentioned in an interview that it's not that the problem will be covered up with the delivery of the transaction after the equity is sold, but rather that these 46% of the shares are 'sick'.

Wahaha's equity structure can be traced back to the 1990s. Wahaha Group, formerly known as Hangzhou Baoling Children's Nutritional Food Factory, was renamed Hangzhou Wahaha Food Group Co., Ltd. after merging with a canning factory in 1991. It is 100% owned by the State owned Assets Supervision and Administration Bureau of Shangcheng District, Hangzhou. In 1999, Wahaha underwent a restructuring, with several equity transfers resulting in the ownership of 46% by the State owned Assets Supervision and Administration Bureau of Shangcheng District, 29.4% by Zong Qinghou (later inherited by Zong Fuli), and 24.6% by nearly 2000 formal employees.

But in 2018, while still at the helm, Zong Qinghou pushed for a stock "repurchase" plan, converting employee shareholding into dry shares, in other words, the shares were recovered but the dividends remained. However, in recent years, as the company's dividends have decreased, some employees have stopped buying into this' repurchased 'agreement. Starting from 2024, some senior employees will form a rights protection committee in an attempt to overturn the agreement and restore their shares through legal means.

This is just one of the triggers.

What really worsened the situation was the inheritance dispute that surfaced after the death of Zong Qinghou. The "second tier" of the Zong family, led by the three children born to "Shadow Lady" Du Jianying, has initiated multiple lawsuits in Hong Kong and Hangzhou. In addition to demanding the liquidation of trust funds, they are also attempting to divide the 29.4% company shares inherited by Zong Fuli. According to Article 1127 of the Civil Code, children born out of wedlock have equal inheritance rights as children born in wedlock. If their claims are partially or fully supported by the court, Zong Fuli's shares are likely to face splitting.

This means that Wahaha's already complex equity structure will become even more chaotic. For any enterprise, an out of control equity structure is a major taboo in governance; For state-owned assets that prioritize stability, this is an unacceptable situation.

According to industry insiders, in this context, it cannot be ruled out that the major shareholders of state-owned assets will strengthen their own discourse power and even promote the reshaping of governance structure. It is reported that 5% of the shares in the employee shareholding association were originally transferred from the Shangcheng District government. If the government has the ability to recover this portion of shares, plus the existing 46%, state-owned assets can achieve absolute control over Wahaha Group.

Of course, all of this still cannot avoid a reality: the massive 'outside system Wahaha' still exists. During her lifetime, Zong Qinghou had laid out a series of assets outside the system. Now, Zong Fuli has forcefully eliminated dissidents and incorporated Wahaha's core assets into the "Hongsheng series". As a result, she is willing to shut down 18 factories, triggering the "OEM gate" incident. The fierce competition has had a severe impact on Wahaha's brand reputation and stable development.

From this perspective, the establishment of a "special team intervention" by the major shareholder of state-owned assets to handle family disputes may not be solely for the purpose of "coordinating family affairs". It may also be that state-owned assets are preparing for deeper goals: leveraging the current situation, clarifying equity, restructuring governance, and reconfirming their strategic role as state-owned controlling shareholders.

Next, the key is to see three actions: whether the specialized team will publicly express their stance, whether they will intervene in equity coordination, and whether they will promote governance restructuring.

Regardless of the outcome, the Wahaha, created by Zong Qinghou with a strong sense of patriotism and personal will, has become a thing of the past.

This article is from the WeChat official account "Jinjiao Finance". The author is Jiao Ye, 36 Krypton.

The viewpoint of this article only represents the author himself, and the 36Kr platform only provides information storage space services.

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