Zong Qinghou:The Old School Tycoon

This September， 68-year-old Chinese beverage magnate zong qinghou， president of soft drink giant Wahaha Group， was ranked the second richest person on the Chinese mainland by the Hurun Rich List， with a personal fortune estimated at 115 billion yuan （US$19 billion）.

Zong is no stranger to the list. In 2010， he topped it， and in early 2013 he was ranked the richest on the Chinese mainland with a fortune estimated at 82 billion yuan（US$13.5 billion）.

Mao’s Influence

Wahaha was born in 1987 in a shop Zong acquired from a school. His business began with only two retired teachers as employees and a $23，000 loan from relatives.

After years of development， Wahaha has become the largest beverage maker on the Chinese mainland with 30，000 employees. Of the top 500 private enterprises on Chinese mainland， Wahaha ranked 16th in terms of revenue， 8th in net profits， and 9th in tax payments in 2012. More surprising， perhaps， is the fact that such a huge enterprise doesn’t owe any bank debts and never went public.

Born in 1945， Zong’s personality is flavored by the era in which he grew up： hardworking， stubborn， and ultra-confident. Like many from his generation， he adores Mao Zedong， and adopted Mao’s confidence in management and personnel. Zong’s empire was built with traditional Chinese style： patriarchal.

However， in the eyes of Zong’s employees， the tyrannical patriarch is also a master manager drenched in China’s traditional culture and human relations. Every summer， Zong sends ice cream and cold drinks to his employees at Wahaha headquarters， a tradition that has continued since Wahaha’s establishment. Every Spring Festival， he visits the production lines to meet workers. He toasts them and passes out hong bao， little red envelopes filled with money， as holiday gifts. He almost never fires employees. Even today， when governmental agencies or state-owned enterprises have stopped providing employees with housing， Zong still offers this benefit. For years， he has subsidized nearly 1，600 apartments for his crew.

“Dictator”

Although he shows great concern for his people when managing the business， Zong is frequently referred to as a “dictator.” A bronze statue of him graces Wahaha’s headquarters. He keeps his gigantic empire under tight control – he acts as the sole president and general manager at the same time. All 200 mid-level managers report directly to him. He even lacks a think tank or consulting team.

A longstanding rumor claims that any Wahaha reimbursement more than about US$8 requires personal approval from Zong. Since 2006， however， Zong has not attended to everything personally. He began trusting others to make tentative decisions， while still keeping the right to the final say. The reasons behind his distinctive management style are not only attributed to China’s culture and customs， but also to the fact that his enterprise evolved from a family workshop.

Zong’s career took off after China’s introduction of reform and opening-up policies. During that period， the country’s economy developed at an amazing speed. The special semi-planned， semi-market economy at that time catapulted a number of Chinese entrepreneurs with qualities similar to Zong. Most started from scratch， led a simple life， and devoted their entire being to work.

Amidst such a group， Zong is the most outstanding. He thoroughly understands Chinese consumers， and possesses tremendous integration capacity for the various resources on the market. However， at the same time， words such as “stubborn” and “conservative”are frequently tied to him. He has shown little interest in the goals many other modern enterprises seek， such as capital operation and expanding into the international market. Unlike many enterprises of a similar size， Wahaha never went public. Zong’s family， including his wife and daughter， owns 80 percent of Wahaha shares. Many analysts speculate that this is due to Zong’s unwillingness to part with any of his family’s overwhelming majority control.

Helm of a Massive Vessel

Many observers worry that an enterprise as large as Wahaha， which operates through a single leader’s personal charm and ability， will face difficult times in the future. Although Zong has expressed some desire to become more open-minded， no one who knows him is holding their breath.

Zong’s dictatorial tendencies have already brought crisis. In recent years， Wahaha’s unique selling mode， Zong’s pride for years， has begun to collapse. Waow Plaza， a boutique shopping mall owned by Wahaha， has been open for almost a year， but hasn’t seen many consumers. Zong has noticed the beverage industry’s tendency to produce excess capacity， leaving less room for profits， so he visited foreign lands more frequently in recent years， in hopes of finding new profit sources.

However， many see the solution to such problems in Kelly Zong， Zong Qinghou’s daughter， who is believed to be the heiress to her father’s empire. American-educated since middle school， Kelly Zong joined Wahaha in 2005. The dictator’s progeny avoided much involvement with Wahaha’s beverage business， and spent more time diversifying the company into new fields such as children’s apparel， household chemicals， and imports and exports. She hopes to make the brand more fashionable and youthful. Compared to her father， who fuels his enterprise with personal charm and authority， Kelly concentrates more on regulatory framework.

However， a timetable for the heiress’takeover is still far away. “She still has a lot to learn，” the father asserts. Now， the old man continues spending 16 hours a day at the helm of his massive vessel， steering clear of the rocks as they come， as he has always done.