Kelly Zong, widely known as the only daughter of the late founder and the current head of the company, is being sued by three people claiming to be her “half brothers and sister,” Bloomberg reported last Friday.
The trio, Jacky, Jessie and Jerry Zong, are seeking to block Kelly from managing assets worth around US$2 billion and also urging her to uphold what they claim was the late Zong’s will, which allegedly promised them trusts worth $700 million each.
The news triggered a wave of online attention, with “Wahaha” and related terms such as “Wahaha Zong Qinghou” climbing the ranks of trending searches on Chinese platform Sina Weibo over the weekend.
With the inheritance dispute set to come before Hong Kong’s High Court on Aug. 1, here is what to know about Wahaha, its late founder, and the responses so far to the feud.
Zong Qinghou’s rise from humble beginning
Born in 1945, Zong spent his early years working in salt mines and tea plantations in Zhoushan, Zhejiang, according to China Daily.
It was not until the late 1980s, when he was already in his 40s, that he took his first steps into business.
Starting small, Zong began by selling snacks at a school canteen in his hometown of Hangzhou before expanding his business. Among his most successful products were bottled water and nutritional drinks for children, sold under the brand “Wahaha,” which means “laughing child.”
Zong later took over a struggling state-owned factory to scale up production and built a vast network of distributors to sell his products nationwide.
At its height, Wahaha operated with more than 7,000 distributors, over 100,000 wholesalers and millions of retail points across China.
He topped Forbes’ list of China’s richest people in 2010 and 2012, with estimated fortunes of $8 billion and $10 billion, respectively.
Zong passed away last February at the age of 79. As of 2023, his net worth stood at $5.9 billion.
Kelly Zong steps into her father’s shoes
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Zong Qinghou (R), founder and chairman of Wahaha Group, and his daughter Zong Fuli attend an award ceremony in Hangzhou city, east China’s Zhejiang province, Jan. 12, 2012. Photo by Oriental Image via Reuters |
Known as the “Princess of Wahaha,” Kelly took the helm of the beverage group following Zong’s death.
After Kelly took on her father’s role, a shareholder dispute broke out over her leadership, prompting her to suddenly resign as vice chairman and CEO last July. But within a week, the firm announced that the matter had been resolved amicably and Kelly returned as its chairman and CEO, as reported by Forbes.
Before this, Kelly, who graduated from the U.S.’ Pepperdine University, had already played a key role in the company’s efforts to attract younger consumers.
Her initiatives included selecting a new brand ambassador, working on TV product placements and bringing in influencers.
Despite these efforts, the company has faced challenges. Its annual revenue fell 35% from its 2013 peak to 51.2 billion yuan (US$7.22 billion) in 2022—the most recent year with available data.
Wahaha’s response to the family feud
Wahaha addressed the lawsuits with a brief statement, emphasizing that the issue is a private family matter unrelated to the company’s operations, according to the Global Times.
“This is a family matter unrelated to the company’s operations or business. The company will not be offering any official comment or response.”
What the legal fight could mean for Wahaha
The legal battle between Kelly and the three individuals claiming to be her half-siblings has cast uncertainty over succession at Wahaha, the South China Morning Post reported.
In China, many second-generation heirs to family-run businesses studied abroad and tend to have different priorities, strategies and risk appetite from their parents.
The feud may also shake consumer confidence in Wahaha, a brand once closely associated with the late Zong’s integrity and rags-to-riches image.
Even before the dispute, Wahaha has been grappling with growing competition from domestic players like Nongfu Spring. With consumer demand weakening amid an economic slowdown, the company now faces even tougher challenges ahead.
Impact on China’s business community
The public inheritance dispute has sent ripples through the country’s business community and raised doubts about the sustainability of family firms.
With Zong being such a respected tycoon, scandals involving him could undermine confidence in family-run firms. Private firms account for 60% of China’s total economic output.
“Zong [Qinghou] has long been a respected tycoon, but the stories about his other children made me suspect his honesty and succession plans,” commented Zhang Mingjun, an entrepreneur in the field of electrical engineering in Shanghai.
“As a small company boss, I feel that more people will cast doubts on our integrity and sustainability.”
