Kelly, 43, currently serves as chairwoman and CEO of Hangzhou Wahaha Group, which was founded by her father, billionaire Zong Qinghou. Following his death in February 2024 at the age of 79, she assumed leadership—but unresolved succession issues have sparked legal challenges.
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Kelly Zong, daughter of Wahaha Group founder Zong Qinghou, attends the 2015 NetEase Annual Economist Conference in Beijing, China, December 2014. Photo by Imaginechina via AFP |
A Hong Kong court this month directed Kelly to establish three trusts worth US$2.1 billion for individuals claiming to be her “half brothers and sister,” based on what they allege were her father’s instructions.
The feud surfaced just a year after the heiress won a battle for control of the company following her father’s death in February 2024 at 79, according to South China Morning Post
The case has sparked widespread discussion on Chinese social media.
The delay in creating these trusts has led the three half-siblings – Jacky, Jessie, and Jerry Zong – to file a parallel lawsuit in Hangzhou with similar demands.
Their lawyer stated that Kelly agreed in February last year to comply with her father’s directive to establish the trusts.
However, the paperwork for the trusts remains incomplete, with no final agreement reached.
Kelly’s lawyer countered that the handwritten instructions were not directed to her and that the source of funding for a US$300 million shortfall remains unclear.
“We agreed to set up the trusts from the start, but only on the condition that the trust assets would be clearly defined,” the lawyer said.
The Hong Kong High Court is set to deliver its ruling on August 1, according to its website.
Kelly is also facing another legal challenge from former Wahaha employees who want to void a 2018 share buyback, alleging that the repurchase price was unfair, sources familiar with the matter told Bloomberg.
But Wahaha’s labor union defended the share repurchase, stating in a September Weibo post that it was approved by staff representatives and was lawful.
These disputes have reignited scrutiny of Wahaha’s leadership and ownership structure, echoing the corporate power struggle that followed the death of founder Qinghou.
“Chinese family business founders need to take careful note of the Wahaha case,” said Marleen Dieleman, a family business professor at the Singapore-based International Institute for Management Development, as cited by Bloomberg.
“Especially when founders have smaller stakes, succession can quickly spiral into a battle for control.”
Other analysts also warn that the lawsuits might cause major impacts on the business.
“No one waves a red flag when business is good, even though family businesses’ questionable corporate governance and management structure cannot support their further growth,” said Wang Feng, chairman of China-based financial services group Ye Lang Capital, as reported by South China Morning Post.
“Family feuds and power battles in boardrooms may hurt employee morale and brand image, particularly at a time when the companies are undergoing succession from first-generation entrepreneurs to their offspring.”
Founded in 1987, Wahaha, which means “laughing baby,” has three main shareholder groups.
An investment company under the government of Hangzhou’s Shangcheng District holds a 46% stake, the family of Qinghou owns 29.4% and a group representing Wahaha employees has the remaining 24.6%.
