Zong Qinghou, the self-made billionaire who became China’s richest man by wresting control of the country’s top drinks brand from Danone, has died. He was 79 years old.
The founder and president of the Wahaha Group died of illness in hospital at 10.30am on Sunday, according to a statement that gave no further details on the cause of death or the location of the medical facility. The company said on Feb. 22 that Zong had been hospitalized for treatment and was in stable condition.
Born before the Communist Party took power, Zong’s life paralleled China’s transformation from a poor, mostly agricultural country to a world factory and its second-largest economy. His wealth, which began with a $22,000 family loan, grew to billions of dollars as the Chinese became increasingly voracious consumers.
Zong, who never attended high school, was forced to live in an agricultural commune in 1964 during Mao Zedong’s Cultural Revolution. He left in 1978, the year Deng Xiaoping – having consolidated power as China’s supreme leader – began to introduce private business and foreign investment into China, allowing a generation of entrepreneurs like Zong to dabble in capitalism.
After working for several years as a consumer goods salesman, Zong took over a small shop in an elementary school in the eastern city of Hangzhou in 1987. There he created Wahaha, the drinks brand that would make him one of the richest men in China.
Zong was thrust onto the global stage when he fell out with French food giant Danone, when the two dissolved a decades-long partnership in a flurry of lawsuits and government intervention.
The saga began in 1996, when Zong formed several joint ventures in China with the Paris-based owner of Evian Water. The terms of the agreement included the transfer of the Wahaha brand, which means laughing child in Chinese, to companies 51% owned by Danone.
That partnership grew to peak sales of 1.1 billion euros ($1.2 billion) in China, before Zong accused Danone in 2007 of trying to take over Wahaha at an unreasonably low price. Danone countered that Zong had breached the contract by creating Wahaha-branded companies. At the center of the dispute was who owned the Wahaha brand: Danone believed it complied with the terms of the original agreement, while Zong claimed the Chinese government had blocked the request to transfer the brand, meaning it still controlled it.
Ultimately, Danone capitulated, agreeing to sell its stake to Zong in late 2009 in a deal brokered by the Chinese and French governments. With 80% control of Wahaha, Zong became China’s richest man in 2012 with a personal wealth of $20.1 billion.
Wahaha’s luck didn’t last. Revenue began to decline as the company was slow to adapt to the changing tastes of Chinese consumers, switching from carbonated soft drinks to healthier offerings such as juice and yogurt. More astute rivals such as Inner Mongolia Yili Industrial Group and China Mengniu Dairy Co. have outpaced Wahaha with celebrity ambassadorships and product placement in Hollywood films, while efforts to acquire other companies by Zong’s daughter and chosen successor, Zong Fuli “Kelly,” they mostly failed.
The boom in China’s Internet industry soon propelled digital economy entrepreneurs such as Alibaba Group Holdings Ltd.’s Jack Ma, Tencent Holdings Ltd.’s Pony Ma and JD.com Inc.’s Richard Liu to fortunes that dwarfed those by Zong.
As mom-and-pop shops that stocked Wahaha’s drinks and snacks lost business to online shopping, Zong became a critic of the e-commerce industry, accusing it of stifling brick-and-mortar retailers and destroying more jobs than they created. He used his membership in China’s parliament, the National People’s Congress, to advocate for more government policies that supported what he called the “real economy” over the “Internet economy.”
For all his wealth and stature, Zong lived frugally. He dressed simply and wouldn’t buy new shoes until the pair he wore wore out. Shan Qining, Wahaha’s longtime spokesman, liked to tell the story of sellers at a yacht show ignoring Zong and only later being told they had snubbed one of China’s richest men.
What few clues there were to his fortune included a taste for Davidoff cigarettes and a $48,000 Vacheron Constantin watch he bought to replace a Rolex, because he had heard that Rolexes were favored by the “nouveau riche.” He didn’t consider himself one of them, as his fortune was amassed “one yuan at a time,” he said in a 2012 Bloomberg interview.
“For a long time I couldn’t even afford food and clothes,” Zong said. “I rose from the bottom of society.”