Zong Fuli took over the baton for 100 days, and Zhong stood outside the gate

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2024-05-23 12:47Posted in Beijing Science and Technology Creators

Wahaha faces two major problems.

Written by | Zhang Lin

Edit | Yan Fei

On February 25 this year, Zong Qinghou, the founder of Wahaha, passed away at the age of 79. In the past three months, Wahaha has gradually entered the era of Zong Fuli, but the aftermath of Zong Qinghou's farewell has not stopped.

On May 21, Nongfu Spring, which suffered from inexplicable "cyberbullying" after Zong's death, released a 2,900-word statement to refute rumors, mentioning Wahaha 12 times. Of the 20 rumors that have been refuted, four are related to Nongfu Spring's old rival Wahaha, and three of them are in the top three.

In the statement, Nongfu Spring refuted rumors such as "Zhong was expelled by Wahaha", "Nongfu Spring was founded against Wahaha", "was fined 200,000 yuan for unfair competition with Wahaha", "Nongfu Spring banned Wahaha from being sold in stores", and specifically mentioned that Zhong's establishment of Nongfu Spring was completely a temporary head-patting project, and was not aimed at anyone or enterprise.

On the other side, Zong Fuli and Wahaha remained silent as always and did not respond in any form.

In the days after Wahaha lost Zong Qing, Zong Fuli, who hurriedly took over as the "second generation of enterprises", did not make public comments on her biggest opponent, Nongfu Spring.

Faced with rumors from competitors, Zong Fuli chose to keep silent; Nearly a month ago, when Nongfu Spring suddenly took out a "green bottle" of pure water and pointed directly at the hinterland of Wahaha, she was still silent, and Wahaha had not yet offered countermeasures.

At this time, 100 days have passed since Zong Fuli took over Wahaha. Judging from the public information, she focused on the expansion of offline channels and the improvement of management efficiency.

In the "Letter to All Sales Staff" that flowed out in early March, Wahaha declared that it would seize the opportunity to "fight a good terminal distribution blitzkrieg". In the following two months, Wahaha increased the delivery of offline freezers, and strengthened the index assessment of dealer salesmen, requiring salesmen to check the neatness and warranty period of Wahaha and other products when they inspected the terminal store, so that the terminal retailer owners could save worry and effort.

Offline channels are the key to success in the beverage industry. According to market research firm Frost & Sullivan, in 2019, only 6% of the beverage industry's sales came from e-commerce channels, while 94% came from offline channels such as supermarkets, convenience stores, and restaurants.

The joint sales model created by Zong Qinghou in the nineties of the last century has better balanced the interests of manufacturers and distributors, and improved the operation efficiency of the entire sales system, which is the key factor for Wahaha to move towards glory. However, with the structural changes on both the supply and demand sides of the beverage market, Wahaha's joint sales model has exposed problems such as strong decision-making dependence, weakened channel control, and difficulty in quickly responding to market changes.

From this point of view, at the beginning of Zong Fuli's tenure, it is understandable that she devoted her main energy to improving the quality and efficiency of existing channels. But while holding on to the past, Zong Fuli still has two major internal and external problems to be solved.

On the one hand, Zong Fuli needs to deal with the strong challenge of Nongfu Spring.

In the past 20 years, in the field of drinking water, Wahaha insisted that pure water is healthier, while Nongfu Spring has carried the banner of natural water, and the two giants have even fought a national lawsuit for this. However, at the end of April this year, Nongfu Spring suddenly distributed purified water packaged in green bottles on a large scale, rushing to "sneak attack" Wahaha's foundation before the summer sales season.

On the other hand, within the company, Zong Fuli inherited the equity and popularity of her father, and the succession in "de jure" is a foregone conclusion. However, in the post-Zongqing era, if Wahaha wants to return to the top, it needs to continue to promote the reform of Zongqinghou's uncompetitive, especially the establishment of a marketing system that adapts to the new environment.

For Zong Fuli, who has just taken over the baton, the simple improvement of the efficiency of the existing channels is only a "symptomatic treatment", and deep change is imminent. In this process, many interests inside and outside Wahaha will be reconstructed. How to win the trust and support of the "old ministers" and build a new power system will be a big test for Zong Fuli. Zong Fuli needs time to build authority and trust and brand Wahaha with her own.

This undoubtedly adds difficulty to Zong Fuli's inheritance battle, on the one hand, it needs to prove its ability to win the trust of the "old ministers" and shareholders, and on the other hand, it is necessary to face the industry competitors surrounded by wolves, and at the same time, it is necessary to solve the problems left over from Wahaha's history, but also to lead Wahaha to take another step forward.

The past 100 days are just the beginning, and what awaits Zong Fuli will be an even more severe test.

At one time, Zhong drew a clear line between natural water and pure water, and Nongfu Spring did not produce pure water after 2000, leaving this huge and lucrative market to Wahaha and other players.

But with the passing of Zong Qinghou and the second generation of the Zong family in power in Wahaha, Zhong and Nongfu Spring seem to see an opportunity to re-cut the cake.

In February this year, Zhong Xuxi, who wrote "Two or Three Things with Zong Lao" to clarify rumors, still emphasized that there was a battle of ideas with Zong Qinghou, insisting that "natural water is healthier". Just two months later, Nongfu Spring put pure water on the shelves and went straight to the hinterland of Wahaha.

Behind this unexpected move, Nongfu Spring needs to open up new growth points.

In recent years, although the revenue of Nongfu Spring packaged drinking water is still growing, the growth rate is significantly behind the overall growth rate of the company. In 2023, Nongfu Spring's total revenue will reach 42.7 billion yuan, a year-on-year increase of 28.4%; As the largest single product, packaged drinking water contributed 20.3 billion yuan in revenue, but the annual growth rate was only 11%. In contrast, the annual revenue of the tea beverage business represented by Oriental Leaf was 12.7 billion yuan, a year-on-year increase of 83%.

At the same time, purified water is growing as a part of the overall packaged drinking water market. According to a report by CIC Consulting, purified water will account for about 56% of the packaged drinking water market in 2023, far exceeding the 8.47% of natural mineral water. The compound annual growth rate was 7.7%, which was also higher than the latter's 7.5%. Naturally, Nongfu Spring could not let go of this opportunity.

However, the timing of Nongfu Spring's choice is very delicate: the founder of the old rival Wahaha has passed away not long ago, and the "second generation of enterprises" has just taken over, and it is in a critical period of "the master and the country are suspicious". Zhong Sui suddenly made a move at this time, which somewhat caught Wahaha off guard.

But what is surprising is that since the end of April, Zong Fuli and Wahaha have not publicly made any response. If Zong Qinghou is still alive, in the face of Nongfu Spring's large-scale attack, Wahaha is unlikely to sit idly by; Zong Fuli is silent, reflecting that the style of the new head is quite different from that of his father.

Compared with Zong Fuli, who is a junior, Zhong Xuxu has more business experience and is a person who has fought big battles.

In the "Water War of the Century" in 2000, when the packaged drinking water market was still pure water, Zhong Sui, as a latecomer, put his new "natural water" on the opposite side of the entire pure water industry.

The two camps set off a fierce war of words, and the court has become the norm between enterprises. On July 13 of that year, Nongfu Spring took Wahaha to court, and in August, Wahaha and Robust led 69 pure water companies across the country to jointly accuse Nongfu Spring of unfair competition.

As Zhong said in his long article, this "water war of the century" finally came to an end under mediation, and the two sides shook hands and made peace. But after this battle, Nongfu Spring became famous and sat at the poker table.

Compared with business courage, Zong Fuli, who has been training under the protection of her father, obviously has no opportunity to experience strong winds and waves; In terms of marketing, he once said, "I have been a business for so many years, just so that I can do advertising creativity as I like!" With popular advertising slogans such as "Nongfu Spring is a little sweet" and "We don't produce water, we are just porters of nature" and other popular advertising slogans have found the market positioning for Nongfu Spring. On the other hand, KellyOne, a beverage brand independently operated by Zong Fuli, has not been well known to the public.

In terms of product innovation, Wahaha's follow-up operation has been criticized by the market for many years. On the other hand, Nongfu Spring not only has a comprehensive layout of high, medium and low-grade mineral water, but also has successively launched fist products such as tea Π, screaming, water-soluble C, and oriental leaves.

From the perspective of the company, Zhong Sui, who sent himself to the throne of China's richest man by virtue of his listing, has a capital operation capacity far above Zong Fuli, who failed to complete the acquisition of "China Candy".

This is not to say that Zong Fuli is not excellent, on the contrary, Zong Fuli can be regarded as the best in the second generation of enterprises, but now the opponents she is facing are not of the same magnitude as her. Before sorting out the internal situation, Zong Fuli does not seem to intend to follow her father's example and openly start a war with the well-connected Zhong Sui and Nongfu Spring.

But the two beverage giants stepped into the same river, even if Zong Fuli didn't want to fight for the time being, Zhong couldn't show mercy. At the beginning of April, an industry insider close to Nongfu Spring revealed to the media that the Nongfu Spring pure water project is very urgent, and the initial shipment is about tens of millions of bottles. Nongfu Spring is menacing, and what awaits Zong Fuli will be a vicious battle.

In the post-Zong Qinghou era, in addition to resisting Nongfu Spring, Zong Fuli also needs to inject a new management culture into Wahaha and promote deeper changes in the company.

Like almost all first-generation entrepreneurs, Zong Qinghou established a top-down "paternalistic management" model, where the founders had a great say in the process and their ideas could be implemented efficiently. The Economic Observer mentioned in the report, "For nearly 30 years, Zong Qinghou was both chairman and general manager, not worthy of secretary, not worthy of vice president (until January 2016, Wahaha promoted 3 deputy general managers), and the company's decision-making had to be made by Zong Qinghou alone." Insider's evaluation: Extremely controlling, even a bit overbearing. ”

Looking at the global business community, paternalistic management under the leadership of founders is not uncommon, especially in traditional industries, which shows that its vitality is very tenacious. Compared with the common "professional manager + board of directors" combination, the founder acts as the head of the family, which helps to unite people's hearts and talents, and participate in market competition more efficiently.

However, the common problem with this management model is that after the departure of the "patriarch", his successor is often difficult to meet the expectations of the public, and it takes a long time to get out of the shadow of the founder's influence. This includes the proper placement of "former ministers of the dynasty", so that outstanding talents can be subordinated to themselves, and at the same time clean up redundant personnel; It also includes refreshing the corporate management culture with a more modern concept, and completely jumping out of the cycle of "governing the enterprise with home".

This is also the challenge that Zong Fuli faces.

After Zong Fuli officially took over, Wahaha has not yet made major personnel changes. However, whether the management talents left in the last era can promote Wahaha to make a breakthrough under the leadership of Zong Fuli, I am afraid there is a big question mark.

After all, Zong's father and daughter have tried to change their business in many ways, but the results are not particularly ideal. Especially in terms of new products, Wahaha has done a lot of exploration, but few have caused a splash in the market. Today, when consumers mention Wahaha, the first thing that comes to mind is still traditional product lines such as purified water and AD calcium milk. Wahaha's lack of innovation has led to a slowdown in development in recent years, and the management is to blame.

On the other hand, Zong Fuli received a modern business management education, and the starting conditions of her career were far better than her father's. This makes her management philosophy very different from Zong Qinghou. Zong Qinghou's "paternalistic" management style is more considerate of human feelings and sophistication, while Zong Fuli, who studied abroad, believes that the company's rules and regulations are the core of the company's efficient operation, and she is straightforward in dealing with people.

Zong joined Wahaha in 2004 after returning from studying abroad and has held various positions within the group, during which time she was at the helm of Hongsheng Beverage Group, and was appointed as Vice Chairman and General Manager of Wahaha Group in December 2021. Zong Fuli's main focus is on brand building, product innovation and the expansion of new channels.

According to a report by The Paper, some of the employees who worked under Zong Fuli in the early days were directly fired because they did not complete their tasks, and there was little room for "intercession". And Zong Qinghou will quietly "take back" the outstanding employees who were fired by his daughter to Wahaha Group.

Zong Qinghou also expressed his worries, believing that his daughter's institutionalization of management is not in line with China's national conditions, "The Chinese market is new and changing, and it requires a flexible management style, and it is necessary to tightly control employees in the center of the formation of their personal charm." She is too tough in dealing with personal relationship issues, tougher than me. ”

Whether it is the change in management mode or the use of new people, it will undoubtedly bring a new round of business management pains, but only after truly experiencing these can Zong Fuli establish her own power system and become the real helmsman of Wahaha Group. For Zong Fuli, 100 days is far from enough.

Even if the current "internal and external troubles" are successfully solved, Zong Fuli has only solved the problem of keeping Wahaha's basic plate. Almost every second-generation entrepreneur has a vision beyond their parents, and they are often faced with the pressure and expectation to prove their abilities, realize their personal value, and drive the sustainable development of the business.

This is especially true for Zong Fuli, who once publicly expressed that she "doesn't want to inherit and hopes to merge Wahaha". Whether it is jumping out of Wahaha to launch her own beverage brand, or carrying out brand rejuvenation innovation and market expansion in Wahaha, Zong Fuli has always wanted to prove herself.

Now, Zong Fuli, who does not want to take over her father's career step by step, even if she embarks on the road of inheritance, she still hopes to lead Wahaha to take another step forward through her own ability and innovation.

For the beverage industry, those who have channels win the world. Especially in the Wahaha business empire established by Zong Qinghou, when asked about the three major success factors of Wahaha, Zong Qinghou's answer was: "There are no three, only one - channel, that is, our Wahaha joint sales body." ”

But now, under the wave of new retail, channels and consumer groups have changed, and the joint sales body that once made Wahaha brilliant has also shown some drawbacks. Under the joint sales model, Wahaha sells its products through a multi-level dealer network, on the one hand, it does not directly contact consumers, does not have a deep understanding of its needs and changes, and cannot keep up with product research and development; On the other hand, with the deepening of channels, Wahaha's control over channels has weakened, uncontrollable links have increased, and the speed of information dissemination has slowed down, resulting in an increase in business costs and a decline in profits.

In 2010, Wahaha's performance entered the 50 billion club for the first time, with a revenue of 67.86 billion yuan in 2011, 63.63 billion yuan in 2012, and 78.3 billion yuan in its heyday in 2013. Such achievements have made Zong Qinghou the richest man in Chinese mainland by Forbes for three consecutive years, and put forward the goal of annual sales revenue of 100 billion yuan. However, since 2014, Wahaha's revenue has begun to decline for 7 consecutive years, with only 43.9 billion yuan at the lowest, less than 60% of 2013, and it is getting farther and farther away from the "100 billion revenue target".

Zong Fuli, who wants to lead Wahaha back to its peak, must promote channel reform, but the first problem faced is to handle the relationship with dealers and replace her father as the link between the group and dealers. The reform should be carried out slowly, and the slightest carelessness may lead to the defection of dealers, and may even lead to the collapse of the entire sales network.

This is a problem that even the battle-hardened "Iron Lady" Dong Mingzhu will encounter. Gree's "joint-stock regional sales company" has many similarities with Wahaha's "joint sales body" model, which not only requires "payment before delivery", but also allows large regional dealers to distribute downwards layer by layer.

In the past two years, Dong Mingzhu has strongly promoted the reform of channel sales, and the sales method has shifted from offline to online, which has directly caused the dissatisfaction of some large dealers. Dealers in Henan, Shandong and other places have given up cooperation with Gree and turned to home appliance brands such as Midea and Oaks.

In the face of the sudden defection of Hebei dealers, Dong Mingzhu, who had been on the battlefield for a long time, did not stay, but immediately prepared to build a new sales company in the local area and rebuild the dealer network.

If the same problem happened to Wahaha, it would undoubtedly give Zong Fuli another problem.

Today, Zong Fuli is still unable to make drastic moves, and can only maintain stability and change at the same time. In the introduction of the group's 2024 strategy, Zong Fuli publicly stated that the original joint sales model will continue to be stable, and the unique emerging channels should focus on breakthroughs.

The problem Zong Fuli is facing is not limited to this one, as mentioned in the previous letter list in the article "Three Problems Left to Zong Fuli by Zong Qinghou", "Is it listed? "To sell or not to sell?" and "Do you want to bring in external talent?" and other difficult questions, still waiting for Zong Fuli to give an answer.

Resources:

"Wahaha Zong Fuli: The Difficulty of Succession, the Dilemma of the Times of the Joint Sales Body", source: Tiger Sniff

"The successor Zong Fuli will encounter the same problem as Dong Mingzhu", source: Spiral Laboratory;

"Three Problems Left by Zong Qinghou to Zong Fuli", source: alphabet list;

"Zong Fuli Fired the "First Shot"", source: Wall Street News;

"Taking over more than 100 companies in Wahaha, can Zong Fuli "hold steadily" the 50 billion empire? Source: Nashi

"Zong Fuli took over the baton for two months, what is Wahaha minus Zong Qinghou? Source: Red Star Capital Bureau

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