Zhao Hejuan: It is difficult for Zong Fuli to succeed Wahaha, and it was doomed as early as when Danone was driven away

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2024-07-20 19:52Posted on the official account of Beijing Titanium Media APP

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In the past few days, everyone has been discussing the resignation of Wahaha and the unsmooth succession, I want to say a little about the situation and ideas I understand, it can be said that Zong Fuli has always been difficult to take over, as early as more than ten years ago, Danone Wahaha contradiction broke out, and it was doomed when Danone withdrew as the result. If Wahaha had not completely broken with Danone and developed the global market, perhaps Wahaha's internal governance and the huge gap between its global market share and that of another competitor would not have been the same as it is today.

And for Zong Fuli, there is a bigger and more difficult game waiting for her today, that is, Hongsheng Drink.

Many young people may not know much that this largest international business war since the founding of the People's Republic of China has lasted nearly three years, and there have been nearly 100 lawsuits and arbitrations at home and abroad, which has also attracted strong attention from the international media. I may also be one of the few investigative journalists in China who was the first to get a settlement from the first day of the dispute to the final Sweden arbitration settlement, and I was forced to get involved in public opinion disputes, but I have also personally gained great growth in my understanding of business and human nature in the past three years of reporting.

In 2006, the Danone Wahaha contradiction broke out, and the process is simply that in 1993, Wahaha Group was established and restructured from a school-run enterprise, so Hangzhou state-owned assets accounted for about 46% of the shares. In 1996, Danone invested US$45 million to establish Sino-foreign joint ventures such as Wahaha Food Company with Wahaha Group, with Danone and another Hong Kong company jointly holding 51% of the shares of the joint venture. At the same time, it also paid 50 million yuan as the consideration and trademark transfer fee for Wahaha Group to transfer the "Wahaha" brand to the joint venture company.

However, since the China Trademark Office has not approved the transfer of this trademark, the two parties signed a new supplementary agreement, that is, Wahaha Group will license the "Wahaha" brand to a series of joint ventures in an exclusive and exclusive way for a long time. The joint venture agreement also contains a clear non-compete agreement for Zong Qinghou and others. Later, with the rapid development of Wahaha in the country, the gratifying performance and the urgent need for funds for market expansion, Danone added some additional investment, according to Wahaha's official data in 2005, the cumulative investment reached about 120 million US dollars.

This money may not seem particularly large today, but in the late 90s, when the reform and opening up had just begun to make great progress, the significance of this financial advantage to the company's market opportunity is self-evident. Wahaha advertising is overwhelming and has become a well-known brand. Of course, behind this, the significance of Zong Qinghou himself as the founder is undoubtedly the decisive key.

Therefore, through the establishment of the joint venture company at that time, Zong Qinghou actually had an important opportunity to transform the "Wahaha" brand from a complex school-run collective enterprise with unclear equity to a modern governance international enterprise; This is even an opportunity to go beyond China and become a globally renowned brand.

But Zong Qinghou chose another path, he first established a large number of Wahaha series of "non-joint ventures" that had nothing to do with Danone, according to the preliminary survey statistics at that time, including 87 non-joint ventures in various places, the most important of which was the Hongsheng Beverage Company series controlled by Zong Fuli (and her mother Shi Youzhen). In terms of sales channels and brand use, almost all of them completely overlap with the Wahaha joint venture, and the development speed and market share are even more likely to catch up with the joint venture. This finding, which was discovered by Danone in 2006, shocked Danone and the international media, and after Danone communicated with 4 billion yuan to "merge and acquire 51% of the equity of the non-joint venture" to no avail, the two sides went to court and opened various lawsuits at home and abroad.

Then, Zong Qinghou began to fight a public opinion war with Danone in the name of the country and the nation. Zong Qinghou said that Danone's original exclusive trademark license and non-compete agreement were "contract traps" and framed national brands; Danone, on the other hand, insisted that this was a normal investment and business contract, and that Zong Qinghou did not have the basic spirit of the contract.

In March 2007, Zong Qinghou sent a fax to Danone: The Chinese people have now stood up, and it is no longer the era of the eight-nation alliance to invade China. You always speak to us in a threatening and intimidating tone, which only increases our indignation.

On the surface, this is a dispute of commercial interests, but in fact, there is a deep contradiction between the two sides on modern business civilization and values.

The lawsuit dragged on, and Danone, also caught up in Chinese national sentiment and litigation difficulties, and finally settled with a Chinese partner for 300 million euros to transfer its equity and withdrew from the joint venture. Soon after, Danone also chose to completely withdraw from the Chinese market.

At that time, I was very impressed that Zong Qinghou also publicly said that he was negotiating with the Hangzhou State-owned Assets Supervision and Administration Bureau the withdrawal of his 46% stake in Wahaha Group. Zong Qinghou said that the withdrawal of state-owned assets is not difficult, but because the dispute with Danone has not been completed for the time being. At that time, Hangzhou state-owned assets behind it did stand on the side of Zong Qinghou and successfully contributed to Danone's withdrawal.

But until five or six years after Danone's withdrawal, Zong Qinghou still did not solve the problem of state-owned holdings, I have communicated with an internal management person of Wahaha, he believes that it is much more difficult to let state-owned assets exit than to let foreign capital exit, if the joint venture completed the Wahaha brand transfer, because Danone almost does not care about the company's operation only cares about financial indicators, with Zong Qinghou's control over the company, at the right time through negotiations to require Danone to transfer part of the shares, so that Zong Qinghou to complete the control and actual control of the company, the possibility is still very large. However, it is much more complicated to withdraw state-owned assets and let Zongjia Holdings, which is not entirely a commercial issue, and his judgment is absolutely impossible.

His words became a prophecy, and until Zong Qinghou died, he still did not solve this problem, and planted the seeds for a series of complex entanglements for Zong Fuli's succession, as well as whether Zong Fuli's actual control of Hongsheng Beverage and other in vitro companies embezzled the interests of Wahaha Group's state-owned assets.

However, the nature of the defense of whether these foreign companies infringed on Danone's foreign interests at the beginning to whether they infringed on the interests of state-owned assets is completely different from the defense of whether Hongsheng Beverage infringed on the interests of foreign capital. For Zong Fuli, I am afraid it will be a more difficult game to solve than it was at the beginning.

When Zong Qinghou drove away Danone with the backing of state-owned assets, he completely lost the opportunity to truly control Wahaha. In addition, when Zong Qinghou was alive, whether Zong Fuli had the ability to succeed Wahaha Group was also very controversial in the internal team, and it was difficult for Zong Qinghou to do so when he was alive, and it will only be more difficult after his death.

The result of this historical entanglement continues to this day, and it has also become a microcosm and an important lesson for various problems in the development process of Chinese enterprises.

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