Thursday, April 25

Zong Qinghou, Chinese beverage tycoon, dies at 79

Zong Qinghou, a self-made beverage entrepreneur who was once China’s richest person, died on Sunday.

His death was announced by his company, Wahaha Group, which said Mr. Zong died of an unspecified illness and said he was 79 years old. The company’s statement provided no further details.

Mr Zong’s rags-to-riches story had made him famous in China even before a public feud with his foreign business partner dramatically raised his profile – and his wealth. He founded a drinks company in the 1980s, and in the 1990s he partnered with Danone, the French food giant, to launch one of the best-known food and drink brands in China.

But tensions flared in 2007 when Danone accused Mr. Zong of running secret companies selling virtually identical products that were sold for $100 million through the joint venture.

Mr. Zong responded by saying that Danone was aware of the existence of these companies. Vowing to punish Danone for its “bad actions,” he rallied Chinese public opinion against the foreign company.

The conflict has become so acrimonious that French President Nicolas Sarkozy raised the issue in a meeting with Chinese leader Hu Jintao. In 2009, Danone sold its 51 percent stake, giving full control to Mr. Zong’s company.

The following year, Forbes named Mr. Zong as China’s richest man, with a fortune of $8 billion. He achieved this distinction again in 2012, with $10 billion. Forbes estimates that his fortune has since fallen to $5.9 billion. placing it at No. 53 on last year’s list of Chinese billionaires.

Survivors include his wife, Shi Youzhen, and their daughter, Zong Fuli (also known as Kelly Zong), who is the president of Hangzhou Wahaha Group and successor to Mr. Zong.

Mr. Zong, who grew up poor, was known for Spartan lifestyle. In interviews, he said he arrived at the company’s headquarters before 7 a.m. and worked until 11 p.m. He said he had no hobbies except smoking and drinking Lipton tea.

According to various accounts, he was born in October or December 1945 (his company reportedly used a traditional Chinese method of counting ages at which a person is considered one year old at birth) in or near Hangzhou, a city near Shanghai. He was one of many young people sent to the countryside during the Cultural Revolution and spent years working in an agricultural community.

He became a street vendor in 1978, the same year the country’s new leader, Deng Xiaoping, began ushering in an era of capitalism. About a decade later, Mr. Zong opened a stall near an elementary school, selling soft drinks and frozen treats.

Seeing hungry children passing by prompted him to invent a vitamin drink, which he called Wahaha Oral Liquid. “It solved the problem of children not wanting to eat and suffering from malnutrition,” he told the BBC. interview.

The Hangzhou Wahaha Group – “Wahaha” loosely translates to “laughing child” – was born soon after, selling bottled water, soft drinks and tea. It later expanded to infant formula and children’s clothing.

In 1996, he joined forces with Danone, the French food company best known for its yogurts, to form the Wahaha Joint Venture Company. Selling yogurt, soft drinks and food products, it had 15% of China’s beverage market in 2012, behind Coca-Cola and Tingyi Holdings.

After Danone accused Mr. Zong of misconduct, he fired back with an open letter, accusing Danone of spreading lies about his company’s business practices and slandering his family. Wahaha officials organized rallies and held press conferences, denouncing Danone officials as “rascals.”

Danone ended up selling its stake for about $500 million, far less than analysts thought.

The breakup has sown fear among multinationals, particularly in sectors like automobile manufacturing, in which the Chinese government has required the creation of joint ventures and limited the participation of foreign companies to 50 percent.

But it proved more of an isolated episode than an indicator and, in retrospect, a mere blemish in an otherwise peaceful era. In recent years, multinationals have encountered other, much more difficult obstacles.

Growing geopolitical tensions have led to waves of sanctions between China and the United States. Nearly three years of “zero Covid” lockdowns and other measures have seriously damaged production and sales at many companies. And Chinese state security agencies have become quicker to shut down foreign businesses that concern them, particularly due diligence companies.

“It was a high-profile case that captured public attention,” Ker Gibbs, former president of the Shanghai American Chamber of Commerce, said of the Danone episode. “But looking back on it today, it’s clear that at that time the general environment was quite stable and favorable for foreign companies.”