Zong Qinghou, Beverage Tycoon in China, Dies at 79

Zong Qinghou, Beverage Tycoon in China, Dies at 79
Zong Qinghou, Beverage Tycoon in China, Dies at 79

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

His death was announced by his company, Wahaha Group, which said that Mr. Zong had died from an unspecified illness and gave his age as 79. The company statement provided no further details.

Mr. Zong’s rags-to-riches story had made him prominent in China even before a public feud with his foreign business partner considerably raised his profile — and his wealth. He founded a beverage 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 beverage brands in China.

But tensions erupted in 2007 when Danone accused Mr. Zong of running secret companies selling virtually identical products that siphoned off as much as $100 million from the joint venture.

Mr. Zong struck back, saying that Danone had known about the companies. Vowing to punish Danone for its “evil deeds,” he rallied public opinion in China against the foreign company.

The dispute grew so acrimonious that France’s president, Nicolas Sarkozy, raised the matter in a meeting with China’s leader, Hu Jintao. In 2009, Danone sold its 51 percent stake, giving Mr. Zong’s company full control.

The following year, Forbes named Mr. Zong the richest man in China, with a fortune of $8 billion. He achieved the distinction again in 2012, with $10 billion. Forbes estimated that his wealth has since sunk to $5.9 billion, placing him at No. 53 on last year’s list of China’s billionaires.

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

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

According to varying accounts, he was born in October or December of 1945 (his company may have used a traditional Chinese method of counting ages in which a person is considered 1 year old at birth) in or near Hangzhou, a city close to Shanghai. He was among many youths sent to the countryside during the Cultural Revolution, and spent years working at a farming commune.

He became a traveling salesman 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 a primary school, hawking soft drinks and iced treats.

Seeing hungry children pass by prompted him to invent a vitamin drink, which he called Wahaha Oral Liquid. “It solved the problem of kids who didn’t want to eat and suffered from malnutrition,” he said in a BBC interview.

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

In 1996, it teamed up with Danone, the French food company best known for its yogurt, forming the Wahaha Joint Venture Company. Selling yogurt drinks, carbonated beverages and food products, it had amassed 15 percent of China’s beverage market by 2012, trailing only Coca-Cola and Tingyi Holdings.

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

Danone ended up selling its stake for about $500 million, far less than analysts believed it was worth.

The breakup sent a frisson of fear through multinationals, particularly in sectors like car manufacturing, in which the Chinese government required joint ventures and limited foreign companies’ stakes to 50 percent.

But it proved more an isolated episode than a bellwether, and in retrospect, a mere blemish in an otherwise halcyon era. In recent years, multinationals have encountered other, far more challenging obstacles.

Rising geopolitical tensions have led to waves of sanctions between China and the United States. Nearly three years of “Covid zero” lockdowns and other measures badly hurt production and sales for many companies. And China’s state security agencies have become quicker to shut down foreign businesses that concern them, particularly due-diligence firms.

“It was a high-profile case that got people’s attention,” Ker Gibbs, a former president of the American Chamber of Commerce in Shanghai, said of the Danone episode. “But looking back on it now, it’s clear that the overall environment at that period in time was quite stable and friendly to foreign businesses.”

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Jonas P. Jones

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