Zong Fuli's Ruthless Modernization: Wahaha's 1 Billion Yuan Xi'an Bet Amidst Family Strife
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8-16Mia: When a new leader takes over a legacy brand, especially one built by a legendary founder, their first moves are always scrutinized. But what if one of those first moves is a massive, one-billion-yuan bet on the future? That's exactly what's happening at the Chinese beverage giant Wahaha, where Zong Fuli, the daughter of the late founder, is making some incredibly bold, and some might say ruthless, decisions. It’s a fascinating story of modernization, power consolidation, and a high-stakes attempt to redefine a household name.
Mia: Let's start with this huge investment. Wahaha is pouring one billion yuan into a new, sprawling beverage production base in Xi'an. We're talking about a facility that's over 80,000 square meters, designed to be its own self-sufficient beverage town. It’s going to have high-speed water lines, dairy lines, and the infrastructure to support them, with room to expand even further. And here's the key detail: the company behind this project has Zong Fuli as its executive director, and her personal company, Hongsheng Beverage Group, holds a 90% stake. This isn't just a Wahaha project; this is her project.
Mia: Now, on the surface, this just looks like a company expanding. But it's so much more than that. This is a strategic declaration of intent. By building this massive hub in a key logistical region like Xi'an, Zong Fuli is cementing her control over Wahaha's future. She's diversifying product lines and securing a stronger foothold in northwest and central China. The choice of Xi'an itself is smart—it already has a strong beverage industry ecosystem, which means she can leverage existing talent and resources to compete more aggressively.
Mia: However, this strategic expansion also serves a crucial purpose in a broader internal power struggle, particularly concerning the company's existing, less efficient assets.
Mia: And that power struggle becomes crystal clear when you look at what's happening alongside this new investment. While this shiny new base is being built, reports are surfacing that Wahaha is shutting down 18 underperforming branch factories across the country. What's telling is that these closures are primarily hitting factories that are not part of Zong Fuli's own Hongsheng system. Some of these factories were managed by figures like Du Jianyin, a key non-family member who was part of the old guard's decision-making circle.
Mia: You see, this isn't just about efficiency. This is a calculated move to consolidate power. With her father gone, Zong Fuli is systematically cutting ties with individuals who might represent the past era of management. It’s a deliberate interest cut-off. Now, this aggressive restructuring is aimed at modernizing the company and ensuring quality control is under her direct supervision, but it's also causing friction. There are reports of employees being asked to transfer their contracts, potentially losing benefits, and stricter criteria for dealers. It's a classic case of a new leader cleaning house.
Mia: So while Zong Fuli's ruthless approach aims to drive modernization, it also creates internal instability and faces significant external challenges. This leads us to her bigger, and perhaps more audacious, strategy: what some are calling de-Wahaha-ization.
Mia: This is where it gets really interesting. Zong Fuli is actively trying to build a supply chain that's independent of the core Wahaha brand. Her own company has been seen printing new product labels and registering trademarks for a brand called Wa Xiao Zong across a whole range of categories, including, of all things, beer—a market Wahaha has never touched. All of this is happening against the backdrop of a reported inheritance battle, with employee lawsuits and declining sales for some of Wahaha's most iconic products.
Mia: So what's the key takeaway here? For me, this proactive branding and supply chain independence is a brilliant defensive maneuver. By creating her own operational and brand ecosystem, she's not just future-proofing her control; she's building leverage in any ongoing family conflict. It's a power play. Of course, the challenge is immense. The market's reception to new products has been lukewarm, and Wahaha is struggling in hyper-competitive spaces like sugar-free tea. She's fighting a war on two fronts: internally for control and externally for market share.
Mia: To wrap things up, there are a few key points to remember from this whole situation. First, Zong Fuli is aggressively and strategically consolidating her control over Wahaha's future, and the Xi'an base is the prime example. Second, her management style is defined by a ruthless pursuit of modernization, even if it means cutting ties with the old guard and shaking up the company from within. Third, she’s playing a long game with this de-Wahaha-ization strategy, building her own assets as both a modernization tool and a strategic chip in the ongoing succession battle. And finally, despite some impressive recent growth in profits, the road ahead for Wahaha is anything but smooth. The company faces serious internal and external pressures, making Zong Fuli's leadership the single most critical factor in determining its future.