Over two decades Zong Qinghou’s company grew from a school shop selling vitamin drinks to having a 15% share of China’s soft drinks market
I met Zong Qinghou, by some measures China’s richest man, in his office – an anonymous building near Hangzhou railway station.
His company Wahaha has a 15% share of China’s soft drinks market, and sales of nearly a billion dollars a year in children’s clothing.
Before the interview, we were ushered into the staff canteen, a plain oblong room with formica tables where the top staff eat the same food as the workers. When we arrived in his office, I noticed the same meal had been laid out for their boss.
Zong’s monk-like devotion to duty is legendary. A former employee remembers he personally reviewed every office expense, including the purchase of a broom. He still personally signs every major spending decision. In his office are two safes in which he told me he keeps the company seals of each of his approximately 200 subsidiaries. He says he lives on $20 a day. “My only exercise is doing market research… my only hobbies are smoking and drinking tea,” he told me (when I asked, he said his favourite brand was Lipton’s).
Over two decades, he grew the company from a shop in a school selling ice lollies and vitamin drinks. In 1989, he established the Wahaha Nutritional Food Factory in Hangzhou to produce Wahaha Oral Liquid for Children. It was demand for the nutritional drinks that were the foundation of his empire. When sales took off, the government invited him to take over a failing canning factory in the same town. The two companies merged in 1991 after a fierce media campaign led by the employees of the canning company, who accused him of being a capitalist. Zong runs the company with his wife and daughter. Family involvement is a common feature of entrepreneur-owned businesses in China. The founders see family members as more trustworthy and reliable than other senior management. His daughter runs important parts of the business, but Zong says he has not yet chosen her as his successor.
Zong is unusual amongst Chinese businessmen in his focus on philanthropy. But he does not just give his money away. He said hard work was the key to the poor lifting themselves out of poverty. If you give money to the poor “they just spend it,” he told me. His daugther is a US passport holder, and Mr Zong said his main interest in working with foreign companies is to import products which Chinese companies are bad at making, yet his joint venture to set up Chinese factories with Danone ended acrimoniously. Meanwhile, the 67-year-old is busy planning a major expansion into retail. While Walmart and Carrefours are pulling out of Chinese operations, Zong plans to open 100 large supermarkets in second and third-tier cities.