Jiulong Group, the leading beverage company in China, recently announced that the daughter of the late founder, Zong Qinghou, who had resigned last week, has regained control of the company. In this recent event, it was revealed that nearly 50% of Jiulong Group is state-owned. Analysts believe this outcome is a result of the resignation stirring up public opinion. Despite the Chinese Communist Party (CCP) being wary of social hotspots during the Third Plenum, mainland media reports have also exposed hidden aspects of Jiulong Group behind the scenes.
Financial News reported that on Monday (July 22), Jiulong Group issued a statement in the evening, stating that in order to ensure the stable and healthy development of the company, with friendly negotiations among shareholders, Zong Qinghou’s daughter, Zong Fuli, has decided to continue her responsibilities in managing Jiulong Group.
Jiulong also expressed gratitude for the recent attention from various sectors of society and the media, while apologizing for the use of media resources. However, the statement did not mention the cause of the dispute, nor how it was resolved. Nevertheless, it indicates that the recent highly debated “Zong Fuli resignation” event has come to a temporary close.
Following the passing of founder Zong Qinghou in February of this year, internal personnel upheavals occurred within the group. According to previous reports from Chinese media, Jiulong Group has seen several high-ranking executives resigning.
On July 18, a letter addressed to all employees of Jiulong Group, signed by Zong Fuli, circulated online. This letter was issued just 145 days after she took over following her father’s passing.
The letter stated, “Some shareholders of Jiulong Group have questioned the rationality of my management of Jiulong Group and its holding companies since Chairman Zong Qinghou’s passing, making it impossible for me to continue to fulfill my management responsibilities for Jiulong Group and its holding companies. Therefore, I have decided to resign from my positions as Vice Chairman and General Manager of Jiulong Group, and will no longer participate in its operations and management.”
This news has garnered widespread attention. Jiulong is a leading Chinese food and beverage company and a benchmark of China’s private economy. Founder Zong Qinghou was once selected as one of the top 100 outstanding private entrepreneurs during the CCP’s 40 years of reform and opening up.
At a time when the Third Plenum of the CCP was taking place, the “Zong Fuli resigns” rumor became a hot topic, attracting over 50 million reads on Weibo.
Veteran financial media figure Wang Jian analyzed for Radio Free Asia, stating that in the Zong Fuli event, the resignation letter certainly shaped public opinion. While the authorities were talking about “reform and opening up” during the Third Plenum, the Jiulong incident was criticized for “state advance, private retreat.” This is not a minor impact, it affects the world at large.
“When the talk about the private economy had just begun, they removed the daughter of a private economy founder, which surely displeased many. The Chinese (CCP) government is now very afraid of public opinion. Once there’s a public outcry, they quickly allow her to return,” Wang Jian commented.
Wang Jian believes that when Zong Fuli issued her so-called resignation letter, she was definitely not happy and by making the conflict public, it achieved the effect she desired.
Blogger “Yixi Brother has no V” suggests, “Actually, it’s not that Zong Fuli won, but a result of compromises from all sides. The sentiment of the Chinese brand Jiulong has been preserved by the people.” Blogger “Feige Self-Media” said, “After all, what’s Jiulong without the Zong family? They know the consequences now, and what face does the whole nation want to see? It’s just a transitional phase, she will eventually have to leave.”
Established in 1987, Jiulong Group is headquartered in Hangzhou, Zhejiang, and is a well-known Chinese food and beverage giant.
Public data indicates that the legal representative of Jiulong Group is still Zong Qinghou. The largest shareholder of Jiulong Group, Hangzhou Shangcheng District Wenshang Investment Group Co., Ltd., is a subsidiary of the Hangzhou State-owned Assets Supervision and Administration Commission, holding 46% of shares; while Zong Qinghou and the Jiulong Group grassroots union committee hold 29.4% and 24.6% of shares, respectively.
Wang Jian stated that Jiulong Group was originally a state-owned enterprise, with massive assets that the government wants to reclaim, and officials turn it into a cash cow. However, the Zong Fuli resignation storm has evolved into not just a domestic public opinion issue but also a matter of international image for China. “Everyone seems to be superstitious about the CCP’s control of public opinion. They can control it to a certain extent at a particular point, but not entirely.”
An article by mainland media outlet “Investment Times” revealed that according to information from enterprise investigation platform, Zong Fuli’s shareholding in companies related to Jiulong Group is at least ten times that of Jiulong Group, and the latter does not have any controlling stake in any company.
The article noted that in a sense, the main connection point of companies related to Jiulong is with Zong Fuli, not Jiulong Group itself. Many manufacturers are under the control of Zong Fuli without any direct shareholding relationship with the group. In essence, the crux lies in the hands of Zong Fuli.
Previously, some observers believed that resigning from the group positions was a move by Zong Fuli to take a step back in order to move forward. From the current situation, what started as some shareholders “raising questions” has evolved into “friendly negotiations among all shareholders.”
The article suggests that this in a sense showcases Zong Fuli’s capability, one that may truly help her to gain a say within the company, further resolving issues related to shares and trademarks.