Hangzhou Wahaha Group Limited (Wahaha) has announced the closure of 18 of its factories, spanning across Shenzhen, Chongqing, Tianjin, Shaanxi Xianyang, Zhejiang Quzhou, Jiangxi Ji’an, and other locations. Analysts believe that this move indicates the Chairman and General Manager of Hangzhou Wahaha Group Limited, Zong Fuli, is strengthening her overall control over Wahaha.
Since the beginning of this year, Wahaha has shut down production lines in 18 subsidiary factories. The affected enterprises include Shenzhen Wahaha Rongtai Industrial Co., Ltd., Dali Wahaha Beverage Co., Ltd., Chongqing Wahaha Guangsheng Beverage Co., Ltd., Shaanxi Wahaha Dairy Co., Ltd., Nanjing Wahaha Beverage Co., Shenyang Wahaha Rongtai Food Co., Ltd., and Tianjin Wahaha Food Co., Ltd. For example, Shaanxi Wahaha Dairy Co., Ltd. ceased production on February 16th this year. Employees were either transferred to other Wahaha subsidiaries in Inner Mongolia, Wuhan, Xining, or assigned to perform logistical tasks in the factories such as in the cafeteria, as security guards, or in landscaping.
Reports indicate that Dali Wahaha Beverage Co., Ltd., Shaanxi Wahaha Dairy Co., Ltd., and Shuangcheng Wahaha Dairy Co., Ltd. are not part of Zong Fuli’s 100% controlled “Hongsheng Series” companies.
In response to the partial halting of factory operations, Wahaha stated that “to enhance the responsiveness of terminal markets, it is necessary to adjust and optimize the production and sales layout structure, leading to the closure of some factories.” The company also mentioned that these factories have initiated the liquidation process in accordance with relevant legal procedures.
In contrast, Hongsheng Beverage, which has been undertaking Wahaha’s product processing business for many years, is expanding externally. Wahaha Group is establishing 18 high-speed production lines in locations such as Tianjin, Huaihua, Zhengzhou, Nanjing, Chengdu, and Guiyang. Many of the 11 project companies operating these high-speed lines belong to the “Hongsheng Series,” such as Guangzhou Hengfeng Beverage Co., Ltd., Guiyang Hongsheng Hengfeng Beverage Co., Ltd., Chengdu Hongsheng Hengfeng Beverage Co., Ltd., among others.
Public records show that Hangzhou Wahaha Group Limited was established in 1987 by Zong Qinghou and is headquartered in Hangzhou, Zhejiang Province, China. It is a food and beverage production company, specializing in the production and sale of Wahaha series products, including packaged drinking water, protein beverages, carbonated beverages, tea beverages, fruit and vegetable juice beverages, coffee drinks, plant-based beverages, special purpose beverages, canned foods, dairy products, and medicinal health foods.
Although Hangzhou Wahaha Group Limited was founded by Zong Qinghou, he only holds 29.4% of the shares, making him the second-largest shareholder of Wahaha. Currently, Zong Fuli, his daughter, has inherited this share.
Additionally, Hangzhou Shangcheng Wenshanglü Investment Holdings Group Limited holds 46% of Wahaha’s shares, making it the largest shareholder. This group is solely funded by Hangzhou Shangcheng District’s state-owned assets.
With Wahaha closing some factories while increasing production, 21st Century Economic News believes that Zong Fuli seems to be replicating her management model for Hongsheng Beverage onto Wahaha, aiming to strengthen her control over the company.
According to Caixing News on June 4th, since Zong Fuli took the helm, the management team has gradually transitioned to personnel from the “Hongsheng Series,” with many business operations being handed over to “Hongsheng Series” companies.
In February of this year, a trademark transfer dispute occurred at Wahaha. Wahaha Group transferred 387 series trademarks to Hangzhou Wahaha Food Co., Ltd., where the majority shareholder is Hangzhou Wahaha Hongzhen Investment Co., Ltd., holding 51% of the shares, with Wahaha Group being the second-largest shareholder with 39%. Hongzhen Investment is fully controlled by Zong Fuli.
Hongsheng Group has no relation to Wahaha Group and is registered as a company owned by Zong Fuli overseas.
Tianyancha data shows that on May 28th, there were commercial changes at Wahaha, with Zong Qinghou resigning as legal representative, chairman, and general manager, and Zong Fuli taking over the role of legal representative and chairman. Additionally, several senior management personnel underwent changes.