The high-ranking executive Yan Xuefeng of the Wahaha group has been reported to be under investigation by the disciplinary inspection commission of the Shangcheng District of Hangzhou on suspicion of violating discipline. Yan Xuefeng, who is a close aide of Zong Fuli, was responsible for leading Wahaha’s core businesses such as bottled water to transfer to the Hongsheng Group. Insiders believe that this investigation serves as a clear warning from the state-owned shareholder with a 46% stake to Zong Fuli about the large-scale business adjustment, marking a shift from behind-the-scenes maneuvering to open confrontation within the Wahaha group.
According to a report by Caixin on October 2, Yan Xuefeng, the director of the production center of the Wahaha group and the Hongsheng Beverage Group, is under scrutiny for suspected violation of discipline by the disciplinary inspection commission of the Shangcheng District of Hangzhou. The decision has been conveyed to the party committee of the Wahaha group, explicitly stating that without the approval of the inspection committee, Yan Xuefeng is not allowed to go abroad, resign, be promoted, rewarded, or handle retirement procedures.
Yan Xuefeng is not an ordinary senior executive. Business information shows that he serves as a supervisor in nearly 190 associated companies of Wahaha, and played a crucial role in implementing business adjustments after Zong Fuli took over control of the Wahaha group. Following Zong Fuli’s comprehensive control of Wahaha after the passing of her father Zong Qing in 2024, Yan Xuefeng and other personnel from the Hongsheng group concurrently entered the core decision-making layer of Wahaha, overseeing crucial sectors such as the supply chain and production.
While senior officials of the Wahaha group have stated that Yan Xuefeng’s investigation is due to “personal reasons,” it is widely believed that this investigation is closely related to Zong Fuli’s recent large-scale business transfers.
Yan Xuefeng’s investigation comes against the backdrop of Zong Fuli’s significant restructuring of Wahaha’s bottled water business. At the end of 2024, Zong Fuli ordered the transfer of the sales business of barrelled water of Zhejiang Wahaha Drinking Water Co., Ltd. to Hangzhou Xunercheng Tong Trading Co., Ltd., with the plan officially implemented on March 25, 2025.
It is noteworthy that Yan Xuefeng serves as the legal representative of Xunercheng Tong and Zong Fuli serves as a director of the company. This company is owned 100% by Hangzhou Hongchen Marketing Co., Ltd., which in turn is 100% owned by Hongsheng Beverage Co., Ltd., where Zong Fuli serves as the legal representative.
In April 2025, without signing new purchase and sales agreements with distributors, Zong Fuli instructed distributors to place orders with Xunercheng Tong, achieving substantial business transfer. This meant that Zhejiang Wahaha Drinking Water Co., Ltd. no longer possessed the operational rights for barrelled water sales, becoming a contract manufacturer for Xunercheng Tong.
This adjustment led to a significant decline in revenue and profit for Zhejiang Wahaha Water Plant, directly affecting shareholder dividends. Zhejiang Wahaha Drinking Water Co., Ltd. is a wholly-owned subsidiary of Zhejiang Wahaha Industrial Co., Ltd., with all its profits attributable to the latter.
Zong Fuli’s business adjustments extend beyond the bottled water domain. Shanghai Wahaha Drinking Water Co., Ltd., a subsidiary of the Wahaha group, had its Wahaha brand usage rights revoked and recently introduced a new brand called “Hu Xiao Wah.” Shanghai Wahaha Water Plant, established in 2002, has Zhejiang Wahaha Industrial Co., Ltd. as its largest shareholder (holding 70%) and Zong Wei, the cousin of Zong Qing, as the second largest shareholder (holding 30%).
Of particular interest is that Wahaha is considering launching a new brand name “Wa Xiao Zong” as of 2026, with a target annual sales of 30 billion yuan. This change stems from restrictions on Zong Fuli’s trademark usage rights. The State-owned enterprise Wenshanglv Investment Holdings Group, a subsidiary of the Hangzhou Shangcheng District Finance Bureau, holds a 46% stake in Wahaha, with Zong Fuli owning 29.4% and the employees’ stock ownership association holding 24.6%. The “Wahaha” trademark belongs to the group, requiring unanimous approval from all shareholders for its use.
Earlier this year, Zong Fuli attempted to transfer 387 “Wahaha” trademarks to her personally owned Hangzhou Wahaha Food Co., Ltd., but was unsuccessful. Following the trademark transfer blockage, launching a new brand became her alternative.
An article by NetEase analysis suggests that Yan Xuefeng’s investigation sends a strong signal: the state-owned shareholder in the Shangcheng District of Hangzhou, holding a 46% stake in Wahaha, is deeply dissatisfied with Zong Fuli’s business adjustments. However, as Zong Fuli already has full control of the board of directors, the state-owned side cannot directly stop the business transfer but can impose restrictions on issues like the use of the Wahaha trademark.
The pending investigation into Yan Xuefeng is widely seen as an explicit warning from the authorities to Zong Fuli’s “de-Wahaha and fostering Hongsheng” strategy. After taking over Wahaha, Zong Fuli gradually replaced original core department personnel with Hongsheng personnel, leading to significant changes in the board of directors, supervisory board, as well as changing the contracting entities of 12 provincial distributors to Hongsheng companies. At the same time, Wahaha closed down 18 factories in Shenzhen, Dali, Chongqing, among other places, while Hongsheng Beverage Group continued to invest in Wahaha’s product factories.
The sudden investigation of Yan Xuefeng, a key executor in this series of adjustments, indicates that the underlying power struggles have now come to the surface. An article on Huxiu believes that this is not only a severe test of Zong Fuli’s “new policy” but also foretells a more complicated power struggle she will face in integrating the tangled interests within the group and balancing various forces.