A new twist has emerged in the battle for the multi-billion-dollar legacy left behind by the founder of the Chinese beverage giant Wahaha, Zong Qinghou. On September 26, the Hong Kong High Court made a final decision on the appeal application by Zong Fuli and her related companies, rejecting all five grounds of appeal and upholding the previous freeze order on assets worth $18 billion. This means that this substantial disputed asset will remain locked until the mainland courts complete the trial.
The latest judgment from the Hong Kong High Court indicates that the court has dismissed all the grounds of appeal put forward by Zong Fuli’s side, maintaining the asset preservation order issued on August 1. The injunction froze around $18 billion in assets in the defendant’s HSBC accounts in Hong Kong, prohibiting them from withdrawing or mortgaging the funds until the litigation in Hangzhou concludes.
The court also ruled that Zong Fuli’s side must bear the litigation costs of the plaintiff. However, the court approved a temporary suspension of the disclosure order, temporarily not requiring Zong Fuli’s side to disclose the balance in the HSBC account and the flow of funds, providing them with space to launch a new round of appeals to the appellate court.
The five grounds of appeal raised by Zong Fuli’s side mainly involve jurisdictional issues of the Hong Kong court, whether the plaintiff should first seek relief from the mainland court, whether the plaintiff has a trust or property interest, the necessity of the Hong Kong court issuing an injunction, and disputes over the scope of the disclosure order.
The judge, in the judgment, systematically rejected these reasons, insisting that this is a “serious case pending trial and subject to full argument,” and that the Hong Kong court has the authority to restrict asset transfers to ensure the effective progress of mainland legal proceedings.
At the core of this family feud are the following key figures: defendant Zong Fuli (current chairwoman of Wahaha) and her controlled company, Jian Hao, and the plaintiffs who claim to be Zong Fuli’s “half-siblings from the same father but different mother,” Zong Jichang, Zong Jieli, and Zong Jisheng.
The dispute stems from the offshore trust arrangements planned by Zong Qinghou before his passing. According to court documents, Zong Qinghou had signed a trust agreement with Zong Fuli entrusting her to set up an offshore trust for each of the three half-siblings, with a total value of about $21 billion.
The plaintiffs allege that Zong Fuli deliberately delayed the establishment of the trusts, refused to sign relevant documents, and unlawfully transferred funds from the accounts. Currently, the disputed assets are mainly concentrated in the accounts of Jian Hao company at HSBC in Hong Kong, including bonds, fixed-income assets, and some cash.
While the case in Hong Kong is ongoing, the plaintiffs have also filed a lawsuit against Zong Fuli in the Hangzhou Intermediate Court, primarily focusing on the final ownership and inheritance rights of the Zong family assets.
Wahaha Group previously stated that the claims in the Hangzhou case do not involve the equity of the Wahaha Group, as the 29.4% stake directly held by Zong Qinghou has been fully inherited by Zong Fuli and the industrial and commercial registration changes have been completed.
However, the Hangzhou court is still reviewing another case involving the 24.6% equity of the Wahaha Employee Stock Ownership Association, with over fifty retired and resigned employees objecting to the repurchase agreement signed in 2018, adding complexity to the group’s equity structure.
Since the passing of Zong Qinghou in February 2024, this multi-billion-dollar legacy dispute has continued to escalate. Zong Fuli, as the leader of Wahaha, not only has to deal with legal disputes within the family but also faces operational challenges such as brand trademark ownership and acceptance in the new brand market.
It is reported that Zong Fuli has reported the Hangzhou court to the Supreme Court and the Supreme Procuratorate in an effort to expedite the handling of the case.
Analysts believe that against the backdrop of unresolved issues such as family legacy disputes and brand trademark ownership, Zong Fuli’s path to corporate transformation will continue to face pressure. While the Hong Kong High Court has rejected her appeal application, allowing her to continue to apply to the appellate court indicates that this complex family property dispute will endure for a considerable amount of time.