Saturday, October 18, 2008

Zong Qinghou

Zong Qinghou , born 1945, is a entrepreneur, founder, Chairman and CEO of the Hangzhou Wahaha Group, the leading beverage company in China. Ranked China’s 23rd-richest man and 840th in the world by Forbes, Hurun Report estimated him to have personal wealth of US$1 billion in 2006.

Zong is a delegate to the Chinese National People's Congress.

Biography


Zong is a native of Zhejiang, and has had little formal education. After graduating from secondary school, Zong worked at the Zhoushan salt farm. He returned home in 1979 on the retirement of his mother, who was a teacher. He eventually returned to Hangzhou, and only found menial work at a local school due to the low level of his education. In 1987, he targeted a minigrocery in a school in Shangcheng District,Hangzhou, selling milk. Zong headed the embryonic Wahaha business, which distributed fizzy soft drinks, ice and stationery. Together with two retired schoolteachers, he borrowed the sum of 140,000, to start producing milk drinks for distribution.

He obtained independence from an early government partner by stressing his links with Danone. With his autocratic style and workaholic ethic, he built Wahaha into the largest beverage manufacturer in the People's Republic of China.

The entered into with Groupe Danone involved the inward investment of US$70 million in five joint venture companiesin exchange for 51% Groupe Danone ownership in each company. The trademark agreement signed on 29, 1996 gave the JVs the exclusive rights of production, distribution and sales of products under the Wahaha brand. Collaboration has grown into 39 joint venture entities by 2007.

In 2007, the relationship had started to turn sour when Danone attempted to gain control of the company. Zong, who had been left to manage the business without any intervention from Danone, resigned as Chairman of the joint ventures on June 5, 2007.

Personal


Zong is a delegate to the Chinese National People's Congress since 2002. He was re-elected in 2007.

His wife is Shi Youzhen , and his daughter is Zong Fuli . Shi is the Purchasing Manager at Wahaha. It was reported in 21st Century Economy Report that both Zong and Shi have , and their daughter is an American citizen.

Zong gained wide support as he acted the "David" against a French "Goliath" gobbling up Chinese companies. Perceptions have changed since the revelation of his green card, his reputation is damaged.

Tax evasion allegations


Zong claimed to have been paid a salary of Euro3,000 and Euro100,000 annual allowances plus a bonus worth 1 percent of the annual profit of the joint ventures, totalling 70 million yuan of income every year.

Caijing reported in April 2008 that Zong was being investigated for allegedly amounting to some 300 million. An investigator had alleged that Zong "...earned far more than this and hasn't fully reported the tax for years". Caijing implied there may have been less than transparect payments through web of Hong Kong-registered accounts of Zong, Shi, daughter Fuli; and the former Party secretary of Wahaha, Du Jianying. Zong had apparently paid more than 200 million yuan in back taxes in October 2007, after the investigation kicked off. However, the magazine suspected Zong still owed millions more.

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