Eliza Wong
Turbulence in Beverage Dynasty
The sudden emergence of three previously unknown half-siblings has thrown China’s beverage empire Wahaha into turmoil, with current chairman Zong Fuli facing legal action over a $2.1 billion inheritance dispute. This explosive family conflict coincides with Wahaha’s operational downsizing—eighteen major facilities shut down in early 2024, including several where the claimants held director positions. The Wahaha inheritance dispute threatens corporate stability while revealing complex inheritance challenges confronting China’s first-generation entrepreneurs.
Summary of Key Developments
- Current Wahaha Chairperson Zong Fuli sued by half-siblings Zong Jichang, Zong Jieli, and Zong Jisheng over alleged $2.1 billion trust fund
- Plaintiffs seek injunction freezing $18 billion HSBC holding while demanding paternal inheritance
- Wahaha shuttered eighteen facilities where claimants held management positions
- Company insists dispute is “family internal affairs” unrelated to operations
- Documentation discrepancies fuel inheritance uncertainty
The Inheritance Battlefront
On July 13, 2024, Zong Fuli received formal legal notification that three individuals claiming to be her half-siblings—Zong Jichang (Jacky Zong, 宗继昌), Zong Jieli (Jessie Zong, 宗婕莉), and Zong Jisheng (Jerry Zong, 宗继盛)—had initiated proceedings against her in Hong Kong courts. This marked the public emergence of previously confidential family dynamics at Wahaha’s $20 billion beverage operation founded by their father Zong Qinghou, who passed away in February 2024.
The Core Claims
Plaintiffs assert their father verbally acknowledged their lineage and pledged equitable inheritance, notably through establishing a trust holding approximately $18 billion in assets managed through HSBC. Their lawsuit alleges improper fund transfers from these accounts since mid-2023, seeking:
- Immediate asset freeze preventing fund disposition
- Execution of Zong Qinghou’s inheritance commitments
- Financial compensation for unauthorized transfers
- Payment of accumulated asset interest
According to legal filings obtained by Global Times, each claimant seeks $7 billion individual settlements, collectively equivalent to nearly 15% of Wahaha’s estimated enterprise value.
Corporate Reshuffling Precedes Legal Firestorm
Six months before lawsuit filings, Wahaha initiated sweeping operational changes. Through January-April 2024, the beverage titan shuttered eighteen facilities nationwide—strategic moves the company publicly attributed to “optimizing production-distribution structures.” Internal documentation reveals significant overlaps between these closures and plaintiffs’ corporate positions:
| Closed Facility | Claimant Position | Operating Status |
|---|---|---|
| Dali Wahaha Beverage Co. | Zong Jichang – Director | Active Production Suspended |
| Shenyang Wahaha Rongtai Food Co. | Zong Jichang/Zong Jieli – Directors | Corporate Status Active |
| Nanjing Wahaha Beverage Co. | Zong Jichang – Director | Operating |
| Tianjin Wahaha Food Co. | Zong Jichang – Director | Active Production Suspended |
Operational Transformation
Industry analysts interpreted these closures as modernization efforts in Wahaha’s traditionally plant-centric distribution model. However, the abrupt termination of facilities managed by potential inheritance claimants introduces questions about proactive inheritance protection strategies. Financial distress patterns varied among affected locations—facilities in Shenyang and Dali remained financially solvent despite suspensions.
Contesting Legal Arguments
The Wahaha inheritance dispute pivots on fundamentally opposing legal interpretations. Plaintiff lawyers assert Zong Qinghou personally validated trusts through documented HSBC instructions and direct acknowledgments of lineage.
Defense Counterclaims
Zong Fuli’s counsel challenges evidentiary validity, noting:
- No formal lineage verification exists beyond oral claims
- Cannot authenticate alleged HSBC trust instructions
- Estate documents lack claimant signatures
- Will execution witnessed exclusively by Wahaha executives
The estate’s probate process reportedly bypassed standard protocols, with non-family corporate officers exclusively witnessing final testamentary documents. Legal experts note such procedural deviations often trigger inheritance contests when unexpected heirs emerge.
Corporate Response Strategy
Facing heightened public scrutiny, Wahaha’s corporate communications implemented strict separation protocols:
- Official statements declare matters “interna family affairs” unrelated to operations
- Board members repeatedly stressed sustained business continuity
- Centralized media responses declined substantive commentary
This position reflects common corporate governance approaches implementing “Chinese Walls” between shareholder conflicts and operational management. However, analysts note potential governance vulnerability should ownership structures shift through inheritance resolutions.
Historical Succession Context
The Wahaha inheritance dispute exposes common succession challenges confronting China’s first-generation entrepreneurs. Zong Qinghou epitomized frugal patriarchal leadership—famously dubbed “Cloth Shoe Billionaire” for modest attire despite $25 billion empire-building. Nearly 70% of China’s family enterprises lack formal succession documentation per Tsinghua University’s Family Business Research Center:
- First-plan entrepreneurs prioritize growth over governance
- Successions often delayed until health crises
- Culturally complex acknowledgment of affairs/residential arrangements
The Wahaha succession saga reflects patterns seen in 53% inheritance disputes filed against estates exceeding $100 million according to Chinese court statistics.
Governance Implications
Four pivot points will determine Wahaha’s governance trajectory:
Operational Insulation Effectiveness
Continued separation between ownership conflicts and corporate operations remains critical for maintaining retailer/supplier confidence throughout prolonged proceedings.
Regulatory Compliance
Transparency requirements intensify scrutiny of corporate restructuring justification—investment relationships with closed facilities may face regulatory audit.
Industry Positioning
Competitors including Nongfu Spring may capitalize on governance uncertainty through intensified marketing and distribution negotiations.
Corporate Structure Vulnerability
Should claimants prevail, diluted ownership threatens Zong Fuli’s unified strategic governance—potentially forcing Saudi Aramco-style family office trusts.
Path Forward for Legacy Preservation
The inheritance conflict resolution carries profound industry implications beyond Wahaha’s corporate halls. First-generation entrepreneurs facing succession should consider:
- Formalized trusts established during governance stability
- Corporate governance separating operational/inheritance functions
- Legal acknowledgement mechanisms for complex family structures
- Preemptive transparency on shareholder transitions
All corporate stakeholders should monitor Hong Kong litigation timelines while watching Wahaha’s corporate reporting for governance adaptations. Ultimately, this Wachaha inheritance dispute presents cautionary frameworks actionable today—with leadership continuity dependent on strategic foresight overcoming reactive solutions.
