Wahaha, whose main products are milk drinks, bottled water and mixed congee, is the number one beverage company in China, with revenues of 11.4 billion yuan ($1.37 billion) and profits of 1.35 billion yuan ($162.7 million) in 2004. The company was started in 1987 by Zong Qinghou, its 60-year-old chairman and CEO.
Up until the year 2000, Wahaha was 100% state owned. That year, Zong bought out 55% of the government's shares, kept 30% for himself, and allotted 20% to employees and 5% to senior management.
As a young man, Zong spent 15 years on a farm before starting the company with two retired school teachers. Initially he made money by selling beverages and ice cream. Then in 1989 he founded the Wahaha Nutritional Food Factory in Hangzhou. Its main product - "Wahaha nutritional liquid" - was an instant success. In 1991, Wahaha Nutritional Food Factory and its 100 employees merged with a state-owned enterprise called Hangzhou Canning Factory. The company in 1996 set up five subsidiaries with the French giant Danone Group, a joint venture that attracted $45 million in foreign investment, but allowed Wahaha to retain all managerial and operating rights as well as the brand name Wahaha. In the last eight years, the company has established 40 subsidiaries in more than 16 provinces in China, and in 1998 launched its own brand, "Future Cola," to compete against Coke and Pepsi. In 2002, Wahaha entered the children's garment market.
Qinghou Zong recently talked with Wharton marketing professor Z. John Zhang at Wahaha headquarters in Hangzhou. Philip Wu, president of the Wharton Club of Shanghai, was also present at the interview.
Later, people started to question the quality of those medicines, especially if they contained hormones. Meanwhile, I found that Chinese children -- who usually don't have any siblings due to the single-child policy -- are too picky about their food.
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