Zong Fuli's actions are akin to a father leaving a grand feast for his daughter and telling her that her siblings can have a little too. But as the daughter enjoys the feast, she suddenly decides she doesn't want her siblings to eat and pours a bucket of dung onto the feast, resulting in everyone being unable to eat, including herself.
Perhaps Ms. Zong has watched too much of 'Empresses in the Palace' and thought that after rising to power, she could take revenge on her enemies. But obviously, her abilities do not match her ambitions, and now she has messed up. A bigger problem is that there are a group of people eyeing her, wanting to take the opportunity of state-owned asset loss to settle scores with her. This is the real trouble.
Did Zong Fuli involve herself in depleting state-owned assets? The Hangzhou government holds a 40% stake in Wahaha, and after a year, they haven't made much profit. Most of the profits have gone to external companies controlled by the Zong family. If the Hangzhou government strictly investigates, Zong Fuli may not be able to keep her position as chairman.
By the way, tap water filtered is pure water, and surprisingly, 1.8 billion USD and other assets worth billions were made from selling water. The Chinese market is terrifyingly vast.
Why didn't Zong Qinghou directly establish a trust with the 1.8 billion USD in cash, but instead let Zong Fuli add another 300 million USD to make it 2.1 billion before establishing it? After reading a report from Caixin today, I sorted out the ins and outs, and it should be like this.
On February 2, 2024, Zong Qinghou, who was in the late stages of cancer, realized that his time was limited and he had to arrange for his affairs after death. There are several layers of concern here: first, his legendary patriotic entrepreneur image of 'one wife, one daughter, one cloth shoe' must be passed down through the ages; second, as someone from a traditional Jiangsu-Zhejiang family, he must ensure that the incense of his 'branching out' is well inherited, meaning he must arrange for those unacknowledged children who cannot be publicly disclosed. On this point, Old Zong was still kind-hearted. So on February 2, he established two wills simultaneously. One confirmed that the Long Princess, her mother, and his own mother were the beneficiaries of his estate, without mentioning Du Jianying and the three illegitimate children, nor overseas assets. This will later became an important basis for Zong Fuli to take over as chairman of Wahaha. Additionally, he made another will that required Zong Fuli to give seven hundred million USD each to the other three illegitimate children, Ji Chang, Ji Li, and Ji Sheng, at HSBC Hong Kong, and requested favorable interest rates from HSBC. The children could only take interest and not touch the principal, and it had to be handled according to Hong Kong law, notarized at the Hong Kong Notary Office, with the beneficiaries being only Ji Chang, Ji Li, Ji Sheng, and their children, and it was considered separate property, unrelated to their spouses after marriage. To prevent accidents, Zong Qinghou also wrote a letter to the old loyal minister, Guo Hong, and required that this matter be handled by Zong Fuli, Guo Hong, and Lawyer Chen.
These two wills were actually deliberately set up by Zong Qinghou. On the one hand, he hoped Zong Fuli could take over Wahaha; if Zong Fuli became the chairman, her legendary story of 'one wife, one daughter, one cloth shoe' could continue to be celebrated. On the other hand, he hoped the Long Princess could cooperate with the stepmother to provide seven hundred million USD each to his siblings for adequate living security. These two wills serve as a check and balance; if Zong Fuli wants to take over, the stepmother must cooperate. Thus, Zong Fuli would then transfer another 300 million to the overseas trust, so that everyone gets their due. If this matter were handled while he was alive, no one would dare to say anything, whether it was Zong Fuli, Du Jianying, or anyone else. But after he died, things did not go according to his expectations.
More than 20 days later, on February 25, 2024, Zong Qinghou passed away. Just five days after his death, on March 1, Zong Fuli began to handle the inheritance procedures. However, this process did not go smoothly. By March 14, 2024, Zong Fuli and Du Jianying had to negotiate, ultimately reaching a consensus in the form of an agreement that both wills dated February 2 were valid. However, Zong Fuli's path to succession was fraught with twists and turns, and she was even forced to retreat to advance, using her resignation from all positions at Wahaha as leverage to barely succeed in taking over.
In the more than half a year after successfully taking over, Zong Fuli's main tasks were to eliminate the old ministers, such as Guo Hong, whom Zong Qinghou had entrusted, and then cut off the 18 most profitable external companies managed by Du Jianying, attempting to completely clear out the stepmother and the three half-siblings from Wahaha. Of course, Zong Fuli did not follow her father's previous instructions to add an additional 300 million to the Hong Kong account, and even transferred out 1.1 million USD from it due to payments for Vietnamese goods. By this time, Zong Fuli and Du Jianying had completely torn apart their relationship. Thus, Du Jianying has sued Zong Fuli in both Hong Kong and Hangzhou. The current progress is that Hong Kong has temporarily frozen these funds, and who ultimately wins will depend on the outcome in Hangzhou.
I predict that the outcome of this matter will ultimately be a lose-lose for Zong Fuli and Du Jianying. Because of the current hype, Zong Qinghou's image as a patriotic entrepreneur has collapsed. People can't help but think, when France's Danone sued you for secretly establishing companies for yourself and relatives outside the joint venture, depleting the joint venture's assets, you told the public to be patriotic and that Chinese people shouldn't let foreigners bully us. The public supported you, and then when you later turned into a state-owned enterprise, you did the same thing. Isn't this depleting state-owned assets? Ordinary people have a hard time exchanging a few tens of thousands of USD when traveling. How did you manage to transfer this 1.8 billion USD out of the country? When you accepted an interview with reporters back then, you said that the wealth of private enterprises ultimately belongs to society as a whole, and that money left in the country is the property of the Chinese people, as long as it doesn't go to foreigners. Then why are all your children foreigners? How do you explain that?