Zong Qinghou, liquor magnate in China, dies at the age of 79

Zong Qinghou, a self-made beverage entrepreneur who was once the richest person in China, died on Sunday.

His death was announced by his company, Wahaha Group, which said Mr Zong had died of an unspecified illness and that he was 79 years old. The company statement provided no further details.

Mr Zong’s rags-to-riches story had made him prominent in China even before a public feud with his foreign business partner significantly raised his profile – and his wealth. He founded a beverage company in the 1980s, and in the 1990s he teamed up with Danone, the French food giant, to launch one of the best-known food and beverage brands in China.

But tensions erupted in 2007 when Danone accused Mr. Zong of running secret companies selling nearly identical products that siphoned as much as $100 million from the joint venture.

Mr Zong hit back, saying Danone was aware of the companies. He vowed to punish Danone for its “evil actions” and called on public opinion in China against the foreign company.

The dispute became so intense that French President Nicolas Sarkozy raised the issue during a meeting with Chinese leader Hu Jintao. In 2009, Danone sold its 51 percent stake, giving Mr. Zong’s company full control.

The following year, Forbes named Mr. Zong China’s richest man, with a fortune of $8 billion. He achieved the distinction again in 2012, with $10 billion. Forbes estimated that his net worth has since dropped to $5.9 billion. ranked him at number 53 on last year’s list of Chinese billionaires.

Survivors include his wife Shi Youzhen and their daughter Zong Fuli (also known as Kelly Zong). president of the Hangzhou Wahaha Group and Mr. Zong’s successor.

Mr Zong, who grew up poor, was known for his spartan lifestyle. In interviews, he said he arrived at the company’s headquarters before 7 a.m. and worked until 11 p.m. He said he had no hobbies except smoking and drinking Lipton tea.

According to various accounts, he was born in October or December 1945 (his company may have used a traditional Chinese method of counting ages in which a person is considered 1 year old at birth) in or near Hangzhou, a city near Shanghai. He was among the many young people sent to the countryside during the Cultural Revolution and worked for years in a farming community.

He became a traveling salesman in 1978, the same year that the country’s new leader, Deng Xiaoping, began ushering in an era of capitalism. About a decade later, Mr. Zong opened a stall near an elementary school, selling soft drinks and ice cream treats.

When he saw hungry children passing by, he decided to invent a vitamin drink, which he called Wahaha Oral Liquid. “It solved the problem of children not wanting to eat and suffering from malnutrition,” he told the BBC interview.

The Hangzhou Wahaha Group – ‘Wahaha’ loosely translated as ‘laughing child’ – was born shortly afterwards, selling bottled water, soft drinks and tea. It later expanded to infant formula and children’s clothing.

In 1996, it partnered with Danone, the French food company best known for its yogurt, to form the Wahaha Joint Venture Company. Selling yogurt drinks, carbonated drinks and food products, the company had 15 percent of the Chinese beverage market in 2012, behind only Coca-Cola and Tingyi Holdings.

After Danone accused Mr Zong of misconduct, he fought back with an open letter accusing Danone of spreading lies about his company’s business practices and defaming his family. Wahaha officials organized rallies and held press conferences in which Danone officials were labeled “thugs.”

Danone ultimately sold its stake for about $500 million, far less than analysts thought it was worth.

The breakup caused fear among multinationals, especially in sectors such as the auto industry, where the Chinese government required joint ventures and limited foreign companies’ stakes to 50 percent.

But it turned out to be more of an isolated incident than an indicator, and in retrospect just a blemish in an otherwise halcyon era. In recent years, multinationals have faced other, much bigger obstacles.

Rising geopolitical tensions have led to waves of sanctions between China and the United States. Nearly three years of “Covid zero” lockdowns and other measures have seriously damaged production and sales for many companies. And China’s state security services have become faster at shutting down foreign companies that concern them, especially due diligence firms.

“It was a high-profile case that got people’s attention,” Ker Gibbs, former president of the American Chamber of Commerce in Shanghai, said of the Danone episode. “But looking back now, it is clear that the overall environment during that period was quite stable and friendly to foreign companies.”