Meet Zong Qinghou: China's wealthiest man

 

Twenty-five years ago, when Zong Qinghou was 42, he made his living selling soda and popsicles to schoolchildren.

He says he earned about $8 a month — less than a third of China's average wage at the time — and was so broke that he once slept in a tunnel under the streets of Beijing rather than spend on a hotel.

Today, Zong, 67, is still selling soft drinks — and lots of other things — as the wealthiest man in mainland China.

His net worth of $20.1 billion as of Oct. 5 ranks him No. 30 in the world, according to the Bloomberg Markets magazine. Supermarkets stock the juice, soda and bottled water his Hangzhou Wahaha Group produces, and doting Chinese parents buy his baby formula and children's clothes. In all of Asia, only Hong Kong property developers Li Ka-shing and Lee Shau-kee and Indian industrialist Mukesh Ambani are richer.

Even in a country that has exploded in wealth and created a new economic ruling class, Zong's story stands out. His rags-to-riches tale is remarkable not just for its trajectory but for the way he has thrived amid China's seemingly impossible conflation of capitalism and communism.

Zong, who didn't attend high school, lived on a farm commune from 1964 to 1978 during Mao Zedong's Cultural Revolution. He read the Communist revolutionary's books on leadership and learned about enduring through struggle. After Deng Xiaoping, the architect of China's drive toward a market economy, came to power, Zong took over a grocery store in 1987 with two retired teachers and a $22,000 loan from relatives.

Now Wahaha's chairman, Zong remains a frugal and autocratic manager, traits he honed in approving his first shop's every expense, down to the purchase of a broom. He often sleeps in a sixth-floor office at Wahaha's gray headquarters in Hangzhou, the capital of Zhejiang province. For lunch, he heads downstairs to the canteen, furnished with formica tables, where he eats the same food as his workers.

"When you are poor, you'll have to think of ways to be better off," says Zong, recalling his early years while chain-smoking Davidoff cigarettes outside Beijing's News Plaza Hotel. "That experience helps me to endure."

Wahaha, which means laughing baby in Mandarin, generated $11 billion in sales last year, with a 7.2 percent share of China's soft drink market. Flavored, nutritionally enhanced milk caters to families with young kids, while mineral water and iced green teas target adults.

Wahaha is No. 3, behind Coca-Cola Co. and Hong Kong- listed Tingyi (Cayman Islands) Holding Corp., according to London-based Euromonitor International Plc. Zong estimates that earnings at his closely held Wahaha will soar 60 percent to $1.6 billion this year from $1 billion in 2011.

Such a surge would make Zong even richer. He and his wife, Shi Youzhen, and their daughter, Kelly Zong, hold about 80 percent of the company. Zong disclosed the stake to Bloomberg News in September, more than doubling previous estimates of his wealth. (Bloomberg Markets magazine ranking operates under the rule that billionaire fortunes are inherently family fortunes.)

Zong's net worth is based on the average enterprise value-to-sales and price-to-earnings multiples of three publicly traded peers, using Wahaha's profits, plus $1.9 billion in cash from estimated dividends, market performance and taxes.

Zong is likely to use his status as China's richest person to pursue acquisitions overseas, says Zhang Lu, an analyst at Capital Securities Corp.

"Given the fact that Wahaha is already a well-known brand domestically, disclosing his share and wealth would help to boost the global profile of both Wahaha and Zong himself," she says.

Zong was born in 1945, a pivotal year in modern Chinese history. World War II had just ended and the nation was convulsed by civil war among Mao's Communists, Chiang Kai-Shek's Nationalist Party and independent military armies led by regional warlords. Zong's grandfather worked for a warlord, which later hurt the family's status after the Communists took over in 1949.

In the late 1950s, Mao ordered 700 million people into a state-controlled worker program dubbed the Great Leap Forward. By the early 1960s, the Great Leap had failed, leading to the deadliest famine in history, according to Jung Chang and Jon Halliday's 2005 book, "Mao: The Unknown Story."

In the mid-1960s, Zong, like millions of young Chinese, was forced to join a farming commune before Mao launched his second campaign, the Cultural Revolution.

"For a long time, I couldn't even afford food and clothing," Zong says of his years on the farm. "I climbed from the very bottom of the society."

Zong's time on the commune ended only after Mao died in 1976 and China gradually adopted the more-liberal policies engineered by Deng. Zong went to work as a salesman for consumer-goods companies as the country suffered shortages in the staples Chinese were clamoring for: meat, bicycles and TV sets.

One of the companies Zong sold for was a beverage maker that ran a shop owned by a grade school in Hangzhou. He and two retired teachers took over the store in 1987, the first step in creating Wahaha. He spent the next two and a half decades expanding from China's cities to rural areas, where disposable income was accelerating and competition was less fierce.

Zong named daughter Kelly to head Wahaha's nascent international business in 2010. Zong says she'll take over when he retires, although he has no plans to do so.

Now that he's a billionaire, Zong says, he wants to help other Chinese prosper.

"People who get rich early should help the rest get rich," he says, referring to words attributed to Deng.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksNow available in paperback
Life and Style
tech
News
The 67P/CG comet as seen from the Philae lander
scienceThe most important scientific breakthroughs of 2014
Arts and Entertainment
Ian McKellen as Gandalf in The Hobbit: The Battle Of The Five Armies
film
Arts and Entertainment
Sarah Koenig, creator of popular podcast Serial, which is to be broadcast by the BBC
tvReview: The secret to the programme's success is that it allows its audience to play detective
News
Ruby Wax has previously written about her mental health problems in her book Sane New World
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Sales Executives - OTE £60,000

£25000 - £60000 per annum: Recruitment Genius: Are you passionate about Custom...

Recruitment Genius: Care Workers Required - The London Borough of Bromley

£15000 per annum: Recruitment Genius: This homecare agency is based in Beckenh...

Recruitment Genius: Sales Executives - OTE £50,000

£25000 - £50000 per annum: Recruitment Genius: Are you passionate about Custom...

Recruitment Genius: Sales Executives - OTE £50,000

£25000 - £50000 per annum: Recruitment Genius: Are you passionate about Custom...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas