Wahaha heiress' fight over inheritance with half-siblings sends succession warning
Hong Kong – For decades, Kelly Zong had been known as the only child to her late billionaire father, the founder of China's beverage empire Hangzhou Wahaha Group. His effort to groom her as a successor was hailed as a model for Chinese entrepreneurs during the one-child policy era.
But Ms Zong is now grappling with two overlapping legal challenges stemming from unresolved matters left behind by her father – cases that could set a legal precedent for wealth succession in China and cast a shadow over the reputation of mainland China's biggest soft-drinks producer.
In a Hong Kong court in July, Ms Zong was asked to help set up three trusts worth US$2.1 billion (S$2.7 billion) for people who identify as her 'half brothers and sister' following what they say were her father's directives. The case has raised eyebrows and lit up on Chinese social media.
Her delay in setting up trusts has prompted the three half-siblings - Jacky, Jessie and Jerry Zong - to also file a lawsuit in Hangzhou with similar demands.
Their lawyer said that Kelly Zong had agreed in February 2024 to follow an instruction from her father to set up the trusts. But paperwork for the three trusts remains stalled, with no final agreement in place.
Ms Kelly Zong's lawyer argued that the handwritten instructions were not addressed to her, and that it's unclear where the funding to cover a US$300 million (S$384 million) shortfall would come from.
'We agreed to set up the trusts from the start, but only on the condition that the trust assets would be clearly defined,' the lawyer said.
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The Hong Kong High Court will hand down a decision on Aug 1, according to its website.
The delay in setting up trusts has prompted the three half-siblings to also file a lawsuit in Hangzhou with similar demands.
Separately, the 43-year-old heiress is being sued by some former Wahaha employees seeking to void a 2018 share buyback, according to people familiar with the case. The employees argue that the repurchase price was unfairly low, the people said.
Wahaha's labour union said the share repurchase move was approved by staff representatives and was lawful, according to a September statement it posted on social media platform Weibo.
The cases have once again thrust Wahaha's leadership and its ownership structure into the spotlight – reminiscent of the corporate power struggle following the death of founder Zong Qinghou. The disputes also threaten to derail Ms Kelly Zong's long-standing efforts to take all or part of Wahaha public, following previous failed attempts.
Wahaha's affairs are also a government concern, as a Chinese state-owned firm has a 46 per cent stake and the company is a flagship enterprise for Hangzhou, where it is headquartered. Ms Zong owns 29.4 per cent, while the group's staff union holds 24.6 per cent.
'Chinese family business founders need to take careful note of the Wahaha case,' said Marleen Dieleman, family business professor at IMD based in Singapore. 'Especially when founders have smaller stakes, succession can quickly spiral into a battle for control.'
Since Ms Zong took over as chairwoman in August 2024, some of Wahaha's existing production facilities have been shut down, leading to layoffs as part of business restructuring, the people said. BLOOMBERG
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