Date
11 December 2017
Wahaha chairman Zong Qinghou entered a market in which relentless construction had produced an embarrassment of shopping malls. Photo: Bloomberg
Wahaha chairman Zong Qinghou entered a market in which relentless construction had produced an embarrassment of shopping malls. Photo: Bloomberg

How Wahaha chief lost the plot

Wahaha Group is embroiled in yet another negative publicity.

The beverage titan has been forcing its workers to buy soon-to-expire baby formula in a desperate attempt to ease its stockpile, but the company has denied any such move.

It prefers to call it internal promotion. Now, however, the company is realizing some branch managers might have been pushing too hard and has decided to investigate, according to 21st Century Business Herald.

In 2010, Wahaha chief Zong Qinghou set a goal to double revenue to 100 billion yuan (US$16.06 billion) in three to five years through diversification.

But his bold new ideas have been mostly flops or poorly executed.

Wahaha partnered with Royal Numico in 2010 to produce its Edision infant formula brand in the Netherlands and sell it in China.

However, tougher quarantine procedures since 2013 have led to delays in customs clearance, shortening the time Wahaha can sell the product while still fresh.

Inadequate advertising support meant lukewarm sales, resulting in an inventory pile-up and finally leading to the forced internal sales scandal.

Zong’s shopping mall dream was also shattered. A year after opening its first Waow outlet in its hometown Hangzhou and vowing to open 100 such plazas across China, the mall is said to be grappling with rental delays due to poor business.

Completely new to commercial property, Zong didn’t realize he was entering a market in which relentless construction in the past few years had produced far more bazaars than the country needed. Competition from e-commerce didn’t help either.

Perhaps it’s time Zong stuck to his core competence — drinks, juices and canned porridge — and stopped being too adventurous.

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RA

Wahaha workers are forced to buy expiring infant formula, according to media reports. Photo: Wahaha website


EJ Insight writer

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