The Hangzhou Wahaha Group Co., Ltd. (WHH; ) is a private group of companies, and the largest beverage producer in China.
The company is headquartered in
Hangzhou
Hangzhou ( or , ; , , Standard Mandarin pronunciation: ), also romanized as Hangchow, is the capital and most populous city of Zhejiang, China. It is located in the northwestern part of the province, sitting at the head of Hangzhou Bay, whi ...
,
Zhejiang province
Zhejiang ( or , ; , also romanized as Chekiang) is an eastern, coastal province of the People's Republic of China. Its capital and largest city is Hangzhou, and other notable cities include Ningbo and Wenzhou. Zhejiang is bordered by Jiangs ...
. "Wa ha ha" signifies "laughing child".
Wahaha has roughly 150 subsidiary companies and 60 manufacturing bases scattered throughout China. Wahaha employs about 60,000 staff.
[Paula M. Miller]
"The Chinese beverage company's expansion is no laughing matter"
/ref>
The company was originally a local government owned sales company founded in 1987–8. For most of the time since creation, it has been run by Zong Qinghou (宗庆后), who exercises operational control over the day-to-day operations.
History
Wahaha has its origins in the sales department of the Shangcheng District
Shangcheng District () is the county seat and one of ten urban districts of Hangzhou, the capital of Zhejiang Province, People's Republic of China, it is located in the core urban area of Hangzhou. The district has an area of and a population o ...
School in Hangzhou, which was founded in 1987. A factory, the "Hangzhou Wahaha Nutritional Foods Factory" (杭州娃哈哈营养食品厂), was created in 1989 to tap a niche in the market for a "children's liquid nutrient" 儿童营养口服液.[ Although there were 38 producers of liquid nutrients on the market, none were specifically for children. The advertising campaign struck a note with single child Chinese parents, and was a runaway success.]["娃哈哈"的新童话]
(轉載自証券日報) ''People's Daily
The ''People's Daily'' () is the official newspaper of the Central Committee of the Chinese Communist Party (CCP). The newspaper provides direct information on the policies and viewpoints of the CCP. In addition to its main Chinese-language ...
'' In 1991, the factory was merged with the ailing "Hangzhou Canned Food Factory" (杭州罐头食品厂) in a social restructuring, but which increased the overheads of the business.[
In May 1992, Wahaha raised CNY236 million internally in order to start the Hangzhou Wahaha Food City Co. Ltd. (杭州娃哈哈美食城股份有限公司), and to finance the construction of Wahaha Food City, in Hangzhou.][ Due to inexperience in project management, cashflow became a problem, as construction was delayed for 6 years.][ This company holds the interests of the employees' union. It changed its name to ZHI at an EGM in August 2001.
During the period from 1992 to 1994, WHH shifted the company away from health drinks to other products. During this period it launched a sour plum drink, alcoholic beverages and pseudo-medicinal potions, but these would successively fail.][
In 1994, the company acquired three insolvent companies in ]Sichuan
Sichuan (; zh, c=, labels=no, ; zh, p=Sìchuān; alternatively romanized as Szechuan or Szechwan; formerly also referred to as "West China" or "Western China" by Protestant missions) is a province in Southwest China occupying most of the ...
, and established its first factory in Chongqing
Chongqing ( or ; ; Sichuanese dialects, Sichuanese pronunciation: , Standard Mandarin pronunciation: ), Postal Romanization, alternately romanized as Chungking (), is a Direct-administered municipalities of China, municipality in Southwes ...
. A local manufacturing base enabled the company to reduce distribution costs to western China.[ Once talks had started with ]Danone
Danone S.A. () is a French multinational corporation, multinational food-products corporation based in Paris. It was founded in Barcelona, Spain. It is listed on Euronext Paris where it is a component of the CAC 40 stock market index. Some of t ...
, capital became available once again for the company. WHH launched ''Wahaha Pure Water'' and struck gold with it.[ Over the next three years, WHH would acquire 40 more companies in 22 different provincial cities, transforming it into one of the largest beverage companies in China.
]
Joint ventures
In 1995, Peregrine Investments Holdings
Peregrine (including Peregrine Investments Holdings Limited and Peregrine Infrastructure Investments Limited) was an investment company based in Hong Kong. It was liquidated following the downturn of the Indonesian economy during the Asian financi ...
introduced Zong to Danone, and discussions about the creation of a joint venture began. The Wahaha trademark was assigned to the main joint venture vehicle on 29 February 1996, and a joint venture agreement was eventually signed on 28 March 1996.[
The "foreign partners" took 51%, while the "Chinese partners" held 49% (of which WHH holds 39% and employees own 10%).][ ]Groupe Danone
A group is a military unit or a military formation that is most often associated with military aviation.
Air and aviation groups
The terms group and wing differ significantly from one country to another, as well as between different branches ...
and Peregrine together invested US$70 million in return for the stake in five joint venture WHH companies[
Since April 2007, Wahaha has been engaged in a public dispute with Danone, its JV partner. Danone has accused Zong of selling identical products using the ''Wahaha'' brand outside of the joint ventures, and demands a 51% stake in these.]
Going it alone
Since the dispute began, Wahaha has launched products under different brands. Earlier the company released new beverage products under the name of Nutri-Express Drink and Wahaha Smoothie. U-Yo Milk Coffee has now been launched with a "Qili" logo. The producer was a new company rather than the Wahaha Group. More products are likely to be rebranded with the new logo.[Wang Zhenghua]
"Family feud between Danone and Wahaha"
''China Daily'', 12 November 2007
Products and distribution
Wahaha branded products include milk drinks (19%), soft drinks
A soft drink (see § Terminology for other names) is a drink that usually contains water (often carbonated), a sweetener, and a natural and/or artificial flavoring. The sweetener may be a sugar, high-fructose corn syrup, fruit juice, a s ...
, bottled water
Bottled water is drinking water (e.g., well water, distilled water, mineral water, or spring water) packaged in plastic or glass water bottles. Bottled water may be carbonated or not. Sizes range from small single serving bottles to large car ...
(43%), bottled tea (19%), fruit juice (13%), porridges and its flagship yoghurt beverages (7%).[James T. Areddy & Deborah Ball]
"Danone's China Strategy Is Set Back"
''Wall Street Journal
''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its Asian editions, is published ...
'', Page A10, 15 June 2007
Its largest facility is located in Hangzhou's Xiasha Economic and Technological Development Zone, where one-third of the company's production occurs.[
Wahaha dealers help them with management and marketing and advertises nationally. The company has 35 provincial sales offices, 2,500 sales team employees, Its distribution is truly nationwide. Wahaha is one of 3 brands which has few distribution gaps in rural China, with more than 2 million sales outlets across the country.][ Distributors are responsible for capital, storage, and delivery. The company maintains two grades of distributors: more than 1,500 first-level dealers that need to meet distribution targets and manage large networks and capital; and 12,000 second-level dealers that deal at smaller levels.][ Distributors' franchise areas are strictly delimited to ensure no poaching between areas, and are guaranteed by forfeitable deposits lodged with Wahaha.
The distribution has given '' "''Future Cola''"'' a close third in national market share through its domination of rural China, its tertiary and secondary cities. According to PRC government statistics, ]Coca-Cola
Coca-Cola, or Coke, is a carbonated soft drink manufactured by the Coca-Cola Company. Originally marketed as a temperance drink and intended as a patent medicine, it was invented in the late 19th century by John Stith Pemberton in Atlanta ...
held a 24 percent market share in 2003,[ whilst Future Cola's market share is 70% of that of Pepsi.
Its products are also available in major ]Chinatown
A Chinatown () is an ethnic enclave of Chinese people located outside Greater China, most often in an urban setting. Areas known as "Chinatown" exist throughout the world, including Europe, North America, South America, Asia, Africa and Austra ...
s.
Ownership structure
Holding company
The Hangzhou Wahah Group Co. Ltd. is 29.4% owned Zong, 26.4% by the employees and management as represented by Zhejiang Wahaha Industries Joint-stock Co. ("ZHI") (浙江娃哈哈实业股份有限公司), and 46% by Shangcheng District Government.[Liu Hua]
宗庆后反控达能路径调查
21st Century Economics, 12 April 2007 Zong's shares are controlled by British Virgin Islands
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registered Ever Maple Trading Ltd. (恒枫) through Hangzhou Hongsheng Beverage Co Ltd (杭州娃哈哈广盛投资公司).[Xinhua]
"Wahaha says its arbitration application accepted over trademark dispute with Danone"
18 June 2007 Ever Maple's legal representative is Zong's daughter Zong Fuli.[
]
Other "Wahaha companies"
Whilst the group has many subsidiaries, both local and foreign registered, there are also a number of entities which are essentially private companies owned or controlled by Zong. These companies are the subject of the dispute with the foreign partner. At the end of 2006, total non-joint venture companies reportedly had equity of ¥5.6 billion and profits of ¥1.04 billion. In December, Zong had agreed to sell these to Danone for ¥4 billion.[另一张底牌(another hidden car]
"Wahaha – atypical commercial dispute"
, ''Caijing
''Caijing'' is an independent magazine based in Beijing that covers societal, political, and economic issues, with a focus on civil rights, public affairs, and business.James F. Scotton"New Media for a New China,"John Wiley & Sons, 8 March 2010, ...
'' Issue 185, 14 May 2007
The Hangzhou Wahaha Guangsheng Investment Co. (杭州娃哈哈广盛投资有限公司) ("GUANGSHENG") established in 2003 with registered capital of ¥50 million, is a key non-JV entity. Its shares were held by Zong and the union in a ratio of 60:40. Its capital was later increased to ¥80 million. The following companies, ''inter alia'', were its subsidiaries or associates, with holdings ranging from 39 to 60 percent:[谁拥有娃哈哈？(who owns wahaha]
"Wahaha – atypical commercial dispute"
, ''Caijing'' Issue 185, 14 May 2007
* Hangzhou Wahaha Children's Clothing Co. 杭州娃哈哈童装有限公司, est. 2002
* Changsha Wahaha Beverages Co. 长沙娃哈哈饮料有限公司
* Harbin Shuangcheng Wahaha Foods Co. 哈尔滨双城娃哈哈食品有限公司
* Jian Wahaha Beverages Co. 吉安娃哈哈饮料公司
The shares of Hangzhou Wahaha Children's Clothing Co. (杭州娃哈哈童装有限公司) founded in 2002, were initially held by Guangsheng, but were transferred out in August 2003, in an "interesting series of share transfers". It is now 65% owned by Zong, 10% by his wife, and 25% by Platinum Net Ltd.[
The Hangzhou Wahaha Food and Beverage Sales Co. (杭州娃哈哈食品饮料营销有限公司) "WHHFBSC", registered on 19 December 2006, is an external company allegedly now the centre of a parallel distribution network.][ 10% of its share capital is held by Zong's wife, Shi Youzhen, and 90% by Ever Maple Trading Ltd.][商标权之争 (trademark dispute]
"Wahaha – atypical commercial dispute"
, ''Caijing'' Issue 185, 14 May 2007
Zong set up non-jv owned factories, such as the Hangzhou Xiushan Shunfa Packaging Co. (杭州萧山顺发食品包装公司),[ to manufacture or pack products identical to WHH. Danone alleges that distributors were asked to set up new bank accounts for their deposit payments in the name of WHHFBSC to sell products from these factories.][达能：调查开始了(Danone investigation begins]
"Wahaha – atypical commercial dispute"
, ''Caijing'' Issue 185, 14 May 2007
Offshore companies
These offshore companies
The term "offshore company" or “offshore corporation” is used in at least two distinct and different ways. An offshore company may be a reference to:
* a company, group or sometimes a division thereof, which engages in offshoring business pro ...
have been reported as being subsidiaries of the Wahaha Group, and have been seized in their respective domiciles:["Courts freeze 10 Wahaha units assets"]
, Xinhua, 21 November 2007
British Virgin Islands : Golden Dynasty Enterprise Ltd, Gold Factory Developments Ltd, Platinum Net Ltd, Sunworld Enterprises Ltd, Great Base International Ltd, Bountiful Gold Trading Ltd and Wintell Enterprises Ltd.
Samoa : Mega Source Investments Ltd and Honour Bright Investments Ltd
References
{{Beverage companies of China
Drink companies of China
Privately held companies of China
Manufacturing companies based in Hangzhou
Chinese brands
Chinese companies established in 1987
Food and drink companies established in 1987