Wahaha's latest document in the property dispute case has been exposed, and Zong Fuli is in "big trouble."

Zong Qinghou passed away only 16 months ago, and Zong Fuli's succession path has encountered a series of crises.

Recently, Zong Fuli was sued in a Hong Kong court by three individuals claiming to be her "half-siblings." The three plaintiffs are Zong Jichang (Jacky Zong), Zong Jieli (Jessie Zong), and Zong Jisheng (Jerry Zong). The three submitted a lawsuit to the Hong Kong court to prevent Zong Fuli from disposing of assets in her HSBC bank account.

According to Caixin, the court documents obtained show that the bank account the Zong siblings requested to freeze belongs to a British Virgin Islands (BVI) registered company "Jian Hao Ventures Ltd." The three requested the freezing of this account to assist them in their lawsuit against Zong Fuli in the Hangzhou Intermediate People's Court: they are seeking to recover the trust rights of $700 million each (a total of $2.1 billion) promised by their father Zong Qinghou during his lifetime. This indicates that the Hong Kong HSBC account is not a trust account established by Zong Qinghou for his three younger siblings.

Additionally, according to the Daily Economic News, based on the original lawsuit filed by Zong Jichang and the other two in the Hong Kong High Court, the three had submitted their lawsuit as early as December 30, 2024, just six months after Zong Qinghou's death, indicating that this family conflict had already arisen.

This inheritance dispute has shattered Zong Fuli's "only daughter" label.

In the past, the public perception was that the Zong Qinghou family only consisted of his wife Shi Youzhen and their only daughter Zong Fuli. However, this lawsuit has revealed an unknown side of this beverage giant family.

The three children have lived abroad for many years and have not participated in Zong Qinghou's public family life.

Two Controversial Pieces of Evidence

According to Caixin, the aforementioned court documents indicate that as of May 2024, approximately $1.1 million had been transferred out of the HSBC bank account. The three plaintiffs requested the court to freeze the HSBC bank account and demanded that Zong Fuli respect her father's will.

However, Zong Fuli submitted a version of the will signed by Zong Qinghou in 2020, which clearly states, "All my overseas assets shall be inherited by my only daughter Zong Fuli, and other children shall not claim any rights."

The two conflicting pieces of evidence have become the focal point of the inheritance dispute over Zong Qinghou's estate. This "inheritance battle" has now formed a cross-border dual litigation pattern in the Hong Kong and mainland court systems, with the aforementioned three seeking to obtain trust fund rights valued at $700 million each.

In response, Zong Fuli's legal team strongly opposed this and stated that Zong Fuli does not accept this evidence and was not aware of any relevant instructions from Zong Qinghou.

Furthermore, the aforementioned will submitted by Zong Fuli only pertains to overseas assets and does not make arrangements for Zong Qinghou's domestic equity in Wahaha Group (approximately 29.4% of the group). During his lifetime, Zong Qinghou did not place this portion of equity into any family trust or make holding arrangements, but held it directly in his personal name.

According to reports from Phoenix Finance citing sources, the three non-marital children requested the court to confirm their right to divide Zong Qinghou's 29.4% equity in Wahaha Group according to statutory inheritance shares. However, this claim has not been confirmed by the three plaintiffs Currently, Hangzhou Wahaha Group Co., Ltd. is held by Hangzhou Shangcheng District Wen Shang Lv Investment Holding Group Co., Ltd., Zong Fuli, and the grassroots trade union joint committee of Hangzhou Wahaha Group Co., Ltd. with shares of 46%, 29.4%, and 24.6% respectively.

It is worth mentioning that if the three win the lawsuit, Zong Fuli's equity and control in Wahaha will be substantially diluted, and the original three-party structure of state-owned assets, employee shares, and the Zong family will be broken.

In this regard, Zong Fuli's legal team argues that the shares of Wahaha directly held by Zong Qinghou have actually been registered under his original spouse, Shi Yaozhen's name, therefore the three non-marital children have no right to claim inheritance.

Lawyer: Wealth inheritance for the rich must be prepared in advance

Currently, the core focus of the debate between Zong Qinghou's children is the trust set up by Zong Qinghou during his lifetime.

“This exposes how a generation of wealth creators underestimated the conflicts among their heirs and arranged the wealth inheritance planning timeline too late.” Wang Fang, director of Beijing Yushi Law Firm, stated that the firm specializes in wealth protection and inheritance for entrepreneurs.

Wang Fang stated that wealth inheritance for wealthy families should utilize various tools and be prepared in advance. Many entrepreneurs do not anticipate unexpected life events or emergencies, leading to wealth inheritance arrangements being abruptly halted halfway. Generally, corporate equity inheritance is carried out in stages, while the equity held by Zong at the time of his death had not yet begun to be inherited, laying hidden dangers for subsequent equity inheritance disputes.

The inheritance and distribution of wealth in wealthy families is a systematic project, as the assets involved may include stocks, options, private equity, cash, real estate, calligraphy, and paintings.

The family relationships of the wealthy are often more complex. A private banker once stated that when designing family trusts for the wealthy, one must even become more trusted than their family members. It is essential to deeply understand their family relationships and fully consider the client's interests in distributing benefits to children, including extramarital children.

Experts from Yushi Law Firm analyze that if Zong Qinghou allocated assets to his children through a will, after his death, the heirs would need to go through the relevant institution's will certification process. In mainland China, this requires a notarization process for inheritance rights, where the notary office will notify all statutory heirs to come to the scene to express whether they recognize the validity of the will; in Hong Kong, it requires applying for a will certification process through the High Court's probate office. As a result, Zong Fuli may likely intersect with her three half-siblings during the inheritance process, and whether conflicts will arise is uncertain. Family trusts can bypass domestic or overseas inheritance procedures and directly distribute assets to trust beneficiaries according to pre-established trust legal documents, avoiding conflicts and disputes between the two parties of heirs.

According to reports, a key piece of evidence submitted by Zong Fuli is a witnessed will established by Zong Qinghou in 2020.

Experts from Yushi Law Firm analyze that if Zong Qinghou's assets in Hong Kong are to be inherited by his children, the will must be established in accordance with Hong Kong law. According to current Hong Kong legal requirements, witnessed wills are generally used frequently. The reason for not notarizing a will domestically may be that the notary needs to verify the situation of all statutory heirs of Zong Qinghou first; if his personal privacy is exposed, it may trigger various public opinions and even affect business operations In addition, distributing global wealth through a single will is not practical. It is better to establish different wills according to the laws of the property’s location.

The first generation of entrepreneurs in China is gradually entering the succession period. Wang Fang suggests that wealthy families should consider multiple aspects when passing on their assets.

For example, the wealth creators of the previous generation should clarify their property rights in advance, identifying which assets they have the right to allocate to non-marital children, and these should be separated out in advance. Only the inheritance that belongs entirely to them can be distributed to heirs; otherwise, even if a will is made or other arrangements are in place, it may infringe on the property rights of the marital spouse, leading to partial invalidity.

Additionally, when wealthy families are passing on their businesses, they must plan in three dimensions in advance for the inheritance of equity ownership, operational rights, and shareholder dividend rights, ensuring a balanced benefit mechanism for both the successors and non-succeeding heirs. For instance, establishing an equity trust could be considered.

Moreover, wealthy families should fully consider the distribution of assets across different countries and regions, and understand the local judicial procedures for inheritance in advance. For example, in the case of the Zong family inheritance, there are assets in Hong Kong and overseas. When assets are distributed across different countries or regions, there is a local judicial inheritance process, so the pre-inheritance planning must also comply with the legal requirements of that country or region. Simply put, the types and requirements of wills differ.

Zong Fuli's Twisted Succession Path

Even before the much-discussed inheritance case, Zong Fuli had already faced numerous "crises."

After taking over in 2024, Zong Fuli succeeded her father as the legal representative, chairman, and general manager of Wahaha, gaining control over multiple companies within the Wahaha Group, almost completely filling in the power map of Wahaha.

Although Zong Fuli has always been seen as the obvious successor to Wahaha, her path to succession has been fraught with difficulties.

Her first crisis came from equity issues. Just months after Zong Qinghou's passing, Zong Fuli found herself embroiled in a resignation controversy.

In July 2024, a resignation letter regarding Zong Fuli, the vice chairman of Wahaha Group, went viral online. The content indicated that the People's Government of Shangcheng District, Hangzhou, and some shareholders of Hangzhou Wahaha Group Co., Ltd. questioned the rationality of Zong Fuli's management of Wahaha Group, making it impossible for her to continue fulfilling her management responsibilities for Wahaha Group and its holding companies.

However, under widespread public attention, five days later, Wahaha Group issued a statement confirming that Zong Fuli would continue to fulfill her relevant management responsibilities.

Zong Fuli's second crisis came from the "old ministers" within Wahaha. Faced with the crisis of "old ministers' discontent," Zong Fuli removed almost all of the "old ministers," including Wu Jianlin, Pan Jiajie, Yu Qiangbing, and Zhang Hui, within less than half a year of her succession.

At the end of August 2024, Hangzhou Wahaha Group Co., Ltd. underwent a business change, with Zong Qinghou stepping down as legal representative, chairman, and general manager, all of which were taken over by Zong Fuli. Meanwhile, several senior executives, including Zhang Hui and Guo Hong, exited their positions as directors and supervisors.

In their place were new faces like Ye Yaqiong and Hong Chanchan. From then on, Zong Fuli achieved a major overhaul of the board members Zong Fuli is a "devout believer" in management and systems. Since May 2024, she has completed a series of processes and standards at Wahaha, including human resources and performance systems, financial budgeting systems, integrated production and sales systems, distributor management systems, and terminal management systems. At the same time, she is transforming the corporate gene through job rotation and promoting young talent.

In May of this year, a brand new brand under Zong Fuli, "Wah Xiaozong," launched its first new product. Public information shows that the "Wah Xiaozong" label is launched by a company under Hongsheng Beverage Group Co., Ltd.

The frequently mentioned "Hongsheng Beverage" has become the "external empire" of Wahaha, which Zong Fuli has built up single-handedly. There is no equity relationship with Wahaha Group; instead, it is controlled by a company wholly owned by Zong Fuli. In February of this year, Zong Fuli also transferred the Wahaha trademark IP into her own company.

Reports indicate that Wahaha has shut down production lines at 18 branch factories, involving locations such as Shenzhen, Chongqing, and Tianjin. Meanwhile, Zong Fuli is vigorously developing her own "Hongsheng system" companies and expanding new production capacity. This has also led to controversy over her "emptying out" Wahaha.

Now, Zong Fuli is facing a greater crisis—lawsuits from her half-siblings.

This enormous "beverage empire" is gradually being consumed by power struggles, while Zong Fuli is surrounded by thorns.

Article authors: Yue Jiachen, Xiao Wang, Source: Prism, Original title: "Latest Documents Exposed in Wahaha Inheritance Case, Zong Fuli 'Gets' into Big Trouble"

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