How Zong Qinghou became the richest man in China

Back in 2003, my former student, Nancy Dai, and I wrote a case study on the rise of the Chinese beverage giant Wahaha. We called the case “Cola Wars in China: The Future is Here.” The second half of that title was obviously a play on Wahaha’s cola beverage brand, Future Cola, and the size and pace of growth of the Chinese market. It was also a reflection of the optimism we found in the Wahaha company, where people were convinced the future was theirs.
 
The case has been used in many MBA and Executive programs around the world to discuss doing business in China, competition between multinationals and local companies, and targeting the emerging market consumer.

In the ten years since the case was written, Wahaha has grown into a giant company, and its founder and head, Zong Qinghou, has become the richest man in China. 

Re-reading the case today provides an interesting set of lessons from Wahaha’s strategy as a domestic upstart in an industry globally dominated by some of the largest multinationals, with the savviest marketing and brand building skills in the world. The case gets to the heart of what made Wahaha such a formidable  challenger.

• Early on, the company realized its advantage resided in getting to the mass rural market first. It sidestepped the intense competition in the large urban centers where the international players were already battling for share, and went into the interior.

• In the smaller towns and villages, Wahaha built a formidable, low cost distribution network of bicycle delivery.

• It created pull for its brand by having large numbers of people call retailers and ask for the brand by name.

• It was able to withstand a bruising disagreement with its bottling partner, the French giant Danone.

• It focused on kids as the key target market, and happiness as the key benefit,  in a market where the one child policy had made kids the focus of their parents’ spending, their happiness mattered to both parents and grand parents.

Although the data in the case are now dated, the case contains several anecdotes that shed light on the journey of Zong Qinghou and the company he has built.

Here's a video profile of Zong: