Twenty-five years ago, when Zong Qinghou was 42, he made his living selling soft drinks and popsicles to schoolchildren. He says he earned about $8 a month -- less than a third of China’s average wage at the time -- and was so broke that he once slept in a tunnel under the streets of Beijing rather than spend on a hotel.
Today, Zong, 67, is still selling soda -- and lots of other things -- as the wealthiest man in mainland China, Bloomberg Markets magazine reports in its December cover package, “The World’s Richest People.” His net worth of $20.1 billion as of Oct. 5 ranks him No. 30 in the world, according to the Bloomberg Billionaires Index. Supermarkets stock the juice, soda and bottled water his Hangzhou Wahaha Group Co. produces, and doting Chinese parents buy his baby formula and children’s clothes. In all of Asia, only Hong Kong property developers Li Ka-shing and Lee Shau-kee and Indian industrialist Mukesh Ambani are richer.
Even in a country that has exploded in wealth and created a new economic ruling class, Zong’s story stands out. His rags-to- riches tale is remarkable not just for its trajectory but for the way he has thrived amid China’s seemingly impossible conflation of capitalism and communism.
Zong, who didn’t attend high school, lived on a farm commune from 1964 to 1978 during Mao Zedong’s Cultural Revolution. He read the Communist revolutionary’s books on leadership and learned about enduring through struggle. After Deng Xiaoping, the architect of China’s drive toward a market economy, came to power, Zong took over a grocery store in 1987 with two retired teachers and a $22,000 loan from relatives.
Frugal and Autocratic
Now Wahaha’s chairman, Zong remains a frugal and autocratic manager, traits he honed in approving his first shop’s every expense, down to the purchase of a broom. He often sleeps in a sixth-floor office at Wahaha’s gray headquarters in Hangzhou, the capital of Zhejiang province. For lunch, he heads downstairs to the canteen, furnished with formica tables, where he eats the same food as his workers.
“When you are poor, you’ll have to think of ways to be better off,” says Zong, recalling his early years while chain- smoking Davidoff cigarettes outside Beijing’s News Plaza Hotel. “That experience helps me to endure.”
People passing the five-star hotel a few blocks from Tiananmen Square don’t give the nation’s top billionaire a second glance. He certainly doesn’t advertise his wealth. He’s dressed in a dark jacket and slacks and plain black shoes, all made in China. He says he bought the footwear only after someone told him his old pair was wearing out.
Swiss Watch
He has no bodyguards; his only escort is the manager of Wahaha’s Beijing operations.
“I don’t need expensive clothing,” he says.
Zong’s sole nod to his status is his $48,000 Vacheron Constantin watch, which he bought in Switzerland to replace an old Rolex.
“Other people say Rolex is for the newly rich,” he says, smiling.
Zong is prospering amid China’s booming economy and burgeoning middle class. In the past three decades, growth has averaged 10.1 percent a year, lifting hundreds of millions out of poverty.
Wahaha, which means laughing baby in Mandarin, attracts these new consumers. Flavored, nutritionally enhanced milk caters to families with young kids, while mineral water and iced green teas target adults.
’Juicy Milk’
“Our juicy milk was a big hit,” Zong says, of his drink that combines juice and milk.
Wahaha generated $11 billion in sales last year, with a 7.2 percent share of China’s soft drink market. It’s No. 3, behind Coca-Cola Co. and Hong Kong-listed Tingyi (Cayman Islands) Holding Corp. (322), according to London-based Euromonitor International Plc. Zong estimates that earnings at his closely held Wahaha will soar 60 percent to $1.6 billion this year from $1 billion in 2011.
Such a surge would make Zong even richer. He and his wife, Shi Youzhen, and their daughter, Kelly Zong, hold about 80 percent of the company. Zong disclosed the stake to Bloomberg News in September, more than doubling previous estimates of his wealth. (The Bloomberg Billionaires Index operates under the rule that billionaire fortunes are inherently family fortunes.)
Zong’s net worth is based on the average enterprise value- to-sales and price-to-earnings multiples of three publicly traded peers, using Wahaha’s profits, plus $1.9 billion in cash from estimated dividends, market performance and taxes.
Raising Profile
Zong is likely to use his status as China’s richest person to pursue acquisitions overseas, says Zhang Lu, an analyst at Capital Securities Corp.
“Given the fact that Wahaha is already a well-known brand domestically, disclosing his share and wealth would help to boost the global profile of both Wahaha and Zong himself,” she says.
Zong joins four other mainland Chinese billionaires in Bloomberg’s list of the world’s 200 richest people. Wang Jianlin, 58, chairman of property developer Dalian Wanda Group, is the second wealthiest, with a net worth of $9.1 billion as of Oct. 5. Baidu Inc. Chairman and Chief Executive Officer Robin Li, co-founder of the nation’s biggest search engine, is third, with $8.4 billion. Ma Huateng, 41, of Tencent Holdings Ltd., the country’s largest Internet company by market value, is fourth, with $7 billion. Longfor Properties Co.’s Wu Yajun, 48, the Beijing-based developer who’s the richest woman in China, is worth $6.4 billion and is fifth.
