Wahaha tycoon eyes retail, mining business prospects

PUBLISHED : Friday, 04 March, 2011, 12:00am
UPDATED : Friday, 04 March, 2011, 12:00am

Billionaire Zong Qinghou, whose soft-drink maker Hangzhou Wahaha Group has made him the mainland's richest man, said he planned to diversify his business by opening retail outlets and acquiring mining projects overseas.

'If we want to go faster, we have to get into other industries,' said Zong, founder and chairman of Wahaha, the mainland's third-biggest beverage maker by market share.

He said the company planned to open 100 supermarkets and shopping malls in second- to fourth-tier cities on the mainland over the next couple of years. It was looking for a site for the first supermarket, which was likely to start operation this year.

'The main purpose for us to venture into retailing is to have a bigger say in distribution,' Zong, a delegate to the National People's Congress, said in Beijing ahead of the annual parliamentary session tomorrow.

He complained that when doing business with big supermarkets, suppliers and small distributors were often hit by payment delays, extra charges and high operating costs.

Ranked by Forbes magazine as the mainland's wealthiest person with a net worth of US$8 billion last year, the 65-year-old said he would seek to list the retailing business when the opportunity was mature.

According to the company, all the shopping malls will be built directly by Wahaha while supermarkets will be either built by the company or rented from others. The management team would be recruited from outside the company.

'I believe the scale [of the retailing business] will exceed our beverage business if we can do it in the right way,' he said.

Wahaha's net profit fell 23 per cent year-on-year to 6.7 billion yuan (HK$7.9 billion) in 2010 despite a 27 per cent increase in sales revenue to 55 billion yuan. Sharp price rises for sugar, raw milk and packaging resulted in a 5 billion loss for the beverage maker last year.

The company earlier lowered its profit target to 7 billion yuan from up to 10 billion yuan for this year due to persistent inflation.

Aside from retailing, the beverage giant is also eyeing the overseas mining industry. After visits to Australia and Canada, Zong showed particular interest in buying copper and other rare metal mining projects in foreign countries.

'We think the risk for investing in mining is limited considering the rich capital flow we have now,' he said. The company holds around 13 billion yuan in deposits. Zong said the company had partnered with a Hong Kong mining company for future investment.