Zong Qinghou
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Zong Qinghou

Soft drink maker emerges as mainland's richest man

Disclosing that his stake in Wahaha is twice earlier estimates lifts net worth to US$21.6b

Zong Qinghou

Zong Qinghou, head of China's third-largest beverage maker, is now the mainland's richest man.

He disclosed that his stake in closely held Hangzhou Wahaha Group is more than double previous estimates, underscoring the opacity of wealth in the country.

The 66-year-old soda pop and juice tycoon owns more than 80 per cent of Wahaha, the company's spokesman, Shan Qining, said in an interview. That stake elevates Zong's net worth to US$21.6 billion, according to the Bloomberg Billionaires Index.

He is now US$13.4 billion wealthier than Robin Li, founder of Baidu, China's biggest search engine. Li's net worth has dropped 3.8 per cent year to date.

Zong, a chain-smoking member of the Chinese legislature who says he spends just US$20 a day, ranks No 23 globally and trails only Hong Kong's Li Ka-shing and India's Mukesh Ambani in Asia.

Wahaha has benefited from decades of rapid economic growth on the mainland. The company has about 60 factories in 29 provinces across the country, making soft drinks, food, baby formula and children's apparel, its website shows.

"Zong has made himself a billionaire by staying in the right industry, positioning Wahaha well and eventually seizing the opportunity of growth in smaller Chinese cities," said Zhang Lu, an analyst at Capital Securities in Shanghai. "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."

Zong founded Wahaha, which means "laughing children" in Putonghua, 25 years ago with two retired teachers and a US$22,048 loan.

It has a 7.2 per cent share of China's soft drink market, says London-based research firm Euromonitor International. Coca-Cola dominates with a 16.8 per cent share, followed by Hong Kong-listed Tingyi (Cayman Islands) Holding.

Last year, Hangzhou, Zhejiang-based Wahaha generated US$11 billion in revenue and US$1 billion in profit, Zong said in an interview in March this year. The company may boost its net income to US$1.6 billion this year on sales of US$13.3 billion, helped by the government's push to boost domestic consumption, he said.

The beverage maker's valuation is derived using the average enterprise value-to-sales and price-to-earnings multiples of three publicly traded peers: Tingyi, Hebei Chengde Lolo and China Huiyuan Juice.

This article appeared in the South China Morning Post print edition as: Soft drink maker emerges as mainland's richest man