Beverage magnate sticks to centralist management

By Chen Boyuan
0 Comment(s)Print E-mail China.org.cn, August 29, 2016
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Zong Qinghou, founder, chairman and general manager of Hangzhou Wahaha Group, speaks at the 2016 China Top 500 Enterprises Summit on Aug. 27, in Changsha, Hunan Province. [Photo by Chen Boyuan / China.org.cn] 

Chinese beverage maker Hangzhou Wahaha Group will continue with its current management mode characterized by centralized major powers and distributed small powers, said its founder and chairman Zong Qinghou on Aug. 27 in Changsha, Hunan Province, at the 2016 China Top 500 Enterprises Summit.

Zong said that his decision is backed by the company's good standing over the 29 years since its establishment in 1987 and that he is confident that this management mode is capable of defying the downward pressure in the macroeconomy.

Zong said that his unique management approach is a result of "difficult Chinese people," because in the Chinese culture, "everyone wants to work up the corporate ladder and be the emperor." In so saying, he warned off blindly implementing Western management theories.

He revealed that Wahaha did not instate vice general managers in the past; instead he had the division chiefs directly report to him, which helped reinforce his authority and allowed him to avoid redundant work-related arguments with his direct subordinates.

"Division chiefs did the work of vice-general managers but just didn't have the title. I don't let them feel too good about themselves, or they will come and argue with me, thinking that a vice-general manager still could have a say over me," said Zong.

But he added that Wahaha now has instated two vice-general managers, after he decided to take a back seat.

In the 2016 China Top 500 Enterprises ranking, Wahaha sits at the 271st place. In the latest Hurun Report for the richest people in China, Zong Qinghou sits at the third place with a total family asset of 135 billion yuan (US$20.22 billion); he was the top Chinese billionaire in 2013.

"Wahaha doesn't owe banks a nickel, and we have a large sum of bank deposits. This amounts to an innovation in management," said Zong.

Wahaha's zero debt ratio may be inconsistent with modern economics that suggests a certain debt ratio actually helps a company to expand production. Zong's zero-bank loan policy has brought forth many criticisms, but he clarified his decision as an act of "prudence" in corporate development.

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