Chinese beverage giant Wahaha's heiress Kelly Zong resigns amid inheritance battle with half-siblings

The company’s board has signed off on her departure and corporate filings show that she has been replaced by Xu Simin, the South China Morning Post reported.

Xu previously headed the legal department at Hongsheng Group, a drink and packaging-service firm controlled by Kelly.

Kelly continues to hold her 29% stake in the group. Wahaha’s other shareholders include an investment arm of the Hangzhou government, which holds a 46% stake, and an employee union, which owns the rest.

Kelly Zong (Fuli Zong) delivers a speech while attending a forum event in Hangzhou, Zhejiang Province, China, Nov. 24, 2020. Photo by CFOTO/Sipa USA via Reuters

The 43-year-old heiress has recently been drawn into a legal battle after the late Zong’s three extramarital children sued her, seeking over $2 billion they say their father had promised them before his passing last February.

The three half-siblings, Jacky, Jessie and Jerry Zong, allege that their father had instructed Kelly to establish three offshore trusts for them, each valued at $700 million.

But Kelly failed to do so and instead withdrew more than $6 million from the bank account designated as the main funding source for those trusts, they claim.

The Hong Kong High Court froze the bank account in August, as reported by Bloomberg. Kelly appealed but failed to overturn the ruling.

The late Zong, once the richest person in China, founded Wahaha in 1987. The company began with a milk-based nutritional drink before expanding nationwide with bottled water, tea and fruit juices. His net worth was estimated at $5.9 billion in 2023, according to Forbes.

Zong was widely respected for promoting traditional family values, but his image has come under scrutiny following the lawsuit and revelations that he had children outside his marriage. The dispute has also raised questions about the long-term stability of family-run businesses in the country.

Kelly took charge of the beverage group after his death, but her tenure has been marked by struggles over control. She briefly stepped down in 2024, then returned as chairman and CEO after a shareholder dispute was resolved.

She reportedly cut the pay for many long-serving executives and staff and shifted production contracts, sales channels and about 6,000 employees to Hongsheng, leaving Wahaha with around 200 employees by October, according to 36Kr.

Earlier this year, she also tried to move 387 Wahaha trademarks to Hangzhou Wahaha Food, which she owns 51% of, but was blocked by state capital partners over concerns of self-dealing.

The situation created a stalemate as Wahaha held the trademark but not the production capacity while Hongsheng had the production but no legal claim to the brand.

Hongsheng then announced in September that it would introduce a new label, Waxiaozong, next year. The move, however, was met with hesitation from distributors, threatening next year’s revenue.

After negotiations, Hongsheng confirmed in October that the Wahaha brand would remain in use in 2026.

The disputes have weighed on the business. Data by analytic firm Nielsen show that in the first half of this year, Wahaha’s "AD" calcium milk sales in East China dropped 37% from a year ago while its bottled water market share slipped from 18% to 12%.