The public unraveling of the Zong family—the heirs to China’s once-iconic Wahaha beverage empire—has transfixed Chinese social media for weeks.
Allegations of secret heirs, hidden wealth in offshore Hong Kong trusts and a bitter inheritance dispute in Hangzhou have revealed a dramatic fall from grace for a family once hailed as model national entrepreneurs.
But this is more than a tabloid scandal. For millions of Chinese netizens, now-deceased company founder Zong Qinghou and his extended family saga has become a lightning rod for a generational reckoning with the perceived moral bankruptcy of China’s state-private hybrid capitalism.
Wahaha, began as a state-private joint venture with public investment and access to government-controlled distribution channels, including the public education system.
Many millennials and Gen Zers will remember being required as primary school students to purchase Wahaha’s “nutritional honey beverage” every month. It was not just a beverage brand—it was a fixture of everyday life, especially in classrooms.
In districts like Hangzhou’s Shangcheng, Wahaha’s “children’s nutrition honey drink” was presented as a patriotic obligation of which primary school teachers were enlisted as enforcers, collecting payments and distributing the drink to students.
Those who declined to buy were stigmatized, their families accused of neglecting national industry or even endangering their children’s health.
For years, Wahaha products, including bottled waters, were aggressively marketed through schools and other state-backed channels in the name of national health and patriotism. In hindsight, it was a textbook case of public institutional capture by a profit-driven enterprise disguised as a patriotic mission.
The perceived betrayal, expressed far and wide in social media posts, lies in Wahaha’s origins and structure. Despite its branding as a scrappy private enterprise, Wahaha was from the beginning a state-private hybrid—a so-called “red capitalist” venture built on public resources.
State support, including school distribution networks, infrastructure and administrative endorsement, was instrumental in fueling Wahaha’s rise.
Yet the profits were quietly privatized. For decades, the company benefited from privileged state backing but failed to deliver any meaningful dividends to the public sector.
Instead, the lion’s share of wealth was apparently siphoned to founder Zong Qinghou, his family, mistresses and secret children—whose existence and offshore inheritance are now at the center of a now widely reported US$2 billion trust dispute spanning Hong Kong and Hangzhou.
What began as an opaque business empire is now unraveling in full view of a digitally empowered public, exposing not only private sector scandal but a systemic pattern of elite capture and state-sanctioned impunity.
Zong’s business legacy was built not just on state resources but also on carefully cultivated nationalist theater. When French multinational Danone attempted to assert greater control over its joint venture with Wahaha in the mid-2000s, Zong skillfully reframed the corporate dispute as a patriotic battle between Chinese sovereignty and Western greed.
He mobilized public sentiment and state support to push Danone out, ultimately regaining full control of the venture under the guise of protecting national industry. Yet this “defense of China’s interests” served mainly to consolidate private control for Zong and his family.
Zong was previously celebrated as the ideal socialist entrepreneur. His public image was curated down to every detail: modest cloth shoes, economy-class flights, a dormitory office instead of a luxury mansion. But as recent revelations show, this façade masked a deeply unequal and opaque enterprise.
The Hong Kong trust case has exposed not only offshore wealth but also the alleged existence of multiple secret children, some reportedly born in the United States—in direct violation of China’s now-defunct one-child policy.
Today, in Chinese netizen’s eyes, those same heirs—his daughter, alleged mistresses and secret children—are fighting over the spoils like princes and princesses, inheriting billions through offshore trusts and international property portfolios.
Meanwhile, millions of Chinese college graduates face a brutal job market, with record-high youth unemployment and shrinking opportunities. The contrast is stark: while the children of elites inherit dynastic wealth, ordinary graduates struggle to find a foothold in an economy that has long prioritized connections over merit.
While ordinary Chinese families suffered under the state’s intrusive population control regime—facing fines, forced abortions or sterilizations—Zong lived above the law.
His ability to quietly move wealth and offspring abroad while preaching patriotism at home is emblematic of the hypocrisy that defines China’s first-generation tycoon class.
Equally troubling is how Wahaha’s entanglement with state institutions never triggered scrutiny abroad, particularly in the United States. Despite Wahaha’s close coordination with Chinese government propaganda and education campaigns, there is no public record of the company—or Zong or his relatives who represent Wahaha in the US —being evaluated under the Foreign Agents Registration Act (FARA).
In an era when Chinese state media outlets, Confucius Institutes and even universities have come under FARA scrutiny, state-private hybrid corporations like Wahaha have largely escaped notice, despite their use of school networks to distribute products and alignment with Party-state ideological campaigns.
The mixed state-private structure of many Chinese firms complicates enforcement, which remains selective and sensitive. This selective enforcement raises uncomfortable questions about the incoherence and asymmetry of US regulatory frameworks, particularly when it comes to foreign capital embedded in transnational networks.
The reality is that global capitalism has often turned a blind eye to authoritarian-linked capital, so long as it wears the mask of market liberalism. For decades, Western governments and investors were willing to overlook political entanglements in favor of growth metrics, market access and profit margins.
Under this logic, firms like Wahaha were considered “private enough” to bypass national security review, even while they reaped the benefits of state privilege at home and offshored wealth abroad.
Meanwhile, Chinese elite families leveraged this permissiveness to secure overseas assets, educate their children in Western institutions and build global trust portfolios—all with minimal scrutiny.
The viral outrage over the Zong family scandal reflects a generational reckoning with a deeper betrayal—the realization that millions were exploited under the guise of patriotic duty. This is a public awakening—an act of retroactive justice for those who lacked voice and power in the early years of China’s market transition.
It also exposes a structural illness at the core of China’s political economy. The merger of state power and private capital delivered rapid growth, yes—but at the cost of moral compromise, opaque governance and concentrated privilege. Without regulatory checks or a free press, Chinese citizens had little recourse to challenge exploitative practices—especially when they were dressed in nationalist rhetoric.
Children drank Wahaha’s “nutritious” honey beverage, and families consumed its bottled water under state-backed slogans of patriotism and health. But even then—and now—questions simmered: Was it truly nutritious, or just sugar water? Was this about child welfare, or profit disguised as policy? Is clean drinking water a public right, or just another commodity?
Those who dared to question Wahaha’s practices were often silenced or shamed, accused of undermining “national industry” or lacking patriotism. And the basic rights to health and clean water became tools of capital accumulation for one man’s empire.
China’s so-called “state-private partnership” promised that private enterprise would serve the national good. Instead, it enabled a politically protected class of oligarchs to grow immensely wealthy by exploiting nationalist sentiment, weak regulatory structures and state infrastructure.
Now, the mask is slipping. The Chinese public is connecting the dots between self-proclaimed patriots and their offshore accounts. The online backlash is, in many ways, a form of retroactive justice that the state won’t serve.
A digitally empowered public is reclaiming its voice, exposing past abuses that were normalized in a more repressive era. But it is also a warning to China’s leadership: You cannot build durable legitimacy on foundations of collusion, concealment and coerced patriotism. Eventually, the truth leaks out—through court filings, trust documents, whistleblowers or simply collective memory.
China’s so-called “state-private partnership” was sold as a way to harness market forces for national prosperity. The Zong family scandal has become a form of national therapy– a cathartic reckoning with decades of sellouts, scams and stolen futures.
But it increasingly looks like a rigged game, where insiders privatize profits while socializing the costs. It reveals not just the myth of the self-made billionaire, but also the grotesque imbalance embedded in China’s model of state capitalism.
A generation now asks: Who paid the price for these fortunes? Who was protected while others were taken down? As more information leaks out—through lawsuits, revealed emails or just lived experience—the Chinese public is no longer content to applaud model entrepreneurs in red armbands.
They want accountability. They want justice. They want jobs. And most of all, they want to know: How much more has been stolen over the market “reform” years in the name of patriotism?
Yujing Shentu is a writer and policy analyst with a background in policy analysis and economic strategy, focusing on digital politics, international political economy, and US-China strategic competition.