Wahaha's Diversification Strategy

Caixin Magazine
June 24

Since Hangzhou Wahaha Group Co, one of China's largest beverage producers, has reached its peak, what will happen next? Its chairman Zong Qinghou gave an answer: adopt a diversification strategy.

Wahaha has been at the top of China's beverage industry since 1999. Among the top 20 beverage producing companies in the country, its output makes up 25.6 percent, sales volume 43.3 percent and profit 53.8 percent. Once listed, it will have the highest market value in the beverage industry.

However, Zong insists controlling Wahaha with his own hands. In 2012, stock held by Zong's family increased from 60 percent several years ago to 80 percent, making him the richest person on the Chinese mainland according to both Hurun Research Institute and Forbes magazine.

Increasingly fierce competition in the beverage industry forced Wahaha to choose diversification. The areas Zong dabbled in include electro mechanics, bioengineering and retailing.

At present, it's hard to say if Zong's diversification strategy is successful because the Wahaha controlled by him has little advantage to diversify except for money. Anyway, Zong is good at adjusting his strategies according to different situations.

As diversification begins, he is considering building a management team because he has realized he cannot expand business on his own.

He is looking for a successor. Although he is giving his daughter Zong Fuli the opportunity to develop new industries, he said less than half of second generation private company owners can successfully take over. He added he will give his management team stock to stimulate them to manage the company well.

Philippine Ambitions

Oriental Outlook
July 18

As the main participant in the biggest South China Sea dispute in 30 years, Philippine military forces and high ranking military officials constantly put their tough attitude on display. A Philippine coast guard vessel even attacked a Taiwanese fishing boat and killed one crew member on May 9. The strength and development of the Philippine military force is mysterious.

It should be noted that contrast in military strength between China and the Philippines has never been the core of the disputes. The big powers behind the Philippine troops, which rank 31st in the world, are the root cause for the continuous disputes.

Inequality in Raising a Child

Xinhua Daily Telegraph
July 16

A recently released list showing the costs of raising a child in 10 big Chinese cities has spread like wildfire on the Internet. The average cost of the 10 cities was 1.881 million yuan ($306,603). Widespread complaints among young urban parents once again added a sense of urgency to the Chinese society. But when urban citizens complain about the high cost of raising a child, rural children's aspiration for equal education opportunities is more touching.

The study showed that the cost of raising a child is becoming more diversified in cities. It includes nanny fees, early education, medical expenses, toys, school tuition, private teachers, as well as extracurricular activity costs. These expenses present a major burden for ordinary families. However, children in rural areas have few of these opportunities. For them, college tuition is the major cost of living.

The cost of education has been identified as the biggest factor in the rising cost of living. In the competition for better educational opportunities for their children, urban parents spare no efforts. Despite the cost, only a small percentage of children in cities go on to attend elite universities, not to mention children in rural areas.

In recent years, the proportion of rural students in renowned universities is on the decline. Even though some universities tend to give more opportunities to rural students, rural students still find it hard to get in because of low incomes and the challenging education conditions in rural areas.

To combat the cost gap of raising a child in urban and rural areas, both society and families should change their thought patterns. After all, the key to a child's success is not money but their own efforts. And the government should share the investments in children with the families. In the meantime, it should carry out more favorable policies in rural areas, because the rural families don't even have the opportunity of complaining about the high cost.

The Museum of Counterfeits

The Yangtze River Daily
July 16

A museum located in Jizhou, north China's Hebei Province, recently became a hot topic. The items on display there are either cheap copies or inferior counterfeits, but the museum holds a number of honors authorized by the local government, including certificates as a national AAA scenic spot and science education base for students.

The museum was established by a local village. Wang Zongquan, its director, additionally holds a post in the village committee. Over the past years, Wang has over 40,000 "curios" and displayed them in the museum. Most of these were bought at very cheap prices of between 100 and 2,000 yuan ($16.3-326). Thus, people can imagine how inferior they are, let alone what artistic and historical value they can provide visitors with.

Many villagers have suspected Wang of embezzling collective village funds to build the museum and of laundering money by buying cheap copy curios. Yet no investigation has been made. Instead, the museum has been bestowed with a number of official honors, which is to say, it was supported by local government.

Local authorities recently announced the closure of the museum and revoked its certificate of registration. The public is waiting for a further investigation.