On the tenth day of the Lunar New Year, while much of China was still in holiday mode, more than 200 employees at Hangzhou Wahaha Precision Machinery Co. received terse notices terminating their labour contracts. The company formally announced a dissolution on 24 February 2026 and filed for creditor notices, setting 28 February as the date when employment contracts would be extinguished as liquidation began.
Wahaha Precision, long a vehicle for the group’s push into automation and robotics, was wholly owned by Wahaha Commercial Co., whose ultimate controller is Zong Fuli. The liquidation notice named Yan Xuefeng as head of the clearing team; Yan is publicly identified as a senior executive in the Hongsheng group closely associated with Zong Fuli, underlining that the move was driven from the top rather than the result of a rogue local decision.
For more than a decade the unit embodied the industrial ambition of Wahaha’s founder, Zong Qinghou. Established in forms dating back to at least 1999 and often described in corporate records from 2011, the division developed packaging machinery, a range of robots and experimental servo motors, built a patent portfolio approaching 300 grants and at times carried nearly 300 insured employees. Its mission was twofold: to render Wahaha’s beverage production lines self‑sufficient and to spawn a new external growth engine in smart manufacturing.
That ambition, however, never matured into a profitable external business. The unit’s work largely stayed inside the group, servicing Wahaha’s own production lines rather than winning third‑party customers. R&D and cash outlays persisted even as returns failed to materialize, turning the division into a recurring drain on the parent company’s resources. Complicating matters were long‑standing minority social shareholders in the precision‑machinery business, a governance mismatch with Zong Fuli’s stated principle of not allowing outsiders to benefit from Wahaha’s system.
Since taking the helm in August 2024, Zong Fuli has pursued a conspicuous contraction of Wahaha’s sprawling empire. From July 2025 to the present she has overseen the dissolution of at least eight affiliated companies, including an e‑commerce entity she had once personally led. The closing of Wahaha Precision is the most consequential of these moves: it not only severs a decade‑long industrial project associated with her father, but signals a wholesale return to focus on the group’s core beverage business.
The strategic logic is straightforward. More than 95% of Wahaha’s revenues still come from food and beverages, and the sector’s competitive intensity has risen sharply. Market leaders such as Nongfu Spring and nimble challengers like Genki Forest have pushed margins and market share, forcing Wahaha into a bruising price war on bottled water soon after Zong Fuli’s takeover. In that environment, investments that consume capital but deliver little revenue lift—such as an inward‑facing robotics unit—become difficult to justify.
The human fallout is immediate and messy. Employees report no company‑wide town hall or a readily available compensation plan at the time of the liquidation notice, and there were scenes of agitation when termination letters were handed out. The technical know‑how developed over more than a decade is unlikely to disappear: some of the automation gains have already been internalised in Wahaha’s factories, and patents and tooling can be repurposed within the group or sold. Still, for engineers and technicians who hoped the unit would grow into a standalone supplier of smart equipment, the decision represents a hard stop.
Wahaha’s move matters beyond one firm. It illustrates a broader dilemma facing Chinese family conglomerates as they pass from a founder to a second generation: whether to cling to a diversified portfolio assembled in earlier eras of rapid industrial expansion, or to prune non‑core assets aggressively to sharpen competitive focus. For investors and competitors, the dismantling of Wahaha Precision reduces one potential supplier in China’s crowded industrial robotics field, but it may free capital and managerial attention for Wahaha’s battle to defend market share in beverages.
The company has entered creditor notification and liquidation processes; the timetable and terms for employee compensation, the fate of patents and unfinished R&D, and any potential asset sales remain to be disclosed. How successfully Zong Fuli redeploys freed resources into branding, product innovation and supply‑chain efficiency will determine whether this contraction is a prudent refocus or a retreat from diversification that forfeits long‑term optionality.