Summary of Key Issues
Wangwang has encountered a significant operational crisis due to declining performance: its traditional wholesale business has seen double-digit declines, and sales of its core product, Wangzai Milk, have also decreased. The company has implemented a layoff policy that involves employees filling out "reflection forms" and being scored by their supervisors, with the supervisors being exempt from this process, which has led to employee dissatisfaction and exposed the shortcomings of its family-owned governance structure. Additionally, its products fail to keep up with the trend towards healthier consumption (Wangzai Milk is high in sugar), and its marketing strategies are outdated (nostalgic ads no longer resonate with younger consumers). As a result, the company faces the dual challenges of shedding outdated thinking and regaining customer trust.
1. The Layoff Controversy: Making Employees Take the Blame While Supervisors Are Exempted?
Wangwang's layoff process is somewhat peculiar: employees at the headquarters are required to fill out reflection forms to assess their own shortcomings, and those with lower scores may be laid off, except for the highest-ranking supervisors in their units. Employees are frustrated that the company's long-standing problems (such as a lack of product innovation and slow decision-making) are attributed to them, despite the fact that these issues lie with the management.
For example, an employee from the Shanghai headquarters mentioned that not pointing out these issues could affect their layoff outcome. The Jinan factory was even more direct, laying off hourly workers and asking office staff to help on the production lines. Some departments plan to reduce the workforce by 8%. This approach of targeting those with less say in the decision-making process reflects the family-owned governance structure: many supervisors were promoted based on personal connections rather than ability, leading to a clear hierarchy. As a result, senior executives can avoid the consequences of their decisions.
2. Losing the Battle Against Sugar: Wangzai Milk’s High Sugar Content
Wangwang's biggest problem is its reliance on traditional, high-sugar products. The company has thrived for nearly 30 years on products like snow cakes and Wangzai Milk, but it has failed to adapt to consumers' growing interest in healthier options. Wangzai Milk contains 297 KJ of calories per 100 ml, which is 117 KJ more than Coca-Cola, making it particularly sweet. However, consumers are now more aware of the impact of sugar on health. 78.7% of them check the sugar content before purchasing beverages, and brands like Dongfang Shuye and Yuanqi Senlin have succeeded by offering sugar-free options.
Wangwang has made attempts to innovate, such as launching sugar-free black coffee and low-sugar fruit milk, but these products have not gained prominence in supermarkets. Even its core product, Wangzai Milk, does not have a reduced-sugar version. It was only after facing public criticism that the company announced a new, lower-sugar version, but it is still not available on e-commerce platforms.
3. Outdated Advertising That Doesn’t Appeal to Young Consumers
Wangwang's advertising used to be very persuasive, with slogans like "One more sip, and you’ll be addicted.” However, the media landscape has changed, and young consumers no longer respond to such tactics. For instance, a video on a Douyin live stream featured a middle-aged man with a Taiwanese accent claiming that drinking Wangzai Milk was equivalent to hosting a feast or going a month without using the bathroom—a clichéd message that failed to resonate with the audience. The actors in the ads also did not meet contemporary aesthetic standards, and post-90s users found them outdated.
Wangwang has invested heavily in marketing, with distribution costs increasing by 16.9% in 2025 and advertising and promotional expenses rising from 2.7% to 3.8%. However, most of this money has been spent on expanding its product range, without focusing on making the brand more appealing to younger consumers. Today, young people look for snacks and beverages that are not only healthy but also have social appeal (such as those with traditional Chinese designs or cross-brand collaborations). Wangwang remains stuck in its nostalgic approach and fails to connect with this new generation.
4. Family-Owned Governance Hinders Progress: Slow Decision-Making and Lack of Innovation
Wangwang is governed by a family structure, with Chairman Cai Yanming playing a central role, and many managers have been promoted based on personal relationships rather than merit. This leads to two major issues: slow decision-making (the company failed to release a competitive sugar-free product despite the trend) and a lack of accountability (problems are often blamed on employees rather than the management).
Employees argue that the company's long-standing structural problems have been ignored, and when issues arise, employees are expected to take the blame. This family-controlled approach prevents Wangwang from responding promptly to market changes and erodes employee trust.
5. The Real Challenge: Overcoming Outdated Thinking
Wangwang’s current difficulties cannot be resolved by simply laying off a few employees. First, its products need to be genuinely improved and made available in supermarkets and online stores. Second, its marketing strategy must change; it needs to adopt more appealing content and tactics that resonate with younger consumers (such as using short videos and social interactions). Finally, the company must reform its governance to promote capable individuals, rather than relying on personal connections.
Nostalgia can be a positive aspect, but it cannot be a sustainable business strategy. For Wangwang to survive, it must first get rid of its outdated ways of doing things—something much more difficult than laying off employees.
Conclusion
Wangwang’s crisis is a typical example of the challenges faced by traditional companies in the face of changing consumer preferences. Its products fail to keep up with trends, its marketing strategies are ineffective, and its governance structure hinders innovation. Layoffs are just a temporary solution. The real challenge is to embrace change and move away from outdated practices. Otherwise, the next time, it might not be just a matter of filling out reflection forms; the company could be completely eliminated by the market.