Troubled Waters: Why boycott of China’s richest man is bad news for the country

Zhong Shanshan is China’s richest man. And he is in troubled waters. The billionaire and his beverages company, Nongfu Spring, the country’s biggest bottled water maker, have become the latest target of an army of increasingly vocal nationalists on the internet. There are allegations that he betrayed a fellow beverage billionaire.

Social media posts spreading online have accused the Nongfu Spring founder of “biting the hand that fed him” by undermining his former partner Zong Qinghou, the late founder of rival beverage producer Hangzhou Wahaha Group.

Why is Zhong Shanshan receiving hate?

The criticism against Zhong Shanshan started last month after the death of Zong Qinghou, the founder of Wahaha Group, one of Nongfu’s biggest competitors. Zong was a respected nationalist, who took on the French food company Danone in a business dispute about 20 years ago and went on to win, reports CNN.

More from Explainers

How ChatGPT is becoming everyone’s BFF and why that’s dangerous This Week in Explainers: How recovering from Gen-Z protests is a Himalayan task for Nepal

The demise of the Wahaha owner led to comparisons with Zhong. Many online zealots claimed that Zhong had built his fortune by first working with Wahaha as a reseller, but then later established Nongfu to compete against Wahaha after he was fired for violating the company’s rules against sales of its products across provincial borders. Zhong has denied the allegations.

Soon the richest Chinese and his firm became the target of unflattering remarks and hate online. The bottled water giant Nongfu has been criticised for perceived Japanese-style packaging.

Impact Shorts

More Shorts

Ghaziabad woman dead, pilgrims attacked in bus… How Nepal’s Gen-Z protests turned into a living hell for Indian tourists

Were bodyguards involved in Charlie Kirk’s shooting? The many conspiracies surrounding the killing

Rumours spread online that the company was using pictures of Japanese religious buildings on its packaging, even though the bottler clarified last week the designs are artistic creations based on a Chinese temple, according to a report in South China Morning Post (SCMP). Images were circulated online linking a temple featured on the label of one of its green tea drinks to Tokyo’s Sensoji, an ancient Buddhist temple.

Critics have also compared carp-shaped designs on the label of Nongfu Spring’s brown rice tea drink to Japan’s traditional carp-shaped flags, the koinobori windsocks.

The American citizenship of Zhong’s son, a non-executive director of the company and possible successor to his fortune, has also been under fire.

“Zhong Shuzi will inherit his father’s huge assets. But as the future richest man in China, he is an American national. It’s unbelievable,” commented a Weibo user.

“[The son] will eventually manage the company as an American national. But as a Chinese, I only support our own national brands,” another Weibo user said.

Critics are also miffed that big US investment funds like Vanguard and BlackRock are major shareholders of Nongfu Spring.

The anger has prompted many Chinese nationalists to boycott the bottled water. Online content creators posted videos that showed them pouring Nongfu Spring water into toilets. Two 7-Eleven convenience stores in Jiangsu province vowed not to see the brand, calling it a business that “reveres Japan”.

In one video, a small shop is seen replacing the bottled water from Nongfu Spring with Wahaha. In another video, which has gone viral on Douyin with more than 300,000 likes, a supermarket returned a Nongfu Spring freezer to its company, reports CNN.

Also read: Explained: How China's economic slowdown could affect the rest of the world

Why the boycott is worrying

Since the online campaign, the company’s share prices have taken a hit. Its Hong Kong-listed shares have lost nearly five per cent since the end of February. According to CNN, this has wiped out $3 billion off its market cap.

Zhong topped the 2023 Forbes list of China’s 100 Richest with an estimated wealth of US$ 60.1 billion. Since March 1, he has lost $2 billion from his personal wealth.

But apart from losses suffered by the company and Zhong, the boycott has prompted concerns in China about its impact on a fragile private sector. The Chinese economy is seeing a slump and Beijing is putting its weight behind private businesses to help counter it.

Private firms represent 92 per cent of all enterprises in China and play a key role in job creation. With a goal of “ around five per cent” for gross domestic product growth this year, Beijing has made the operating environment for private companies a priority, reports SCMP.

According to Zhou Dewen, head of an association representing small and medium-sized enterprises in Wenzhou, Zhejiang province, nationalism creates an obstacle to rebuilding confidence among private companies.

“What’s most dreadful is to attack people and things that are leading the way in the name of patriotism. We must stay sober and not be coerced by public opinion. Economic recovery is not about talking, but action,” he told SCMP.

Wu Fang, a professor at Shanghai University of Finance and Economics’ Business College, asked entrepreneurs to maintain a low profile when “nationalism prevails”. “They need to avoid the spotlight because issues such as their nationality and personal beliefs are likely to be exaggerated in such an era,” he was quoted as saying by the publication.

What has Zhong Shanshan said?

In a statement posted on Weibo in early March, Zhong said, “To me, Zong has always been a respected entrepreneur. We were both mentors and friends to each other, and of course, we were also competitors.”

“Zong despised online attacks during his lifetime. Never did I expect that, following Zong’s passing, there would be so many people making defamatory statements against me and Nongfu Spring on the internet. This is definitely not what Zong would have wanted to see.”

The billionaire dismissed rumours that he started building his fortunes while working for Wahaha, adding that he had “never received a salary from Wahaha, not to mention getting fired.”

The Nongfu chairman said his first success in the business world came through a curtain business he had founded.

How did Zhong Shanshan become China’s richest man?

Zhong started his career as a journalist, working as a reporter in Chinese state-owned media in the 1980s. But he turned toward business, selling several goods from mushrooms to nutritional supplements.

He first gained repute as the founder of a pharmaceutical company specialising in anticoagulant drugs derived from pig intestines. This laid the groundwork for future success.

In 1966, he established Nongfu Spring which soon emerged as one of China’s leading beverage firms. It soon expanded its portfolio to include bottled water, tea and fruit juices and became a household name.

Zhong has had run-ins with the law. More than two decades ago, Nongfu Spring launched an ad campaign which claimed its water was taken from springs and lakes and had greater health benefits than water purified in factories. Rival companies like Wahaha accused Nongfu of false advertising and appealed to Chinese regulators. It was fined 200,000 yuan at the time, reports Forbes. Yet it went on to become a market leader.

In 2020, Zhong’s fortunes changed when Nongfu Spring went public on the Hong Kong Stock Exchange. With the initial public offering (IPO), the businessman’s net worth touched unprecedented heights – an estimated $17 billion at the time, reports Financial Express.

The stock performed exceptionally and Zhong’s other ventures in the biotechnology and pharmaceutical sectors played a big part in his growing net worth.

By the end of that year, Zhong’s wealth had soared to an astounding $68.9 billion, a staggering increase of over 3,000 per cent in 12 months.

With inputs from agencies