Nongfu Spring, which says it is China’s largest packaged-water producer by market share, has been awash in problems, including online attacks and a fierce price war in China’s bottled-water market. Its stock tumbled 28% in the past year, resulting in founder and chairman Zhong Shanshan’s wealth evaporating by $9.3 billion to $50.8 billion. Despite this, he retained his position as China’s richest person for the fourth year in a row.
The problems began in February when Zong Qinghou, founder of beverage maker Hangzhou Wahaha Group and Zhong’s former business partner, passed away. Chinese netizens unleashed a string of allegations against Zhong, 69, who was once a distributor for Wahaha and went on to start a rival business. They launched a boycott campaign against Nongfu Spring and questioned Zhong’s patriotism, claiming that the company would eventually lose its Chinese identity because his son and likely heir, Shu Zi, 36, is a US citizen, according to the company’s 2020 prospectus. Nongfu Spring didn’t respond to a request for comment but has repeatedly denied all allegations. In an August interview with state-owned CCTV, Zhong stressed he was self-made and “every penny is clean”. He also said Nongfu Spring would “always belong to China”. The troubles damped Nongfu Spring’s first-half water sales and curbed earnings growth. Net profit rose 8% to 6.2 billion yuan ($873 million) after a 25% jump the year before while revenue rose 8% to 22 billion yuan, slower than the year-earlier 23% gain but supported by a surge in ready-to-drink tea sales.
