Nongfu Spring founder Zhong Shanshan's wealth has declined in competition. As China's richest man, his net worth has evaporated by $13 billion. PDD Holdings founder Huang Zheng narrowed the gap in the billionaire index. If this situation continues, Zhong Shanshan may continue to hold the champion position for nearly 3 years. In terms of product structure, the operating income of 10-30 billion yuan products was 401/1288/60 million yuan respectively.
According to the Bloomberg Billionaires Index, Zhong Shanshan, Chairman of Nongfu Spring Co., Ltd., based in Hangzhou, has lost $13 billion through 2024. As of Monday, July 22nd, his net worth was $54.8 billion. This puts him slightly ahead of Huang Zheng, the founder of online retail platform PDD Holdings Limited, whose net worth is $47.3 billion.
(Source: Bloomberg)
As the economy slows and competition from emerging brands intensifies, the potential for management changes reflects the increasing complexity of the consumer economy for businesses.
After falling into a price war in the core bottled water field, Nongfu Spring has found itself in opposition to health-conscious Chinese consumers in recent months. This has led to a nearly 20% drop in its stock price since February 1st, while PDD Holdings has risen about 6% with its ultra-low-priced products and aggressive trading strategy.
Consumer analyst Ada Li of Bloomberg Industry Research said: "The concerns may be due to recent issues with product quality from Hong Kong's consumer regulator, the increased competition from declining consumer spending within the industry, and the boycott that occurred earlier this year due to concerns about business practices."
It is reported that Zhong Shanshan's most of the wealth comes from the shares of beverage company and pharmaceutical enterprise Beijing Wantai Biological Pharmacy Enterprise Co., Ltd.
In 2001, Zhong Shanshan acquired 95% of Wantai Bio's shares for 17.1 million yuan and began researching and developing HPV vaccines.
Earlier this year, Nongfu Spring received fierce criticism after the death of its main competitor, Zong Qinghou, founder of Hangzhou Wahaha Group Co. Ltd. After his death, sympathy for Nongfu Spring online turned into criticism, with some comments mocking Nongfu Spring's bottled water packaging as Japanese-designed and recounting tricks they accuse Nongfu Spring of using to gain an edge against Wahaha in their competition.
Users claimed that Zhong Shanshan's son holds an American passport and questioned whether his family is loyal to China. Nongfu has denied some of the allegations and said it has taken legal action against those who spread malicious rumors.
In April of this year, China Resources Beverage Holdings applied for listing in Hong Kong, which will provide more resources for its bottled water brand, Nongfu Spring's main competitor.
Shortly thereafter, Nongfu Spring launched a new purified water, which competes directly with China Resources' YiBao, and lowered the price to the lowest level. On Tmall, Alibaba's holding's e-commerce platform, the product is priced at less than 1 yuan per bottle (550 milliliters), less than 50% of its normal retail price.
Although Nongfu Spring's profits exceeded expectations thanks to strong sales of ready-to-drink tea last year, the proportion of revenue from packaged drinking water fell from 54.9% in 2022 to 47.5%, highlighting the intense competition in the bottled water industry.
The latest negative factor is that the Consumer Council of Hong Kong said last week that the bromate content in Nongfu Spring drinking water exceeded the standard and excessive drinking could be harmful to health. The committee clarified that its early detection was the result of an evaluation based on the fact that Nongfu Spring drinking water did not belong to a particular category, and the company's stock price fell 7.3% in the following two trading days. After the regulatory agency apologized, the stock price of Nongfu Spring rebounded slightly but wiped out its gains again last Friday.
To boost confidence, Nongfu Spring announced earlier this month that Zhong Shanshan intends to purchase up to 2 billion Hong Kong dollars, approximately $256 million U.S. dollars worth of Nongfu Spring shares through his controlled health industry firm. Regulatory filings show that on July 9th, his firm bought about 3.5 million shares of Nongfu Spring stock.