China’s richest man is at risk of losing the pole position he’s held for almost three years, with his wealth slipping the most among billionaires around the world as intensifying competition and mishaps plague the bottled water giant he founded.
Zhong Shanshan, chairman of Hangzhou-based Nongfu Spring Co., has lost US$13 billion ($17.49 billion) so far in 2024, according to the Bloomberg Billionaires Index, with a fortune of US$54.8 billion as of Monday. That keeps him a whisker above Colin Huang, founder of online shopping platform PDD Holdings. Huang’s fortune stands at US$47.3 billion.
The potential changing of the guard reflects a consumer economy that’s increasingly complex for businesses to navigate, as the economy slows and competition from upstart brands intensifies.
Besieged by a price war in its core bottled water space, Hong-Kong listed Nongfu has also found itself on the wrong side of growingly nationalistic and health-conscious Chinese in recent months. This has led to an almost 20% plunge in its share price since Feb 1, compared to a roughly 6% rise for PDD, with its dirt-cheap products and aggressive deals.
“Recent issues with Hong Kong’s consumer watchdog regarding product quality, heightened competition in the sector amid decreased consumer spending, and a boycott earlier this year due to concerns over business practices are likely to have contributed to these apprehensions,” Bloomberg Intelligence consumer analyst Ada Li said.
Most of Zhong’s fortune is derived from stakes in the beverage company and pharmaceutical business Beijing Wantai Biological Pharmacy Enterprise.
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Nongfu didn’t immediately respond to a request for comment Monday about its founder’s wealth and any setbacks it’s encountered this year.
Roller coaster
Earlier this year, the company — and Zhong himself — were barraged by criticism after the February death of Zong Qinghou, founder of key rival Hangzhou Wahaha Group Co.
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Online sympathy after his passing morphed into a takedown of Nongfu, with some comments deriding its bottled water packaging as looking Japanese in design, and others recapping what they alleged were tricks Nongfu had used to gain an advantage over Wahaha.
Users alleged that Zhong’s son holds a US passport and questioned the family’s allegiance to China. In a blow to Nongfu, Wahaha sales spiked. While Nongfu refuted some of the claims and said it had taken legal action against people who instigated malicious rumors, many Chinese internet users remained unmoved.
In April, China Resources Beverage Holdings filed for a Hong Kong listing, a move set to provide additional resources for its bottled water brand C’estbon — one of Nongfu’s major competitors.
Soon after, Nongfu introduced a new purified water in direct competition with C’estbon, pushing prices to the floor. The product is being sold at less than 1 yuan per 550-milliliter bottle on Alibaba Group Holding’s Tmall, less than half its normal retail price.
Even as Nongfu reported stronger than expected earnings last year thanks to robust sales of its ready-to-drink teas, the proportion of revenue from packaged drinking water dropped to 47.5% — from 54.9% in 2022 — underscoring the rise in competition in the bottled water sector.
In the latest headwind, Hong Kong’s Consumer Council last week said Nongfu’s water had been found to contain the maximum limit of bromate, which could pose health risks when overconsumed. Shares plunged by 7.3% in two trading days before the council clarified that its early findings had come as a result of evaluating Nongfu’s water against criteria used for a category to which it doesn’t belong. Shares bounced back after the watchdog apologised, but wiped out gains again on Friday.
To shore up confidence, Nongfu announced earlier this month that Zhong intended to buy up to HK$2 billion ($344 million) of the company’s shares via Yangshengtang Co., a holding company he controls. On July 9, Yangshengtang bought about 3.5 million shares, according to regulatory filings.
