Water empire rooted in founder's reporter profile

The frenzy over Nongfu Spring's initial public offering has put Zhong Shanshan, the journalist-turned founder of the mainland bottled water giant, into spotlight. Zhong holds an 87.44 percent stake in Nongfu Spring, as well as a 75 percent interest in coronavirus test kit maker Beijing...

Kevin Xu

Monday, September 07, 2020

The frenzy over Nongfu Spring's initial public offering has put Zhong Shanshan, the journalist-turned founder of the mainland bottled water giant, into spotlight.

Zhong holds an 87.44 percent stake in Nongfu Spring, as well as a 75 percent interest in coronavirus test kit maker Beijing Wantai Biological Pharmacy, which went public at the Shanghai Stock Exchange in April.

He is worth US$12 billion (HK$92.99 billion) as of September 2, according to Forbes.

Born in 1954 in Zhejiang province, Zhong dropped out of primary school in fifth grade in the wake of China's chaotic Cultural Revolution. He worked as an apprentice to plasterers and carpenters from the late 1960s until 1977, mainland media reported.

After China reinstated the national college entrance exam in 1977, he took the exams twice before getting into Zhejiang Radio and Television University.

Zhong quit his newspaper reporter job at Zhejiang Daily in 1988 to join the gold rush in Hainan province, which was designated as one of China's first special economic zones that year.

He tried his hand at a mushroom plantation in Hainan initially but failed.

Zhong rolled out nutritional supplements made of turtle shells in 1993, which became a hot seller.

When working as a journalist, he built connections with some of his future business partners. For instance, one of his interviewees, Hong Mengxue, developed that health product with Zhong, according to mainland media reports. Hong's family members hold a total 2.38 percent stake in Nongfu Spring.

Zhong, who founded Nongfu Spring in 1996, is dubbed as "lone wolf" by mainland media for few public appearances but aggressive public relations and marketing strategies.

Nongfu Spring announced in 2000 that it would stop producing purified water and would only produce natural water. The company claimed that purified water does no good to health, a move that is believed to take market share from competitors which produce purified water.

The company even broadcasted a television advertisement called the "daffodil growth comparison test," in which daffodils growing in Nongfu natural spring water grew faster than those growing in purified water.

Although Nongfu Spring faced a series of allegations that its water failed to meet quality standards years ago, the company ranked first in the packaged drinking water market in China in market share for eight consecutive years from 2012 to 2019, according to a commissioned Frost & Sullivan Report.

The initial public offering has been more than 1,100 times oversubscribed by retail investors, freezing more than HK$642.4 billion through margin financing, the largest ever amount among Hong Kong IPOs.

Nongfu Spring, due to begin trading tomorrow, will raise HK$8.35 billion after pricing its Hong Kong IPO at HK$21.5, the top of the indicative price range, Reuters reported.

A veteran mainland investor splashed about HK$10 million for new shares.

Zhang Qiang, an H-share investor from Hangzhou, has applied to subscribe 500,000 Nongfu Spring's new shares through margin loan, Qianjiang Evening News reported.

The Hangzhou-based company had 12 production bases as of the end of May and has obtained the access to 10 quality water sources across China, including the Thousand-island Lake in Zhejiang, Mount Changbai in Jilin, Wanlv Lake in Guangdong and Mount Emei in Sichuan.

Apart from packaged drinking water products, Nongfu Spring also produces tea beverage products, functional beverages, juices, and other products. But packaged drinking water products contributed to over 57 percent of revenue over the past three years.

Nongfu Spring said the pandemic would not have a material adverse effect on the results of operations this year, and it has fully resumed business operations since March.