Mr. Zhong Shanshan, founder of NONGFU SPRING, recently appeared on national television to criticize e-commerce platforms. He called them the largest middlemen, deemed them unfair, and urged restrictions on platform power. This isn't his first conflict with platforms; it's an annual event. Two years ago, NONGFU SPRING and Mr. Zhong were targeted by online mobs, with even bottle caps labeled as "Little Japan," marking the start of the friction.
Back then, I stood with the company against the cyberbullying. Some of my old articles, like "Report: Three Evils Exposed: Tsinghua, Mo Yan, and NONGFU SPRING," have vanished. Others remain. Defending NONGFU SPRING carried significant risk, often leading to being labeled a traitor. Yet, I sincerely supported Mr. Zhong. However, this time, the former richest man's attack on platforms feels different. It's purely a conflict of interest, not a moral stance. And it bears Mr. Zhong's signature style: he strikes so fiercely that he even hits himself.
Why the self-inflicted blow? For instance, he strongly condemns price wars, stating, "China's biggest concern is price competition, not quality, high-end products, or premium pricing." While this isn't entirely wrong, the problem is that NONGFU SPRING itself has engaged in price wars, and even initiated them. During the 2024 public relations crisis, the company launched its green-bottled purified water with aggressive low pricing, selling it online at 9.9 yuan for 12 bottles—just 8 jiao each. This dragged competitors like C'estbon, Wahaha, and Kangshifu into the fray, slashing industry profit margins. After the crisis passed, Mr. Zhong urged consumers to return to the more expensive red-bottled water, claiming that the green-bottled water isn't suitable for long-term consumption and could harm health. This self-contradictory stance shocked many. Now, he opposes "price competition," having already done it himself—another self-inflicted blow.
Double standards in business Mr. Zhong argues that e-commerce harms physical stores, diminishing the joy of impulsive, sensory shopping. But does he truly care about our shopping experience? His companies aggressively push freezers into stores, demanding exclusive displays, which stifles variety. If all stores are dominated by one brand, where's the spontaneity? Moreover, his claim that e-commerce hurts small shops is flawed in the bottled water market. When thirsty, people need water from convenience stores, noodle shops, school kiosks, or service stations. The real threat to small shops comes from mid-sized supermarket chains, which NONGFU SPRING doesn't boycott. So, the real issue is that platforms undermine NONGFU SPRING's traditional channel profits and pricing power.
Profit margins and platform bypass Using a martial arts novel analogy, consider Shaolin Temple selling a martial arts manual for 2 taels of silver. To ensure its presence in every school, they set up distribution layers—provincial, county, and local agents—each with healthy margins. Similarly, NONGFU SPRING relies on a complex distribution network with strict controls, like prohibiting cross-regional sales and using its own transaction system. Violations incur fines. The profit margins are high: a retailer gets green-bottled water for 19.9 yuan per 24 bottles (low profit) and red-bottled for 23-26 yuan, selling each bottle for 2 yuan, near 100% profit. This high margin relies on brand premium. Mr. Zhong emphasizes "quality, high-end, and premium pricing," but the last is the real goal.
E-commerce platforms disrupt this by allowing nationwide price comparison, pressuring distributors to sell at lower prices through online channels. This erodes the brand premium, devaluing the millions of retail outlets. NONGFU SPRING's fortress is bypassed, and Mr. Zhong, feeling the pinch, calls for regulatory limits on platforms. While regulation is necessary, platforms are already heavily regulated—more so than offline. Laws like the E-commerce Law and Anti-Monopoly Guidelines, along with specific rules on pricing, are in place. Yet, online platforms face stricter content controls than offline retailers.
Self-contradiction and the bigger picture Mr. Zhong opposes "middlemen," but NONGFU SPRING itself, as "the nature's porter," acts as a middleman. For a product costing a few cents plus a bottle, selling for 2 yuan, he'd prefer to control everything. He recently introduced ice sold at 22.8 yuan for 2kg, more than double the price of water. Of course, there are costs: sourcing water, building factories, and distribution. But platforms also invest heavily in technology and personnel. If platform competition reduces the water premium, perhaps it's not a big loss. It suggests that the brand's premium is inflated, and platforms offer efficiency gains.
The real significance The most striking aspect of Mr. Zhong's TV interview isn't his platform criticism. It's that a boss once subjected to a witch hunt and baseless accusations can now speak freely on mainstream media, offering sharp opinions and expressing personal interests. This is the real insight. The essence is the cycle of time. Cycles don't produce history, but they are history's porters.
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