Why China's Richest Man Falls Short of Global Expectations

Where to Begin

If nature could speak, it would likely condemn NONGFU SPRING (09633) founder Zhong Shanshan as a mere "porter" who, by transporting water, transformed himself into China's richest person and an unyielding intermediary between humanity and the natural world. China's bottled water market has propelled two individuals to the top of the wealth rankings, a phenomenon rooted in the shortcomings of public drinking water systems. Tap water in China is generally not potable, turning bottled water from a luxury into a necessity. Beyond this, the rise of these two water magnates is tied to their robust business empires. Wahaha built a nationwide "united sales" distribution network, while NONGFU SPRING adopted a more sophisticated direct-to-retail system, differentiating itself with the slogan, "We don't produce water, we're just nature's porter."

Both billionaires are undoubtedly familiar with the quality of China's tap water, yet they never discuss it publicly. From a commercial perspective, they are likely the last people in China to want improved tap water quality. As long as tap water remains undrinkable, their profits flow like water from a tap—endless, but also tainted. The late Zong Qinghou of Wahaha is no longer with us, so we won't discuss him. An analysis of Zhong's business narrative reveals he never directly claims "tap water is problematic" but instead argues that "natural water is healthier than purified water." His logic: natural water contains minerals beneficial to health, while purified water (often made from tap water) removes them. Thus, natural water is superior. The core selling point is "minerals," not "bad tap water." He leverages public distrust of tap water quality to market natural water without overtly attacking tap water's safety, which would carry legal risks. He simply repeats, "We don't use tap water" and "Natural water has minerals," leading consumers to conclude that tap water is insufficient. This is a shrewd marketing tactic—suggesting without stating.

I recall in 2000, Zhong suddenly announced NONGFU SPRING would stop producing purified water, publicly claiming it was "unhealthy for long-term consumption." He ran TV ads featuring experiments with narcissus flowers and mice, comparing NONGFU SPRING to other brands. He argued that his water made flowers grow better, to which Zong retorted that manure water also makes flowers thrive, but that doesn't mean people should drink it. Zong was a straightforward person. If not for the general rise in Chinese intelligence, Zhong might have aired an ad showing NONGFU SPRING reviving a dying man in the desert, who then outruns a camel after a sip.

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Zhong's rhetoric often expresses disdain for overbearing intermediaries, yet he frequently grants interviews to such outlets. In a recent CCTV interview, he launched his fifth attack on e-commerce platforms. From his business perspective, these criticisms are justified, as they align with his interests. NONGFU SPRING relies on about 5,000 distributors covering over 3 million retail outlets, with 95% of revenue from offline channels. E-commerce platforms' low-price strategies directly threaten this foundation. Moreover, many brands now sell bottled water and beverages online, bypassing intermediaries and eroding NONGFU SPRING's market share. Anyone in his position would be concerned. However, blaming all problems on e-commerce platforms is excessive. While platforms have areas for improvement, Zhong's accusations often amount to blanket condemnations.

Zhong's speaking style is marked by a strategic retreat to gain moral high ground, then labeling opponents with sensitive tags. This approach makes it difficult for others to argue or even dare to respond. It reminds me of the scheming in the Three Kingdoms era, particularly Zhuge Liang's verbal attack on Wang Lang, where every word was framed as righteous, leaving no room for rebuttal. For instance, Zhong blames e-commerce platforms for the decline of offline retail, but platforms don't have that much power. The real causes are a weakening economy, declining consumer confidence, and worsening cost structures. Platforms are merely accelerators, not the root problem. Offline retailers first feel the chill not from online competition but from tighter consumer wallets. Rent, labor, and utility costs—these three burdens are what truly crush physical stores. Over the past decade, commercial property rents have soared, eating into small merchants' profits. Labor costs have risen, and compliance with social insurance and employment regulations has become more burdensome. E-commerce merely highlights these cost disadvantages. Additionally, capital withdrawal has left physical stores without a lifeline. In recent years, many retail formats survived on capital injections—tea shops, bakeries, gyms, all fueled by burning money. The culprit isn't e-commerce; it's a mirror reflecting structural issues in offline retail. Blaming e-commerce for the decline of physical stores is like blaming cold weather for a cold—weather is a trigger, but the real cause is a weakened immune system. The urgent question isn't why e-commerce is so dominant, but why our economic immunity has become so fragile. Without restoring consumer confidence, optimizing cost structures, or attracting capital back, even shutting down all e-commerce platforms won't save doomed stores. E-commerce doesn't produce products; it's just a porter for the retail industry.

Zhong's cleverness was evident when the interviewer asked about the gap between him and Elon Musk after SpaceX's explosive news. Zhong replied, "This isn't just about me, a farmer entrepreneur. The gap is between all Chinese entrepreneurs and Musk." He added, "How many Chinese entrepreneurs are focused on looking up at the stars versus looking at people's pockets?" He noted that Musk's market value alone exceeds that of China's top ten tech moguls combined. This led him to argue, "What entrepreneurs should create isn't just textbook profit maximization, but the maximization of national strength. Every Chinese entrepreneur should think about this." His words sound impressive but don't hold up to scrutiny. By labeling himself a "farmer entrepreneur," he avoids direct comparison with Musk, then drags ten tech leaders in for cover, and further ties us all to moral and political expectations. Focusing on consumer needs and making money through products and services is normal economic behavior. If his goal is to maximize national strength, he should start by fixing the public drinking water system. The gap between U.S. and Chinese tech companies isn't about individual entrepreneurs' vision or capability. Attributing everything to individuals ignores structural issues like differing institutional environments leading to different capital ecosystems, and cultural differences—one admires outliers, the other smooths edges. China doesn't lack smart people; it lacks an environment where they can dream and experiment safely. Fair evaluation systems, transparent resource allocation, tolerance for failure, and respect for originality—these are the true foundations for world-class innovation.

In the interview, Zhong also criticized e-commerce platforms' low-price marketing. But low prices aren't the problem; low prices driven by low quality are. This is a legal issue, not just a business competition one. Costco founder Jim Sinegal said, "Our store won't have the cheapest sunglasses in the market, but it will have the cheapest Ray-Bans." The current challenges facing society and business aren't simply about low versus high prices. If Zhong sets high prices, will small and medium enterprises gain higher profits? And if they do, will they invest in R&D and quality improvement? Not necessarily. Zhong's call for regulators to limit e-commerce platforms' power seems sensible but won't solve anything. Regulators can't even manage themselves well. In the current environment, such restrictions would harm platforms rather than help them. Platforms transform closed, hierarchical, opaque distribution systems into open, flat, measurable markets. The low prices, transparency, and equal access they offer are exactly what farmers and small businesses crave. What needs vigilance isn't platform development but any entity—whether platform or brand giant—trying to restore price collusion and weaken market competition. Prescribing "limit platform power" as a cure for a misdiagnosed problem is often more dangerous. The best outcome of Zhong's battle with e-commerce platforms might be a new balance: platforms continue to exist and offer efficiency without unchecked pricing and traffic control; physical businesses use e-commerce channels without being enslaved; consumers enjoy convenience and diverse choices. Achieving this balance requires wise regulation, otherwise, it remains a tangled mess. One thing is clear: people have long suffered from intermediaries—those who are useless or overbearing. But many intermediaries are hard to eliminate and shouldn't be, as they have value. When tap water is drinkable straight from the tap, yet a porter emerges to become the nation's richest person, that intermediary is unreasonable. Finally, I wish the billionaire and the platforms well. After all, when entrepreneurs thrive, the people have clear skies.