Friday, February 3, 2023

Entrepreneur’s bottled water empire made him richer than Warren Buffett

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Zhong Shanshan turned water into gold.

Zhong, chairman of China’s Nongfu Springs bottled water empire, has become the sixth richest person on the planet, with his company’s shares soaring nearly 20% since the start of 2021. Zhong currently stands at $ 91.7 billion, just behind Facebook founder Mark Zuckerberg ($ 103 billion) and higher than US investor Warren Buffett ($ 86.2 billion), Google founder Larry Page ($ 82 billion) and Indian tycoon Mukesh Ambani ($ 75.9 billion).

Zhong’s fortune is now the largest in China. His wealth has surpassed that of Chinese tech moguls like Pinduoduo founder Colin Huang ($ 66 billion), Tencent Pony Ma founder ($ 58.2 billion), and Ali Baba founder Jack Ma ($ 51.5 billion).

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Yet among these billionaires, Zhong is an oddity in that he derives the majority of his money not from technological breakthroughs or investments at the right time, but through a relatively simple business: bottling water and selling it. en masse.

Who is Zhong Shanshan?

Zhong was born in 1954 in Hangzhou, in eastern China. Growing up in the midst of China’s tumultuous Cultural Revolution, Zhong dropped out of school in fifth grade and spent about a decade doing odd jobs in carpentry and construction, according to Chinese media.

At the end of the Chinese Cultural Revolution, Zhong graduated with a journalism degree from a local university and worked as a journalist in the early 1980s. After spending five years as a journalist, Zhong tried to get started in business, selling a variety of products, from mushrooms to nutritional supplements derived from turtles.

In 1996, Zhong turned his entrepreneurial activities into water. (He had previously worked as a salesperson for another bottled water company.) He started Nongfu Springs in his hometown of Hangzhou by selling bottled water from a nearby reservoir to local vendors.

Zhong’s business capitalized on the fact that China’s tap water was – and still is – essentially undrinkable. In 2016, the Chinese Ministry of Water Resourcessays that over 80%of the country’s groundwater was unfit for consumption.

At the same time, the Chinese bottled water market has exploded alongside the country’s economic boom. The International Bottled Water Association estimate that in 2013, China consumed 39.5 billion liters of bottled water, up from 2.8 billion liters in 1997.

Zhong’s success can also be attributed to its ability to convince Chinese consumers that Nongfu’s water was of better quality than its competitors. He boasted that Nongfu only sold natural water, and his company’s slogan “Nongfu tastes a bit sweet” became known in Chinese households.

“Chinese consumers thought that fresh water was better water,” Chinese State Media written in 2016.

Become public

But Nongfu’s claims of having better water came under close scrutiny in 2013, when China’s summit the regulator accused the company to have safety standards for its bottled water that were less stringent than those for domestic tap water. In response, Zhong accused its competitors to prepare the scandal.

Later that year, the government deemed Nongfu’s water safe to drink after testing at its factories, and Nongfu’s sales continued to climb. In 2018, Nongfu was the top bottled water seller in China, controlling a 26% share of the country’s bottled water market. Zhong added other products, such as energy drinks and vitamin waters, to the company’s portfolio, and in September 2020, introduced the bottled water giant to the public market.

Nongfu Springs debuted on the Hong Kong Stock Exchange at a stock market valuation of 48 billion dollars. Nongfu’s current market cap is now 95 billion dollars.

Nongfu’s success this year can be attributed, in part, to investors seeing it as a safe bet in a turbulent economic climate. “Its activities are immune to any global economic shock and US-China tensions”, Vincent Wen, director of investments at KCG Securities Asia, said to the Wall Street newspaper in September.

Zhong’s other investments have also paid off.

In April 2020, Zhong released Beijing Wantai Biological, a vaccine maker he founded in 1993 as part of a nutritional supplement business. Beijing Wantai now has a market capitalization of approximately $ 17 billion on the Shanghai Stock Exchange.

Zhong has long been dubbed a “lone wolf” by Chinese media for his reluctance to speak to the press or socialize in elite circles. So far, her new status as one of the ten richest people on Earth hasn’t changed her low-key personality.

“I don’t like to make friends with business people,” Zhong said China Daily in 2016. “In business, I want it to be all business.”

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