How Zhong Shanshan became the richest man in China

Zhong was born in Hangzhou, a city in eastern China, in 1954. His early education was cut short by the Cultural Revolution (1966-1976), and he instead worked as a bricklayer and carpenter in order to help support his family. In 1977, he enrolled into Zhejiang Radio & TV University. After graduation, he worked in the media as a reporter for the Zhejiang Daily, where he had the opportunity to interview start-up businessmen.

During late 1970s and throughout 1980s, as China ramped up its efforts to accelerate economic growth, it began to open up its borders for foreign investment. This resulted in the creation of “Special Economic Zones” in China, where foreign and domestic trade and investment can be without the authorization of the central government. This was a success as 18 cities were given this title, and foreign investment poured in thanks to the tax and business incentives as well as huge market opportunity.

In 1988, Hainan became a special economic zone and became China’s largest city. It was at this time that Zhong decided to move to the island. During his time in the 90s, he tried his hand in several sectors, including setting up his own newspapers, farming mushrooms and prawns, and selling Chinese turtle medicine; but it was during his time as a sales agent for Wahaha (bottled water company in China) that he decided to direct his entrepreneurial aspirations to the beverage space.

In 1996, Zhong founded his own bottled company, Nongfu Spring, in Hangzhou. Initially, sales from the company came from selling water which was bottled from a nearby reservoir to local vendors. However, the company’s growth accelerated off the back of 2 major factors. First, the ultimate opportunity. China’s tap water is largely undrinkable – the Ministry of Water Resources reported that more than 80% of the country’s groundwater was unsafe for consumption. This, in combination with China’s huge economic upturn, resulted in a massive demand for bottled water. The International Bottled Water Association estimates that in 2013 China consumed 39.5 billion litres of bottled water, compared to 2.8 billion liters in 1997.

In addition, Nongfu Spring was able to stand out among its competitors by emphasizing its quality to its customers. During this time, a majority of bottled water in China was distilled, as there was increasing scientific reports showing evidence that distilled water was not healthiest, in 1999, Nongfu Spring made a strategic decision and stopped removing the natural minerals out of their water and as a result became hugely popular.

This catapulted Nongfu Spring to be the major player in the beverages production industry in China. According to research conducted by Nielsen, Nongfu Spring became China’s most popular bottled water in 2012 and has held that title for the past 9 consecutive years since. Nongfu currently occupies approximately 26% market share and remains dominant within the beverage industry.

In 2020, Nongfu Spring went public on the Hong Kong Stock Exchange in one of the most successful IPOs in the exchanges history. Pre-IPO, Nongfu raised $1.1billion, while being oversubscribed by 1,148 times. On its first day of trading, September 8th, shares closed at +54% from open (from HK$21.50 to $33.10), while breaking records in terms of retail subscriptions. Zhong’s 84.3% stake in Nongfu was worth USD$40.33 billion by the end of the day, instantly shooting him up the leaderboards to become China’s wealthiest person according to Bloomberg. Since then, Nongfu’s share price has continued to rise and even briefly made Zhong the wealthiest person in Asia.

In 2020, Zhong also took Beijing Wantai, a major pharmaceutical company focused on in vitro research, public, listing on the Shanghai Stock Exchange. He had acquired a majority shareholding in the company in 2001, and as of Feb 2022, Beijing Wantai (603392.SS) has a market cap of CNY154.8 billion ($172 million).

Zhong has often been described as the “Lone Wolf” by Chinese media due to the low profile he keeps – whether that is with other businessmen or within politics and the government.

“I don’t like making friends with businesspeople. In the business world, I want it to be just business.”.

–  Zhong Shanshan (China Daily in 2016).