China’s wealthiest man is battling a storm of criticism that has swept social media and spawned a boycott of one of the country’s popular bottled water brands in recent weeks.
Zhong Shanshan, chairman of bottled water giant Nongfu Spring, was hit with a wave of insults from nationalist supporters of Nongfu’s competitor, the Wahaha Group, after its founder passed away on Feb. 25.
Netizens took to social media to mourn Wahaha founder Zong Qinghou, a revered nationalist. Wahaha Group (the name means “laughing child” in Chinese) is ostensibly a private enterprise but enjoys heavy state backing.
Praise for the self-made billionaire quickly turned into critical comparisons with his rival at Nongfu Spring. That criticism took on a life of its own as online nationalists accused Mr. Zhong of being pro-Japan, pro-West, and unpatriotic, calling for a boycott of Nongfu Spring’s products.
In October 2023, the Hurun Report released the “Hurun Rich List 2023,” which ranked Mr. Zhong as China’s wealthiest individual for the third consecutive time, with a wealth of 450 billion yuan ($62.3 billion).
Nongfu Spring Founder Attacked as Unpatriotic
Since February, when the storm of public opinion on China’s heavily censored internet attacked Mr. Zhong and Nongfu Spring in favor of their competitor the Hangzhou Wahaha Group—the country’s largest beverage producer—Nongfu Spring’s sales in China have plummeted.Articles and videos circulating on China’s social media claimed that Mr. Zhong began building his fortune as a distributor for Wahaha in his early days as an entrepreneur. Mr. Zhong was attacked as “ungrateful” and “disloyal” for founding Nongfu Spring and becoming Mr. Zong’s competitor.
Subsequent criticism extended to Mr. Zhong’s son, Zhong Shuzi, who allegedly has U.S. citizenship. Ultranationalist netizens claimed that the temples depicted on Nongfu Spring’s bottles were Japanese Shinto shrines. Nongfu Spring and Mr. Zhong were accused of being “unpatriotic,” and “pro-Japan” and there were calls for a boycott of the company’s products.
In the face of the controversy, Mr. Zhong released a statement on March 3 explaining his relationship with Mr. Zong and emphasizing that initial capital for his startup came from the textile business, not from Wahaha as claimed by netizens. He admitted that Nongfu Spring and Wahaha had previously sued each other but said they had since reconciled.
‘Private’ Wahaha’s State-backed Shareholder
On the surface, Wahaha is perceived to be a family-owned, private company. However, in terms of shareholding structure, Wahaha is backed by the Chinese Communist Party (CCP).There is a view among Chinese netizens that a 46 percent stake is not an absolute majority and therefore does not constitute a state-owned enterprise. Lu Yuanxing, a former Chinese entrepreneur living in exile in the United States, told The Epoch Times that he disagrees.
In an interview on March 13, Mr. Lu said that the size of the shareholding ratio does not reflect the substantive issue of company control. In China, such ratios lack practical significance and are simply numbers, he said.
“The shares held by Wahaha’s employees are actually symbolic economic incentives,” Mr. Lu said. “[The employee stock holders] can only share dividends but have no shareholder rights. In other words, these employees cannot participate in the company’s management or investment decisions.”
Mr. Lu further explained that even with a low shareholding ratio, the CCP can still control a company. In fact, in some situations, the regime symbolically acquires just one percent of a company’s shares and yet can gain absolute veto power. If the representative of the state-owned stock believes that the company’s decisions do not align with the interests of the CCP, it has the right to veto. Therefore, these companies are actually under the control of the CCP, even if the CCP’s shareholding is less than 50 percent.
It is not clear how Nongfu Spring offended the CCP, Mr. Lu said, but in his opinion, it is evident that both Nongfu Spring and its founder have been attacked by manipulated public opinion. He pointed out that when decisions made by private and non-state-owned entrepreneurs conflict with the interests of the CCP, they have no choice but to submit to the regime. In this case, it is plausible that the CCP is allowing or aiding the storm of public opinion in order to punish Mr. Zhong.