---
title: "How Many Billionaires Can Chinese Health Anxiety Still Produce?"
description: "In a long-lost CCTV program 'Dialogue', Zong Qinghou discussed the hardships of establishing a Wahaha factory in Tibet around 2009, despite opposition from middle management. Cao Dewang then joked that selling water is profitable because the water is free, only costing for bottles, which Zong refuted, saying water is the least profitable. The article explores the history of China's bottled water industry, the 'health anxiety' marketing strategies, and how companies like Nongfu Spring and Baishuishan have used differentiation to dominate the market."
author: "维多厉害呀"
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published: "2021-05-13"
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# How Many Billionaires Can Chinese Health Anxiety Still Produce?

> In a long-lost CCTV program 'Dialogue', Zong Qinghou discussed the hardships of establishing a Wahaha factory in Tibet around 2009, despite opposition from middle management. Cao Dewang then joked that selling water is profitable because the water is free, only costing for bottles, which Zong refuted, saying water is the least profitable. The article explores the history of China's bottled water industry, the 'health anxiety' marketing strategies, and how companies like Nongfu Spring and Baishuishan have used differentiation to dominate the market.

In an old episode of CCTV's 'Dialogue' program, of which only a 4:3 video clip circulates online, Zong Qinghou talked about the hardships of Wahaha setting up a factory in Tibet around 2009.
He said that after Wahaha's middle-level cadres inspected Tibet, they found only shabby equipment and factories, with no market or future.
However, to respond to the government's call and give back to society, from a poverty alleviation perspective, Zong Qinghou ignored the collective opposition of his middle-level cadres and resolutely invested 40 million yuan to build a factory in Tibet.
The host asked: Before doing such a thing, did you consider the return on investment? Or were you just thinking about doing a good deed?
**Zong Qinghou replied:** If you insist on a very high return on investment, then indeed it wasn't considered, but at least it shouldn't lose money.
At this point, the camera cut to a close-up of Cao Dewang sitting in the audience, and Cao Dewang smiled. After the host and Zong Qinghou briefly discussed the improvement of living conditions for Tibetan employees, Cao Dewang spoke.
He said: "I understand that Mr. Zong makes mineral water. **Mineral water, the water is taken from inside, free of charge.** The entire cost is the bottle and plastic. Because my younger brother does this, if Mr. Zong doesn't mind, I'll have my brother come and build such a factory for you right away. After the Beijing-Tibet Expressway opened, more tourists go there, and that's the most profitable."
The camera returned to Zong Qinghou, who looked a bit embarrassed and uneasy. He adjusted his sitting posture and said: "Mr. Cao, what you said is wrong. **Now making water is the least profitable.** You just said..."
Before he could continue explaining, Cao Dewang interrupted him, saying: "Jingzhu mineral water is my brother's; he's selling it like crazy in Fujian."
The host laughed and repeated, "Did you hear that? Selling like crazy," and the video clip ended abruptly.
A heartfelt talk about giving back to society was thus disrupted by Cao Dewang...

**-01-**

**"That's Making Money from the Dead"**
How profitable selling water is doesn't even need data; you just need to look at people.
**Zong Qinghou**, founder of Wahaha, who started selling water in 1995, became China's richest person in 2010; **Zhong Shanshan**, founder of Nongfu Spring, who started selling water in 1996, became Asia's richest person in 2021.
And many wealthy figures in the water world are "invisible," such as **Zhou Jingliang**, founder of Jingtian (Baishuishan); we still don't know how much money he has. Just as Nongfu is not listed, we don't know Zhong Shanshan's wealth tops Asia, and we don't even know who Zhong Shanshan is.
The only way to make "water wealth" visible is probably through company listings, but when water businesses hear "listing," their first reaction is: "We're not short of money; why list?"
That's why when Nongfu Spring listed, the market was full of doubt: "Water companies aren't short of money; why list?"
But thanks to Nongfu, "there is gold in water" can now be quantified. In terms of gross margin, the intuitive expression is: **for every 2-yuan bottle of water sold, Nongfu Spring earns 1.2 yuan.**
As for Wahaha's bottled water business, which has no specific performance figures, in a 2016 'Dialogue' program where Zong Qinghou and Dong Mingzhu were both guests, Zong Qinghou said: **"Dong said her profits are high, but actually my profits are higher than hers. Because from upstream to downstream, I do it all myself."**
I wonder if when saying this, Zong Qinghou remembered years ago, on the same program, even facing the same host, he told Cao Dewang that "making water is the least profitable."
However, although the bottled water industry is generally highly profitable, only Nongfu Spring has a net profit margin exceeding 20%. In 2019, Nongfu Spring had the largest market share in water, with a net margin of 20.6%, while the second-largest, C'estbon, had a net margin of only 7%.
The gap can be traced back to the "industry secret" Cao Dewang mentioned: the main cost of bottled water is the bottle.

**-02-**

**Nature's Delivery Fee**
Except for a few high-end products in glass bottles, the most common bottled water uses PET bottles, which are the lowest-cost packaging in beverages.
A glass beer bottle costs about 0.6-0.8 yuan, an aluminum can costs about 0.4 yuan, and a PET bottle costs only 0.1-0.2 yuan.
Given that Coca-Cola uses a 0.2-yuan PET bottle, most bottled water bottle costs should be below 0.2 yuan, especially Coca-Cola's Ice Dew, whose bottle feels very "1-cent" (of course, its selling price is only 1 yuan).
This 0.1-0.2 yuan PET, using Nongfu Spring as an example, accounts for about 30% of the cost. Adding labels, shrink film, cartons, etc., **all packaging-related parts account for 60-65% of sales costs.**
Thus, PET prices have become the primary factor affecting bottled water companies' profits. In 2018, the average domestic PET price was 9,571.5 yuan per ton. In 2019, international crude oil prices fell, so low that it triggered the "Crude Oil Treasure Incident" that shocked the nation for a year, and the average PET price correspondingly dropped to 7,627.7 yuan per ton.
This nearly 2,000 yuan per ton price difference translates to about 2 cents saved per bottle for Nongfu Spring. Based on the company's 2019 revenue scale, saving 2 cents per bottle brings profits of around 500 million yuan. Moreover, the impact of the 2019 PET price drop hasn't ended because Nongfu Spring stocked up a lot in 2019.
(Source: Nongfu Spring 2020 interim report)
Once the water is bottled, the next step is to transport it for sale.
The bottled water industry has a "500-kilometer radius" rule, meaning **from extraction to sale, the distance should not exceed 500 kilometers,** otherwise, you start losing money. After all, water is heavy and cheap.
A heavy truck with a load limit of 14 tons can carry at most 1,166 boxes (550ml*24) of Nongfu Spring. Based on the ex-factory price of 1,072 yuan per ton disclosed in the prospectus, a truckload of water totals only 15,000 yuan.
From 2017 to 2019, Nongfu Spring worked hard for three years to reduce transportation costs as a percentage of revenue from 13.4% to 10.5%. However, since Nongfu Spring's scale effect has almost reached its limit, there is little room to further compress transportation costs.
Due to this troublesome "500 kilometers," water companies also need some real estate thinking, trying to secure as many locations as possible that can be deeply bundled with first-tier distributors and logistics companies—
location,
location,
location.
But finding a good water source doesn't mean the business will succeed.
In fact, over 30 years of China's bottled water world has seen several dynasties change and billionaires shift, from Wahaha and Robust to Nongfu Spring and Baishuishan. The driving force behind every wave in the bottled water world is nothing more than **"water source."**

**-03-**

**Water Can Carry a Boat**
Before the disputes, let's talk about the emperors and generals the bottled water industry has seen.
In 1990, China Longhuan (Shekou) Co., Ltd., which had been established for 6 years and mainly produced carbonated drinks, launched the first truly domestic purified water—"C'estbon" distilled water.
From 1996 to 1999, C'estbon was fully acquired by China Resources Enterprise, **becoming the prototype of the now-familiar China Resources C'estbon.** Although C'estbon started early, it stayed in the South China market for 17 years. In 2007, with the launch of the "Westward Advance, Northern Expedition, Eastward Expansion" strategy, C'estbon's sales finally exceeded one million tons, entering the first tier of China's bottled water.
In 1992, Zhou Jingliang, the general manager who successfully built the C'estbon brand, resigned from C'estbon and created his own brand "Jingtian." The same year, Guangdong Today Group entered the purified water track with the "Robust" trademark. However, compared to other brands that fell on the "water source" issue, Robust somewhat died on its own.
Having just achieved some success, Robust was acquired by French Danone Group for 92% of its equity in 2000. Less than a year after the acquisition, the founding team, led by founder He Boquan, collectively resigned due to "serious differences with the controlling shareholder on development strategy." In 2005, Robust recorded huge losses, and in 2006, it laid off a large number of employees, on the verge of death.
After being acquired by Danone, the only new product Robust could offer was probably "Mizone." Therefore, when Danone sold Robust in 2016, the only thing it kept was the "Mizone" trademark.
In 2019, Robust, back under Chinese corporate control, tried to make a comeback with a nostalgia card, but contemporary young consumers may spend on nostalgia, but only once. Robust's return to bottled water made less of a splash than Wahaha opening milk tea shops.
Speaking of milk tea, He Boquan, who reluctantly gave away his "son" Robust brand in 2001, perhaps hurt too deeply or tasted the sweetness, never started a business again. Instead, he became an angel investor, starting a career of "selling sons." His most successful "son" in recent years is Heytea.
In 1995, Wahaha exited the children's health supplement track and, with the lyrics "My eyes only have you" and the first-generation "little fresh meat" spokesperson Jinggangshan, brought the concept of purified water into ordinary households through overwhelming TV ads, replacing the habit of drinking boiled water.
In 1996, Wahaha purified water sales exceeded 100 million yuan, becoming the first-generation overlord of China's bottled water. The same year, Zhong Shanshan, who had been expelled from Wahaha for cross-regional selling, established Qiandaohu Yangshengtang Drinking Water Co., Ltd., the predecessor of Nongfu Spring.
In 2007, Danone, which had given up on saving Robust, set its sights on Wahaha. Danone's acquisition met with strong opposition from top to bottom at Wahaha. Unlike He Boquan's exit after acquisition, Zong Qinghou expressed his "death before surrender" attitude by resigning.
Eventually, with mediation by the Ministry of Commerce and both governments, the "Dawa War" ended with Zong Qinghou paying 300 million euros to buy back the joint venture shares from Danone. Zong Qinghou successfully retained the "national brand," but also left a stain of openly violating market economy contract spirit under the banner of nationalism.
In 2004, Jingtian targeted the blank high-end water market and launched "Baishuishan," the "aristocrat in water." However, Baishuishan only gained market attention and sales growth starting in 2013 when it launched that ad featuring a princess and an old man, which perhaps only Zhang Dongsheng from "The Bad Kids" could understand.
Also in 2004, Master Kong, not content with selling noodles, also started selling the necessity for instant noodles—water—and for many years thereafter sat firmly as the TOP1 in the "1-yuan water" market.
In 2006, Master Kong launched the hit product "Mineral Water," **and in 2008 dominated the bottled water market with a 25% market share.** However, tall trees catch the wind; also in 2008, Master Kong's "Water Source Gate" incident broke out. After the storm lasted over a month, Master Kong's senior management collectively appeared at a press conference, admitted that the company's water source was local tap water, and apologized to the public, causing the brand image to hit rock bottom.
Starting in 2008, Nongfu Spring, rumored to have masterminded Master Kong's "Water Source Gate," began to grow rapidly at an annual sales growth rate of 30%-50%. **In 2012, Nongfu Spring's sales exceeded 10 billion yuan, becoming the new leader of the water world.**
In 2018, Master Kong was squeezed out of the TOP3 of the bottled water industry by Baishuishan.
According to AC Nielsen data, in 2018, Nongfu Spring (26.5%), C'estbon (21.3%), and Baishuishan (10.10%) occupied nearly 60% of the bottled water market. Adding Master Kong (9.9%), Ice Dew (7.4%), and Wahaha (5.3%), the CR6 (market share of the top 6 brands) was close to 80%.
After discussing the market structure, it's time to talk about how this structure came to be.

**-04-**

**It Can Also Capsize a Boat**
The "Big Three" currently dominating China's bottled water market have a very interesting relationship. Interestingly, not only Nongfu Spring, but also C'estbon and Baishuishan can each claim to be "number one in the country," and there's nothing wrong with that.
This is because, although you think everyone is selling water, these three are actually selling different kinds of water.
According to the "Food Production License Classification Catalog" implemented on March 1, 2020, packaged drinking water can be divided into three categories. Nongfu Spring, C'estbon, and Jingtian each occupy one category.
And between these three types of water, it's not just about product iteration; it's a series of covert wars over "health."
At the beginning of the article, in the clip from 'Dialogue', Cao Dewang said he understood that Zong Qinghou was "making mineral water." From this, he indeed doesn't know much about the water business.
Because from industry pioneer C'estbon to early industry overlords Wahaha and Robust, they all made purified water.
"Clean" was the highest pursuit for drinking water in China in the 1990s.
At that time, although tap water pipes had fully connected urban households, the national sanitary standard for drinking water issued in 1985 had only 35 indicators, far from direct drinking standards. Meanwhile, the disinfection method for tap water was simple and crude: using bleaching powder, then filtering.
The chlorine that couldn't be completely filtered out, along with secondary pollution in the tap water network, made people have higher requirements for drinking water on the road to a moderately prosperous society.
Wahaha's earliest spokesperson Jinggangshan, its longest-serving spokesperson Wang Leehom, and its newest spokesperson Hsu Kuang-han, all without exception, are idols with a "pure" appearance.
Compared to Wahaha's approach of advertising on CCTV and using spokespersons to concretize the concept of "purity," Robust directly used the slogan "Every drop of water goes through 27 layers of purification."
In 2000, Nongfu Spring, which had been making purified water for a few years without gaining much presence, made its move. Rather than pushing a specific competitor off the table, Nongfu Spring chose to flip the table entirely, so no one could eat.
Although in the entire TV advertising world, "A Little Sweet" and "Nature's Porter" are textbook success cases, in fact, Nongfu Spring's "legendary" marketing tactics were more than just coming up with a brilliant ad copy.
To overturn the bottled water industry, Nongfu Spring only needed three steps: **First, find a concept that cannot be falsified; second, create differentiation; third, falsify competitors.**
To complete these three steps, Nongfu Spring launched what was probably long-planned **"Nongfu's Three Punches."**
First punch: **Capacity differentiation.**
Nongfu Spring was established in 1996 and launched a 4L barrel purified water in 1997, targeting the family market that Wahaha and Robust disdained to cover and which was indeed small—at the time, the main battlefield for purified water was 500ml portable bottles and 18L outdoor/conference water.
Subsequently, Nongfu Spring launched a 350ml small package, lighter than 500ml, better avoiding the situation of having to carry half a bottle of unfinished water.
Given the subsequent two punches, it's more accurate to say that these two products were launched not to pick up Wahaha and Robust's leftovers, but **to quietly penetrate the market without attracting competitors' attention.** Because Nongfu Spring promoted these two products very low-key, only distributing channels, not advertising.
In 1998, Nongfu Spring chose 550ml purified water with a sports cap and launched on CCTV with the slogan "A Little Sweet." In 1999, Nongfu Spring aired an ad on CCTV claiming that "polluted water, even if purified, has fundamentally changed in quality, just like a white shirt, once stained, is hard to restore even after washing."
In April 2000, **Nongfu Spring threw the second punch—high-profile announcement that the company would stop producing purified water because it was "not beneficial to health."** It also aired three TV ads using narcissus, mice, and cell experiments to prove that natural water is "more nutritious."
This ad directly provoked Zong Qinghou's famous quote: "Narcissus grows better in manure water; does that mean manure water is good?"
After these two punches, one can't help but suspect that from the moment Nongfu Spring was named "Mountain Spring," it might have already planned to flip the purified water table.
So how did this completely indefensible biological experiment ad "succeed"?
Mainly because the stance Nongfu Spring took cannot be refuted even today—**although the so-called "not beneficial to health" ignores the premise that trace elements are not primarily supplemented by drinking water,** water completely lacking trace elements and minerals needed by the human body is naturally less "healthy" than water containing these components.
So what could purified water manufacturers do? They could only get anxious.
Yangshengtang announced in April that it would stop selling purified water, and in June, Wahaha led over 60 purified water companies to a meeting in Hangzhou, subsequently suing Nongfu Spring for "unfair competition."
At this point, Nongfu Spring threw the "third punch"—filing a lawsuit. It counter-sued Wahaha on the same grounds.
In Zhong Shanshan's few interviews, he once expressed dissatisfaction with the legal determination of "unfair competition," saying: "I just compared my product with other products; how is that unfair competition?"
Indeed, in this mutual lawsuit between Nongfu Spring and Wahaha, Nongfu Spring lost. But did Nongfu Spring need to win? No, **it only needed the media attention from Wahaha's national purified water conference and the social attention from the mutual lawsuits.**
Even if this dispute led the China Beverage Industry Association and the Ministry of Health to state that "purified water can be safely consumed," it didn't matter. Because while Nongfu Spring introduced a new "health" concept, it didn't add an "IQ tax"—whether water has minerals or not, it sold for 1.5 yuan, so how could consumers choose otherwise?
In 2001, Nongfu's "three punches" defeated Wahaha and became the industry leader.
Twenty years later, this tactic seems to have been learned by Baishuishan.
Baishuishan's "aristocrat in water" is as brainwashing as "A Little Sweet." And Baishuishan is also quietly throwing the "second punch"—differentiation, because above natural water, there is natural mineral water.
On its official website, under the menu "Healthy Drinking Water," Baishuishan directly attacks Qiandao Lake.
Natural mineral water is deep groundwater, requiring relevant mining permits to extract. Compared to lake water, natural mineral water is less susceptible to industrial and environmental pollution, which seems like an invincible stance.
Learned, but learned too late. When Baishuishan launched in 2004, besides being 1 yuan more expensive, it didn't make an issue of natural mineral water.
And the dormancy before Nongfu's "three punches" was also key to its success. Baishuishan's stepping on natural water on its website may not be seen by consumers, but Nongfu Spring certainly saw it.
In April this year, Nongfu Spring put on shelves the Changbai Mountain natural mineral water for which it obtained mining rights in 2015. This water is priced at 3 yuan, and currently, 3-yuan water is synonymous with Baishuishan.
Baishuishan, which barely made it into TOP3, **hasn't awakened consumers yet, but has awakened competitors.**

**-05-**

**The Willing Bite**
If you ask what distinguishes Zhou Jingliang, who single-handedly created C'estbon and Jingtian (Baishuishan), from Zong Qinghou and Zhong Shanshan, besides never being China's richest person, it's probably that he didn't come from the health supplement industry.
Zong's Wahaha started by selling children's nutritional liquid, targeting the anxiety of parents worried that their kids don't eat well and might lack nutrition.
Zhong's first pot of gold came from selling turtle and soft-shelled turtle pills, targeting the uniquely Chinese health anxiety and the thousand-year-old food therapy culture.
Robust's parent company "Today" also spent tens of millions to purchase Coach Ma Junren's "Life Nuclear Energy" formula. That's the same Ma Junren who was later proven to have injected "nuclear energy" (actually stimulants) into his "Ma Family Army" athletes.
However, the so-called "health supplements" these products belonged to faced a crackdown and cleanup by relevant authorities shortly after the two billionaires switched to selling water.
**But they exited unscathed before this pure IQ tax was exposed, then caught the pulse of the bottled water industry's development, creating two Chinese billionaires. More importantly, the wealth code contained herein is:**
**Humanity's eternal anxiety about health.**
After switching careers, Zong Qinghou launched a generation's memory—Wahaha AD Calcium Milk—but according to strict national requirements:
**It can only be labeled as a children's beverage, without emphasizing any functionality.**
Clearly, Wahaha still knows "health anxiety" sells, but it's confined to the fleeting inspiration of "children's nutrition." Zhong, on the other hand, has the ability to create health anxiety on demand.
Nongfu Spring's starting point in Qiandao Lake was when Zhong Shanshan, while inspecting the acquisition of a century-old medicinal wine factory by the lake, accidentally discovered that the water in Qiandao Lake was quite good.
"Such good water just needs a story." Of course, this is just my speculation about Zhong's inner thoughts.
After overturning the water market with "three punches," Nongfu Spring shifted from offense to defense. **No longer using brainwashing TV ads to play with concepts, it focused on laying out differentiated products.**
For example, Oriental Leaf, launched in 2011, was once hailed as the worst-tasting tea drink on the market. But due to poor market response, Oriental Leaf's TV ads disappeared. Yet the product remained on shelves, waiting for the arrival of new anxieties derived from consumption upgrades, such as "sugar is not good for health."
**In this era of information explosion, people are both unprecedentedly sensitive and vigilant about "IQ taxes," while trying to use consumption to combat growing anxiety; they resist merchants "selling anxiety," yet go to Taobao to find products for their own anxieties.**
Nongfu Spring, which is well-versed in selling anxiety, might offer some inspiration to merchants seeking to break through industry involution: **selling anxiety is no longer something people buy.**
But because anxiety, from health anxiety to appearance anxiety, is clearly being generated continuously with the trend of consumption upgrades,
Therefore, as long as you can make a product that is better in some dimension, you don't even need to advertise widely; you might need to wait a while, but someone will always find it through anxiety.
In such an environment, I'll boldly speculate again about Zhong's inner thoughts:
**Selling things has never been this easy.**
Source: Gelonghui APP (ID: hkguruclub)
Tips will be paid 400-2000 yuan once adopted.


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