Knocking on the capital market door again: Is it short of money, or is there another reason? In 2020, Nongfu Spring once again stood outside the capital market. The CSRC website recently disclosed the approval progress for Nongfu Spring's overseas IPO, showing that the CSRC received the relevant approval materials on March 17. A Nongfu Spring spokesperson replied to a reporter from Caijing National Weekly, with almost no difference from previous statements—no comment. In fact, from multiple perspectives, as a leading enterprise in the domestic drinking water industry, Nongfu Spring's entry into the capital market is not difficult. Since 2008, rumors about Nongfu Spring's listing have never ceased. But every time, the listing rumors ended with Nongfu Spring's outright denial, with founder Zhong Shanshan publicly stating that the company was not short of money. This time, could it be another "cry wolf"? Or have the events of recent years changed the minds of Nongfu Spring and its founder Zhong Shanshan? -01- The "Lone Wolf" Regarding listing, Nongfu Spring has always seemed uninterested. "Sufficient cash flow," "no listing plans," "we have been participating in counseling since more than ten years ago, and we report every time; up to now, it's routine counseling." All of Nongfu Spring's responses to listing questions have been cold. People close to Nongfu Spring believe that all of this is closely related to Zhong Shanshan. Unlike Zhejiang entrepreneurs such as Zong Qinghou, Ma Yun, and Li Shufu, Zhong Shanshan, who founded Yangshengtang in 1993, is rarely known outside the industry. Even within the industry, many people have a fragmented impression of him. But one personality trait is universally recognized: maverick. He does not participate in entrepreneur associations, has few friends in the business world, holds no political identity, and almost never dines with government officials. In the FMCG circle, he is nicknamed the "Lone Wolf" to describe his conceit, combativeness, unruliness, and even fearlessness. Because of this "reckless" personality, Zhong Shanshan has offended many people. In 1991, when Zhong Shanshan was the general agent for Wahaha oral liquid in Hainan and Guangxi provinces, he had a falling out with Zong Qinghou, who was already worth over 100 million yuan at the time. At that time, Wahaha's business in Hainan was just starting, and the factory purchase price was relatively favorable. Zhong Shanshan transported goods purchased in Hainan to Guangdong, where prices were higher, to earn the price difference. This directly angered Zong Qinghou. "This is determined by a person's character; there is no right or wrong, only fit or unfit," Zhong Shanshan once said of himself. "I am a loner. I don't care what my peers are doing or thinking." Zhong Shanshan's wolfish nature is also reflected in his provocative rants. It is rumored that he once publicly blasted in front of association experts, saying, "In China, the one who knows water best is Nongfu Spring, not experts or associations." A former executive of Nongfu Spring recalled that at a drinking water conference, Zhong Shanshan directly attacked competitors' mineral water, saying their products were not advocated by the UN Food and Agriculture Organization and should not be produced. Some believe that Nongfu Spring's success to its current height is inseparable from Zhong Shanshan's personality. It is precisely this "unruly" style that allowed Nongfu Spring to carve out a path in the brutal drinking water market. But others believe that Nongfu Spring's repeated failures to list are also due to Zhong Shanshan's personality. Nearly 80% of Nongfu Spring's shares are in Zhong Shanshan's hands. How can such a controlling and independent entrepreneur accept the "shackles" of the capital market and share corporate decision-making with others? -02- Not Short of Money? The "Lone Wolf" Zhong Shanshan has always responded to listing matters with arrogance: not short of money. From the limited public information available, Nongfu Spring may indeed have been "not short of money" in the past. According to the "Zhejiang Private Enterprise Top 100 Ranking" released by the Zhejiang Provincial Market Supervision Administration and the Zhejiang Provincial Private Enterprise Development Federation, Nongfu Spring's revenue from 2015 to 2018 was 10.911 billion yuan, 14.139 billion yuan, 17.791 billion yuan, and 20.911 billion yuan, respectively. Specific profitability can be glimpsed from a company called Wantai Biological. In December 2019, the CSRC approved Wantai Biological's IPO application. The prospectus showed that Zhong Shanshan held a total of 83.5578% of the company's shares through direct and indirect (via Yangshengtang) means, making him the actual controller. The shareholder information disclosed in the prospectus showed that in 2018, Nongfu Spring's unaudited total assets were 20.075 billion yuan, net assets were 14.411 billion yuan, and net profit was 3.616 billion yuan, a year-on-year increase of 7.33%. For horizontal comparison, listed peer Kangshifu's net profit in 2018 was 2.463 billion yuan, and Uni-President's net profit in 2018 was 1.029 billion yuan. Nongfu Spring's net profit alone exceeded the sum of Kangshifu and Uni-President. Besides Nongfu Spring itself, the major shareholder Yangshengtang is even more formidable. Currently, Yangshengtang has more than 70 subsidiaries. In this large business landscape, Zhong Shanshan has built three marketing systems: pharmaceuticals and health products, beverages and drinking water, and leisure foods. Under each system, there are leading brands in their respective industries. In addition to "Nongfu Spring," brands such as "Yangshengtang Turtle Tablet," "Duo'er," "Qingzui," "Growth Joy," and "Mother's Beef Jerky" all rank among the top in their respective market segments. Some securities analysts believe that Nongfu Spring is quite strong in marketing, with a stable core team. The drinking water industry has fast turnover, and the main capital pressure is on channels. Nongfu Spring is not short of funds; in fact, it is one of the private enterprises with the strongest cash flow, so it previously had little motivation to list. -03- Not So Sweet Anymore? Zhong Shanshan and Nongfu Spring, who are unwilling to be controlled and not short of money, why have they now softened their stance and proactively applied for an overseas listing? Perhaps it is because, after all the experiences of the past decade or more, Nongfu Spring and the market it operates in have become "not so sweet." The earliest seed actually goes back 11 years, to 2009, when a routine monthly report by the China National Environmental Monitoring Centre pushed Nongfu Spring into the spotlight of a "problem water" controversy. This water quality controversy was eventually quelled. The Zhejiang Provincial Environmental Protection Department, after thorough argumentation and communication with experts from the China National Environmental Monitoring Centre, stated that the water quality of Qiandao Lake was generally good and it was one of the best reservoirs in the country. But this controversy had already planted a seed of doubt in the market and in some consumers' minds. Four years later, a consumer complaint led to two consecutive months of media scrutiny of Nongfu Spring, bringing its water quality issues to the forefront again. Some media shifted their doubts to Nongfu Spring's product execution standards, arguing that Nongfu Spring's standards relaxed limits on certain harmful substances and allowed the presence of mold and yeast, triggering the famous "Standards Gate" incident. This incident lasted 27 consecutive days and dealt an unprecedented blow to Nongfu Spring. Zhou Li, the board secretary of Nongfu Spring, once said that the "Standards Gate" caused losses of no less than 1 billion yuan. For a long time afterward, Nongfu Spring's market share struggled to recover. At the beginning of this year, Nongfu Spring again fell into the negative impact of "deforestation for water." A video circulating online claimed that Nongfu Spring was "deforesting for water" within the Wuyi Mountain National Park in Fujian, with construction damaging vegetation. Although the Wuyi Mountain National Park Administration issued an investigation report and Nongfu Spring also issued a statement, this public incident still caused a huge uproar in public opinion, with Nongfu Spring's corporate responsibility being questioned and water quality issues being brought up again. Each time it is embroiled in a water source quality controversy, it not only damages Nongfu Spring's brand reputation and consumer goodwill but also serves as alternative evidence of intensifying competition in the domestic market and industry. "After changes in the overall economic environment and industry competition environment, Nongfu Spring's strategic thinking has also undergone a fundamental shift," said food industry analyst Zhu Danpeng. "In this mindset, Nongfu Spring needs to go public to increase investment in the entire industry chain, channels, brand, and internationalization." In his view, after the outbreak of the epidemic, food and beverage companies, as upstream suppliers, have faced considerable challenges. From this perspective, it has also accelerated Nongfu Spring's listing process. Source: Caijing National Weekly, Author: Li Yuxi Tips will be paid 400-2000 yuan once adopted.