---
title: "The Revelation of Jianlibao: How a Can of Magic Water Lost Its Magic"
description: "The decline of Jianlibao can be attributed to internal management chaos and blind diversification, ultimately leading to organizational failure and the end of its glory."
author: "New Distribution"
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published: "2016-11-04"
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# The Revelation of Jianlibao: How a Can of Magic Water Lost Its Magic

> The decline of Jianlibao can be attributed to internal management chaos and blind diversification, ultimately leading to organizational failure and the end of its glory.

The decline of Jianlibao can be attributed to internal management chaos and blind diversification, ultimately leading to organizational failure and the end of its glory.

On April 26, 2013, a man in his fifties with graying hair appeared in the funeral hall of the Sanshui District Funeral Home in Foshan, Guangdong. Dressed in black, he stood behind the bereaved family, tears streaming down his face, bowing repeatedly at 90 degrees. He was Li Ning, the former "Prince of Gymnastics," and the deceased he was mourning was Li Jingwei, the founder of the once-popular Jianlibao.

Riding on the wave of being the "first choice beverage for the Chinese Olympic delegation," Jianlibao became famous overnight across the country after the 1984 Los Angeles Olympics. As China's first beverage with added alkaline electrolytes, Jianlibao introduced the concept of sports drinks to the Chinese public. Today, carbonated drinks, fruit juices, tea drinks, and various other beverages are ubiquitous on the streets, but Jianlibao is hard to find.

**An Orphan's Entrepreneurial Dream**

In 1939, Li Jingwei was born in what is now Baiti Town, Sanshui District, Guangdong. His father died in the war when he was very young, and his mother remarried in Guangzhou after giving birth to him. Unable to raise him, she sent him to an orphanage. Li Jingwei's aunt, feeling pity for him, took him in and raised him. "He was like a worker in our family at the time," his cousin Ou Shenglian once recalled. In Ou's memory, his cousin had no special traits in childhood except for being sociable.

Born into poverty and having endured hardships at the bottom of society, Li Jingwei worked very hard. He worked as an apprentice while self-studying. At the age of 20, he became the director of the Sanshui County Printing Factory. A few years later, he was noticed by the county sports committee and promoted to deputy director of the county sports committee, a position he held for ten years.

In 1973, at the age of 32, Li Jingwei was transferred to the failing Sanshui Winery as deputy director. At the time, this was hardly good news. However, fate had put him in the right place at the right time. Later, people realized that this period became a significant node in Chinese corporate history, as the early 1980s saw the birth of many well-known companies such as Lenovo, Haier, and Vanke.

The Sanshui Winery was not wealthy at the time. Ou Shenglian still vividly remembers the winery: "The floor was uneven, and when guests came, they sat on long benches; there wasn't even a chair with a backrest." But Li Jingwei cherished this opportunity and treated every researcher who came to the factory with good food and drink. Ou Shenglian joked, "I was really worried back then that they would eat this small, shabby factory into bankruptcy."

One of the R&D team members, Huang Xierong, who was a pharmacist at the time, recalled, "Athletes feel tired after exercise because lactic acid is produced in the body during exercise." Huang said they conducted over 130 experiments over more than three months, hoping to find an alkaline substance to neutralize it, and ultimately the experiments yielded satisfactory results.

In 1984, Jianlibao soda was successfully developed.

But how to sell it was uncertain for everyone. At this point, Li Jingwei brought good news again.

**The "Magic" Fades**

Li Jingwei's experience in the county sports committee allowed him to learn from the sports system that the National Sports Commission was preparing beverages for the Chinese sports delegation heading to the 1984 Los Angeles Olympics. After some effort, the newly born Jianlibao accompanied the Chinese Olympic delegation to Los Angeles and shone brightly with China's outstanding performance. Especially when the Chinese women's volleyball team, sponsored by Jianlibao, defeated the host team USA to achieve a "three-peat," news describing Jianlibao as "Oriental Magic Water" spread globally, and this orange-yellow carbonated drink became famous overnight.

That same year, Jianlibao's sales reached 3.45 million yuan, 16.5 million yuan the following year, and 130 million yuan the third year. In 1997, Jianlibao ranked first in China's beverage industry in terms of output, total output value, sales revenue, and taxes and profits, with the Jianlibao Group's annual sales exceeding 5 billion yuan.

That year also became a turning point for Jianlibao.

Afterward, Jianlibao's sales began to decline at a rate of 70,000 to 80,000 tons per year. In 1997, the construction of the Jianlibao Tower in Guangzhou, with a target of 38 floors and a debt of 1 billion yuan, directly led to financial strain. The Asian financial crisis that same year made things worse, and sales continued to slide. Unable to pay employee wages and facing banks demanding repayment, internal and external troubles pressured Li Jingwei, who was nearing retirement age.

Subsequently, Li Jingwei's relationship with the Sanshui government began to deteriorate. In 2002, under the leadership of the Sanshui government, Zhang Hai acquired Jianlibao in a "lightning acquisition" under the name of Zhejiang International Trust and Investment Corporation, ushering in the Zhang Hai era.

After taking over, Zhang Hai made a series of acquisitions, including Baofeng Liquor, Huayi Electric, and Shuanghuan Technology, and invested in three football clubs and the Jiangxi Jingdezhen Health Industrial Park. In 2004, the Jianlibao Group faced a capital crisis, owing suppliers, halting production, and facing pressure from distributors. Claimed to have total assets of 4.7 billion yuan, Jianlibao had liabilities of nearly 3 billion yuan, including 1.5 billion yuan in short-term debt. The assets were highly inflated, and the actual debt-to-asset ratio exceeded 70%.

In 2005, Zhang Hai was imprisoned for embezzlement and misappropriation of funds, pushing Jianlibao to the brink of collapse. To save the brand, the Sanshui government had to find a new buyer again and signed an acquisition agreement with Uni-President Group in October 2005.

For the mess left by Jianlibao, Uni-President set a target of 2 billion yuan in sales for 2006, but the result was disappointing. Jianlibao's vague product positioning, insufficient brand awareness, lack of distributors, and difficulty in restoring production capacity all indicated that returning to its peak would be very difficult.

**Success and Failure: Both Due to the Same Factor**

The decline of Jianlibao can ultimately be attributed to the failure of corporate organization and management caused by chaotic management and blind diversification.

Jianlibao was founded by Li Jingwei, who for a long time held both the positions of chairman and general manager. His keen mind and good market sense brought great benefits to the company in its early development. Success and failure both stem from the same factor. The company never completed the construction of a modern organizational structure; the main executives were still the veterans who followed Li Jingwei in the early days, and there was a lack of training for subsequent teams. This directly affected Jianlibao's later marketing and market promotion.

At the same time, the local government, to meet employment targets, required that 45% of Jianlibao employees be from Sanshui. The government inserted personnel, and nepotism flourished. From 2002 to 2005, equity changes were frequent, management was absent, and the internal control of the enterprise completely collapsed.

The miraculous rise in the 1980s led to a rapid expansion of confidence among Jianlibao's top management. Li Jingwei began a series of diversified investments involving real estate, pharmaceuticals, fast food, sports apparel, auto repair, hotels, securities, tourism, media, and more. During the Zhang Hai era, Jianlibao not only abandoned the sports drink route but also launched multiple new brands, which directly led to vague positioning and a lack of core competitiveness.

When the industry environment underwent drastic changes, these factors directly led to weak sales and insufficient product innovation. Before 1996, multinational companies like Coca-Cola had just completed their layout in central cities, and outside of large cities, there were only a few national brands like Jianlibao and numerous local small enterprises.

But after 1996, the Chinese beverage industry saw many heroes and fierce competition. Wahaha, Robust, and Yangshengtang entered the purified water market in force, Master Kong launched tea drinks, and Uni-President introduced low-concentration fruit juices. Although Jianlibao also launched "Tianlang" purified water and "Chaodeneng" functional drinks, insufficient investment meant these products went unnoticed.

Because its products had been selling well, Jianlibao had always been a "sit-down merchant," using a traditional multi-level distributor agency system. The distribution channel was too long, and there was a lack of proper guidance and control over terminal product promotion, advertising, and product placement. When the market changed, this approach was no longer suitable. During this period, Pepsi and Coca-Cola had expanded from first-tier cities to towns in developed areas. At the end of 1999, Pepsi's spring sales plan for a town in Dongguan not only counted the town's population, area, and per capita income but also detailed data on retail shops, supermarkets, restaurants, and schools in every corner of the town, as well as comparative data on Pepsi and Coca-Cola's market distribution rates, prices, sales volumes, and equipment investments.

Whether it was Li Jingwei or Zhang Hai, both lacked modern comprehensive organizational management and operational control capabilities. The Jianlibao case is also a testament to the organizational management shortcomings of Chinese enterprises.


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