Zhong Shanshan, a former plasterer and reporter, builds billion-dollar business empire Nongfu Spring from turtle shells

Zhong Shanshan builds a business empire from turtle shells

Staff Reporter

2013-06-23

By focusing on a lucrative niche in the market, Zhong Shanshan, a former plasterer and reporter, built a major business group from the ground up. For 20 years, his businesses have been selling bottled water and Chinese herbal medicine, but Zhong continues to maintain a low profile by keeping his firms private.

The flagship firm of Zhong’s business group is YST, which produces Chinese herbal medicine, and owns a number of subsidiaries, notably Nongfu Spring, the second-largest water-bottling firm in China.According to a local economic magazine, Nongfu Spring racked up 2.82 billion yuan (US$460 million) in sales of bottled water in 2010, a 17.5% market share trailing only Master Kong. Data compiled by AC Neilson show that in 2012, Nongfu Spring continued to come runner-up with a 21.8% share. Master Kong garnered 22.6% and leading C’estbon Food and Beverage fell in third at 8.5%. Based on an estimated 8% annual growth in the market, Nongfu Spring’s sales of bottled water approached 4 billion yuan (US$653 million) in 2012.

Founded in Sept 1996 and with registered capital of 360 million yuan, Nongfu Spring sells scores of products ranging from bottled water, fruit and vegetable beverages to functional and tea drinks.

On the other hand, YST mainly sells Chinese medicine-based health products and puts under its fold a number of subsidiaries in the fields of foodstuffs, materials supply, and marketing.

Born in 1954, Zhong was forced to quit his education in fifth grade in the wake of the Cultural Revolution, when his parents were relegated to the rightist camp. From the late 1960s until 1977, he worked as a plasterer and carpenter.

In the wake of the Cultural Revolution, Zhong, via the introduction of a relative, joined the Zhejiang Daily in Hangzhou, working as a reporter for five years. The stint proved to be crucial for him, not only widening his knowledge but also helping him build up connections, including future business partners.

In 1988, Zhong resigned from the reporter job and joined the gold rush in Hainan province, following the establishment of the Hainan special economic zone. Initially, he tried a number of businesses, such as a mushroom plantation, which later failed. Later on, he managed to build up a firm foothold by becoming an agent of Wahaha Group, a leading beverage maker, in Hainan and Guangxi. In Oct 1993, Zhong rolled out a Chinese-medicine health product made of soft-shell turtle, which became an instant hit. In the following 20 years, YST has launched 10-odd products, most of which have been a success.

Zhong remarks that “For a small enterprise to expand, it must be engaged in an exclusive business capable of generating profits, since it cannot accumulate its financial strength through the economy of scale in a crowded industry.”