Zhong Shanshan, China’s wealthiest individual and the founder of Nongfu Spring, has long understood the importance of corporate reputation in the market economy.
He built his bottled water company’s brand by emphasizing that the water came directly from the source, positioning it as superior to competitors. Shanshan once stated in a 2015 interview with Hong Kong television, “The reputation of a company in the market economy is greater than its fixed assets. If the reputation is bad, nothing can be sold.”
China’s Richest Person (Credits: www.eventsmauritius.travel)
However, Nongfu Spring is currently facing a backlash from nationalistic social media users in China who accuse the company of being pro-Japan. The controversy stems from allegations that Nongfu Spring used Japanese-style images on its bottles, which some Chinese consumers find objectionable.
In response, users on Chinese social media platforms have been filming themselves pouring Nongfu water into toilets or using it to clean floors as a form of protest.
Nongfu Spring has defended its packaging design, stating that the images are artistic creations inspired by Chinese temple architecture. Despite this explanation, the backlash has led to declining sales and the removal of nongfu products from some 7-Eleven stores in Jiangsu province.
The social media frenzy surrounding Nongfu Spring appears to be benefiting its competitor Wahaha, following the recent death of Wahaha’s founder, Zong Qinghou. Some users accuse Zhong Shanshan of undermining Zong, as Zhong used to be a sales agent for Wahaha.
China’s Richest Person (Credits: depidiomas.unitru.edu.pe)
This incident highlights the power of nationalist sentiment in influencing consumer behavior in China. Similar nationalist movements have targeted foreign brands, such as Dolce & Gabbana and H&M, leading to boycotts and reputational damage.
However, the backlash against Nongfu Spring demonstrates that domestic brands are not immune to such criticism. The controversy has had a tangible impact on Nongfu Spring’s market value, with the company losing approximately 30 billion Hong Kong dollars ($3.8 billion) in market value over the past two weeks.
Despite a slight recovery in share prices since the weekend, the incident serves as a cautionary tale for companies operating in China to be mindful of nationalist sensitivities.
