China water giant Nongfu Spring’s stock falls on boycott calls

CHINESE beverage giant Nongfu Spring is the latest major brand to come under fire from the mainland’s online army of nationalist citizens, underscoring challenges for domestic firms navigating an increasingly patriotic environment. 

Netizens on local platforms are calling for a boycott of Nongfu Spring’s products following the Feb 25 death of the founder of key rival Hangzhou Wahaha Group, which triggered a wave of unfavourable comparisons. This has dragged on its stock, which has since fallen nearly 6 per cent, making it one of the worst performers on the Hang Seng China Enterprises Index.

Users have jumped to criticise everything from Nongfu Spring’s packaging, which some argue has elements that can be associated with Japan, to the business tactics of founder Zhong Shanshan, China’s richest person. There has also been a debate of the quality of its water relative to Wahaha’s and other brands. Some have also alleged that Zhong’s son holds a US passport, angering netizens who question the family’s allegiance to China. 

Nongfu Spring executives didn’t immediately respond to Bloomberg’s e-mailed requests for comment. A call to the company went unanswered. 

Some Chinese companies have benefited in recent years from nationalist sentiment that has led shoppers to pivot from major global brands to home-grown ones. But the online furore around Nongfu Spring highlights the pitfalls that can befall even domestic giants amid growing nationalistic pressure. 

It also poses a challenge for the government as it works to restore the mainland’s faltering private sector – after years of regulatory crackdowns and a shaky economy hurt entrepreneurs’ confidence – to help meet an ambitious 5 per cent growth target for this year.

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Nongfu Spring has weathered online blowback from patriotic users before. In 2021, it was criticised on Weibo over a promotional campaign for one of its new beverages that mentioned peaches from Fukushima, the Japanese prefecture that endured a post-earthquake nuclear leak.  

In the past two weeks, Nongfu Spring’s sales have plunged, domestic media reports said. About HK$30 billion (S$5 billion) in market cap were wiped out, even as Chinese stocks trading in the city made a small gain in the same period. 

Founder Zhong published a statement this month, defending the company and himself. While acknowledging that Nongfu Spring and Wahaha had filed lawsuits against each other following the water debate, he said both he and his competitor’s late chairman, Zong Qinghou, had later come to terms. 

His “respect for Mr Zong’s entrepreneurship has never wavered”, said the statement posted on Nongfu Spring’s verified Weibo account.

It wasn’t enough to appease Internet users, who commented on the statement, asking Zhong to clarify his son’s citizenship and complaining about the taste and quality of Nongfu Spring’s water. 

Nongfu Spring’s online woes jar with Chinese government pledges to protect private entrepreneurs from hate speech. The government tends to rein in nationalist sentiment online to minimise the risk of such informal campaigns posing a bigger political problem. 

The Supreme People’s Court in recent days vowed to crack down on “malicious attacks” against entrepreneurs, pledging to punish “extreme language and acts” as part of efforts to create an environment conducive to the development of private economy. BLOOMBERG