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After Jack Ma lost the title of China's richest man in 2021, the position of China's richest man has been occupied by Zhong Shanshan, the founder of Nongfu Spring (09633.HK).

On August 9, 2024, Pinduoduo's Huang Zheng topped the list with a net worth of US$48.6 billion, surpassing Zhong Shanshan, who had long occupied the position of the richest man.

The calculation of the assets of the richest people is mainly based on the market value of the stock market, which does not mean that they have so much money in their hands. Pinduoduo's market value has exceeded Alibaba, while Nongfu Spring's stock price has been falling.

Behind this lies several important issues facing China today, which deserve our serious consideration.

Business significance

From a business perspective, Pinduoduo represents China's emerging industry - the Internet platform economy. Jack Ma, Pony Ma, and Robin Li were once the richest people in China. Since the rise of platform economy in China, China has had the world's largest platform economy industry.

The frequent appearance of the richest people in the Internet field represents the rapid growth of China's platform economy.

The contribution of Internet platforms to the entire national economy can be said to be the largest in the past two decades, and it has even led the growth of China's economy.

But the commercial value of Internet platforms is not as great as that of consumer products.

The Internet platform is an efficiency tool. The business model of enterprises lacks a moat and the competition is extremely fierce. Who would have thought that Alibaba, which was once so glorious, would be surpassed by the rapidly rising Pinduoduo?

Consumer brand companies have built a more solid moat by implanting brand value into people's hearts. Zhong Shanshan's Nongfu Spring is a dominant player in the beverage market, and its multiple brand products have established a strong market influence.

The reason why Zhong Shanshan has been able to dominate the list of the richest man for a long time is due to his conquest of the consumer goods market and his strong brand influence.

Of course, China’s number one consumer brand is Moutai, but Moutai is a state-owned enterprise.

Just from the perspective of social development, if the economy continues to grow, then the change in corporate value of operating efficiency tools will increase because competition will become increasingly fierce, which will eventually affect the net profit of these companies and lead to unstable market value.

Efficiency tools serve people's production, and people's production is for consumption. Therefore, in the long run, as long as the economy is developing, consumer brand-type enterprises will have more stable operating benefits and are more likely to produce the richest people.

The most important reason why Huang Zheng can surpass Zhong Shanshan is that Nongfu Spring’s stock price has plummeted in recent times.

Social significance

As we all know, Nongfu Spring has suffered a rare cyber violence incident since May.

In the absence of any negative news about the company itself, it inexplicably became the target of public attack in the public mourning for the death of Zong Qinghou. The breadth and viciousness of the attacks can be considered a heavy blow to a consumer brand.

Nongfu Spring's performance in 2023 hit a new high, with total profit for the whole year of RMB 42.667 billion, an increase of 28.4% year-on-year; profit attributable to owners of the parent company was RMB 12.079 billion, an increase of 42.2% year-on-year.

Compared with the year-on-year increase of 11.9% in revenue and 18.6% in net profit in 2022, Nongfu Spring's growth rate and high net profit level were even more dramatic in 2023.

The same is true when compared with the industry's beverage giants. Taking Master Kong, which announced its full-year 2023 performance report on March 26, as an example, Master Kong beverages' overall revenue was 50.939 billion yuan, a year-on-year increase of 5.39%, and its net profit was 1.26 billion yuan, a year-on-year decrease of 8.57%.

This means that while Nongfu Spring's revenue is 8 billion yuan less than that of Master Kong Beverages, its net profit is nearly 10 times that of Master Kong Beverages.

A few months after the public opinion storm, CCTV Finance Channel interviewed Zhong Shanshan and asked him to talk about his entrepreneurial history and his mental journey in the face of these cyber attacks.

The host asked Zhong Shanshan: "Some people say that the richest man seems to be a high-risk word?" Zhong Shanshan said:

"I am very confident about my outcome. First, I started from scratch, and every dollar I made is clean. Second, I paid taxes according to the law. Third, you can investigate the upstream and downstream suppliers and find out how much profit Zhong Shanshan retained for them. Fourth, I care about the welfare and treatment of employees. Of course, I still have room to work harder to do better, but at my current level, I think I am satisfied with myself."

Such an extremely low-key entrepreneur, a clean entrepreneur with almost no faults, encountered inexplicable angry slander from the entire network, and in the end even the initiator could not be found out.

In the market, the wealth of an entrepreneur is determined by consumers.

Every penny Zhong Shanshan spends is the result of consumers' voluntary monetary vote. No one is forced to pay taxes to subsidize Nongfu Spring like they do to subsidize various state-owned enterprises and crony companies.

Every voluntary purchase by a consumer represents the consumer's authorization to him to control these huge assets because he creates value for the consumer and the consumer hopes that he will continue to do so.

If he goes against the wishes of consumers and does not give him the vote of money, he will immediately lose this status.

So, what reason does the public have to hate an entrepreneur like Zhong Shanshan, but praise countless companies that still need subsidies, have special policy benefits, and in fact enjoy a privileged status?

It has to be said that this absurd farce, and even the change of the richest man, is really regrettable.

As an absolutely mainstream CCTV's interview with Zhong Shanshan, its purpose is to clear the name of entrepreneurs and hope to reverse the stigmatization of private entrepreneurs in society.

World significance

Pinduoduo has once again become the leader in the wealth production rankings, which also reflects another direction for Chinese companies, that is, going overseas.

Although Alibaba has long been a leader in e-commerce, it has not achieved much success in its overseas expansion.

Pinduoduo is different. Its new international brand Temu, as its new symbol of going overseas, is developing rapidly in dozens of countries around the world, causing a sensation wherever it goes.

Against the backdrop of the global depression, Pinduoduo's white-label, low-priced products have become very popular.

Bernstein recently released an analysis report predicting that cross-border e-commerce platform Temu's GMV will reach US$54 billion in 2024. This forecast reflects Temu's significant growth potential, and more importantly, Temu has achieved profitability in the US market and is expected to reach break-even points in other countries such as the UK, Canada and Australia within the next year.

Pinduoduo is challenging Amazon's market position. In 2023, the average daily time spent by American consumers on the Amazon app was 11 minutes, while Temu's was 22 minutes.

This situation has made Amazon extremely nervous, and it has been closely following Pinduoduo's many market strategies and engaging in close combat.

Today, China already has two very successful super-star companies that have expanded overseas, namely ByteDance and Pinduoduo. This means that China's outstanding companies have entered the core area of ​​global competition among multinational companies.

The business owners who have successfully gone overseas become the richest people, and they also represent the new generation of Chinese entrepreneurs, among which a large number of multinational giants will emerge.

In addition to these star companies, a large number of Chinese companies have gone overseas to expand their markets. This is not only a new trend for China, but also a new trend for the world. I believe that the future investment market will pay more attention to this battle between Chinese companies and global multinational companies.

In traditional product areas such as home appliances, Chinese companies have become multinational brands. Lenovo has also become the world's number one PC brand. However, in emerging areas, such as the Internet, these Chinese companies were once close to the world's best giants, but the setbacks in recent years have greatly slowed down the pace of catching up.

Pinduoduo's success has given China's platform economy a new impetus. Alibaba is also undergoing a major internal transformation. Tencent's efforts in video accounts seem to have significant effects. After Hong Kong, Meituan has officially entered the Middle East market and started its overseas journey. Kuaishou has also quickly established a market in Southeast Asia after ByteDance.

The richest man is ultimately just a change in market value, which represents investors' expectations and is investors' vote with their feet to express their confidence in the company.

This change in the richest man makes me happy and worried.