Hangzhou Wahaha Group Co has reportedly given up plans to exploit water resources on the Tibet plateau in part due to concerns about the water quality there. Experts and officials reassured the public about the quality of water in Tibet, but acknowledged that there may be other factors, such as high transportation costs, that hinder companies from dipping a toe in the mineral water industry in Tibet.

An icy river flows in a valley below snowcapped mountains in Southwest China's Tibet Autonomous Region in December 2015. Several companies see the mountains as a pure source for their high-end mineral water products. Photo: IC

The snowcapped peaks of the mountains in Southwest China's Tibet Autonomous Region are perceived as a pure source of water that can command premium prices from consumers who are concerned about water pollution in the rest of the country.

The situation has driven an influx of companies to the region - hoping to tap local water resources. But not Zong Qinghou, a multibillionaire soft drink tycoon who reportedly decided to swim against the current.

Zong, the founder of Hangzhou Wahaha Group Co, said that the company has aborted plans to exploit water from Tibet's mountain glaciers, China Business Journal reported over the weekend.

Zong attributed the decision in part to being unable to find suitable water resources there.

"Our [technical] staff climbed a very high mountain to get water samples for testing. But we were disappointed by the results, which showed a very high concentration of heavy metals in the water," Zong was quoted as saying in the media report.

Wahaha Group refused to comment on the report when contacted by the Global Times on Tuesday, only saying that they primarily run beverage businesses in Lhasa, the region's capital.

No need to worry

Water from the Tibet plateau does possess higher levels of heavy metals than water in other areas, experts said.

For instance, the concentration of arsenic in one water source in Tibet exceeds the national standards for drinking water, said a Beijing-based independent expert surnamed Zhang.

"However, [the arsenic] was naturally formed and technology can help lower the concentration," Zhang told the Global Times on Monday. "Overall, the water in Tibet is very clean."

According to a report issued by the Chinese Academy of Sciences (CAS) in November 2015, major lakes on the Tibet plateau all meet the first-class national standard for the environmental quality of surface water, which means the water in those lakes is unpolluted and drinkable after a simple filtering process. 

And there are abundant high-quality water resources in Tibet, an official from the region's water resources department, who asked not to be named, told the Global Times on Monday.

Every year, 8 billion tons of water gets added to Tibet's lakes, primarily from rainfall, according to the CAS report. Melting snowcaps resulting from global warming also contribute to the increase. 

Tibet 5100 Water Resources Holdings is also confident about the water in Tibet. Mineral water sourced from Tibet is rich in microelements and minerals that provide health benefits, Wang Keqin, the company's executive director, told the Global Times on Monday.

Not a good deal

Tibet's immature transportation network is likely to be the actual reason for Zong's dampened enthusiasm in selling water from the region, said Yan Qiang, a beverage industry analyst with Beijing Hejun Consulting.

"High transportation costs make developing water resources in Tibet a poor proposition for Wahaha, which also has to pour a lot of money into marketing and setting up new high-end sales channels for the premium Tibetan water," Yan said on Tuesday.

Wahaha could take a lesson from Qumolangma Glacier, which was founded in 2006 to produce bottled water from a national reserve in Tibet. Yan said Qumolangma did not perform well due to high transportation costs. 

In the first nine months of 2015, Qumolangma lost 36.5 million yuan ($5.6 million), almost double its net losses for all of 2014, according to a post on the website of Guangzhou Enterprises Mergers and Acquisitions Services.

The purpose of the post was to help two of its shareholders in Guangdong Province sell their 6 percent stake in the company. It had 385 million yuan in debt as of September 2015.

The official from Tibet's water resources department acknowledged that the region's underdeveloped transportation system is a major obstacle in attracting mineral water companies.

"We are in talks with companies and try to improve the current situation as soon as we can," he said.

Liu Hongqiao, a consultant with Hong Kong-based nonprofit organization China Water Risk, thinks the investment in Tibet's bottled water industry should be prudent.

"Investors should consider whether consumers have sustainable interests in bottled water from Tibet, but they also need to pay attention to the environmental, political and cultural risks," Liu told the Global Times on Monday.

Tibet plateau is known as Asia's water tower, the headwater of many important transboundary rivers that feed billions of people through Asia, said Liu.

Aggressive exploitation in the upstream may add further geopolitical threats to transboundary water disputes, she added. 

Spurred by the government

Despite of the barriers and risks, many companies have started producing mineral water in Tibet.

"Last year, I saw the sudden emergence of more than 200 mineral water brands in Tibet, even though the number was in the single digits the previous year," said Shen Bin, secretary-general of the Tibet Cooking Meal Restaurant Trade Association of the Tibet Autonomous Region.

This has been spurred by encouragement from the government, Shen told the Global Times on Monday, following an event sponsored by the local government and the Ministry of Industry and Information Technology (MIIT) in 2014 to promote Tibet's water among inland companies.

During the event, the MIIT pledged to map out specific plans and measures to support Tibet's mineral water industry, which is expected to be a new economic growth engine for the region's economy.

Tibet's regional government also decided to push ahead the expansion with a 10-year plan proposed in 2015 to help grow China's bottled water industry, which experts said is the world's largest in terms of consumption and production, but faces slow growth rate.

The plan set a goal to produce 10 million tons of bottled water by 2025, up from 153,000 tons in 2014.

Nongfu Spring, the Zhejiang-based mineral water producer, mainly exploits water resources at Changbai Mountain in Northeast China's Jilin Province, which has been promoted as another source of pristine drinking water.

Wahaha and Evergrande Spring have opened plants at Changbai Mountain to compete for the high-end mineral water resources there.

Analysts said there is red-hot demand for the mountain's water, which also provides producers with higher profit margins.

In 2015, people in China consumed 1.3 billion yuan worth of premium mineral water. The market has been growing at an average annual rate of more than 20 percent, according to the Bosi Data Research Center.

There are no signs of excessive exploitation of the rivers and lakes in Tibet, said Liu from China Water Risk.

She explained that only an estimated 2 to 5 percent of approved volumes have been exploited, citing public information of listed mineral water companies such as Tibet 5100.
Newspaper headline: Tapping Tibet