Tech companies try to build a smarter farming industry on mainland China

As food scandals mount, companies make risky move into unfamiliar field to capitalise on demand for safer alternatives

PUBLISHED : Monday, 06 January, 2014, 3:59am
UPDATED : Monday, 06 January, 2014, 5:45am

It has been a four year-journey - one marked by mockery and doubt - for internet pioneer NetEase to bring its first pigs to market. You read that correctly - pigs.

The mainland internet pioneer is one of a growing number of companies better known for their manufacturing or online commerce sites that are dabbling in agriculture.

Growing public despair over a never-ending parade of food scandals - plus an eye for a commercial opportunity - has prompted these successful businesses to undertake what some might regard as risky, even reckless, adventures outside their areas of expertise.

The latest company seeking to get some dirt under its nails is LeTV, the online video portal in Beijing. Having already expanded into a conglomerate involved in not only filmmaking but also television manufacturing and wine trading, the company recently leased a 200-hectare farm in Linfen , Shanxi .

There, it will grow organic grapes, vegetables, flowers and seedlings using what it calls ecological farming methods. It also bought a cluster of villas to develop an "ecological manor".

Li Rui , the CEO of Beijing Wangjiu Electronic Commerce - the LeTV subsidiary that is managing the project - said the company saw opportunities amid concerns about food quality and safety, and the lack of trustworthy domestic brands.

"The situation now is that everyone - rich or poor- has no idea whether cooking oil or flour or other foodstuffs are safe," he said. "Safe, better-quality food is what all Chinese hope for."

For some big players, such moves have seen quick results. Lenovo, the world's largest maker of personal computers, set up its horticultural subsidiary, Joyvio, in 2012. It has already become China's largest producer and distributor of blueberries and kiwi fruit.

Organic oranges grown by former "Tobacco King" Chu Shijian , the owner of Yunnan Hongta, have been selling well online during the past year. Chu, now 85, was jailed for life in 1998 for corruption but was given medical parole in 2002 - the year he planted the orchard that made him a millionaire anew.

Wangjiu's Li, meanwhile, was not expecting an early payback: "Agricultural investments have long return periods and bear high risks". To spread the risk, he diversified the operations.

"We're doing it in a different way - combining other types of business to make it sustainable with high-added value," he said.

Wei Guofeng , a Shanghai-based researcher and "new agriculture" advocate, said modern farming was quite challenging for computer makers or online retailers as biotechnology was totally new to them.

"The biggest challenge is logistics: how to get your product, something with neither a concept nor brand, to the consumers' table, in your own way," he said. "It's not just about growing the produce, but storage, sales, and how to build the brand."

Meanwhile, NetEase released a statement last month explaining why its farm venture has yet to bring home the bacon. "We overestimated ourselves, and … underestimated the problems in pig-raising", it said.

"Agriculture is a brand new field for NetEase, and managing a complicated supply chain is not what an internet company is good at," it said, adding that its difficulties ranged from selecting the farm's location, the best livestock, managing the waste and smell, and dealing with a record heat wave in Zhejiang , where the farm was located.

The farm had only 400 pigs so far, of which only about 100 were expected to be ready for slaughter in the near future.

Xu Feng, the company's public relations manager, described the venture as a "public welfare project that NetEase is serious about". "[We] hope our creative approach will bring some new ideas to the whole industry," Xu said.

Professor Du Xiangge , who leads China Agricultural University's Research Centre of Organic Agricultural Technology, said that despite the companies' varying results, the trend of innovative investment in agriculture was a good sign, both for environmental protection and food safety.

"These companies have foundations, technology and other resources," he said. "Such 'positive energy' should be encouraged."