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Mandy Zuo

Technology firms and other companies on the mainland venturing into agriculture might have to wait years to develop their expertise and turn strong profits, according to analysts.
The bottled water producer Nongfu Spring is one of the latest firms to diversify into agriculture, setting up a business to sell oranges online.
It follows in the footsteps of companies such as the computer maker Lenovo and the internet firm NetEase who have set up farming subsidiaries.
Others who have stepped into the market include the property developers Evergrande and Wanda, and IT firms Qihoo 360 and Alibaba.
Analysts have suggested that companies are tempted to venture into agriculture because of public unease about the quality of much of the food made on the mainland after a series of safety scandals.
Newcomers felt they can offer a fresh approach and give consumers greater quality, analysts said.
The food scandals included the contaminated milk controversy in 2008 when at least six children died after drinking baby formula containing the industrial chemical melamine.
It had been added to watered-down milk to distort tests into showing the produce was high in protein.
Wang Hang, the vice-president of the mainland's leading agricultural company New Hope Group, said companies from other sectors were often not used to the lower potential profit margins generated when planting crops or rearing livestock.
"Corporate firms focus on investment returns, but the agriculture sector is undoubtedly an industry with a slow capital turnover," he said.
"A feed seller can enjoy a turnover rate of more than 20 times a year, while that for someone who rears chickens may be just five times a year."
But Zhang Hongyu , the head of the Ministry of Agriculture's economic system and management department, said newcomers into the sector were bringing new ideas and greater efficiency into food production.
"Various types of operating entities, represented by commercial capital, are entering agriculture and they are bringing a revolutionary influence to production patterns," Zhang said.
"The entire world produced 1.8 billion mobile phones in 2013, 1.4 billion of which came from China alone, but where is the competitiveness in our agricultural sector?
Joyvio, Lenovo's agricultural arm, has become the mainland's largest producer and distributor of blueberries and kiwi fruit since the business was set up in 2012.
But the firm's vice-president Liu Dan said at a business forum in Tianjin last year that the company was not expecting rapid growth.
"Joyvio entered this sector not in pursuit of quick money, but because we want to build up the brand. We're running a long-distance race," Liu said. "I should say we're still in the investment phase. Half of our efforts are spent on operations and the other half is spent on looking for new opportunities."
Dong Min , the chairwoman of Tootoo.cn, a company that sells fresh produce online, said the mainland needed to grasp innovation and new technology such as selling farm produce on the internet to help develop the agricultural sector.
"I think this will take a long time, but it is something that we must do and something that depends on these famous businessmen from other sectors, she said."


Hi-tech firms sowing seeds of future profits

An orange orchard featured in an advertisement by Nongfu Spring, one of the mainland firms to diversify into the agricultural sector. Photo: SMP

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China

But it may take years for those diversifying into farming to reap rewards


Technology firms and other companies on the mainland venturing into agriculture might have to wait years to develop their expertise and turn strong profits, according to analysts.


Hi-tech firms sowing seeds of future profits

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}But it may take years for those diversifying into farming to reap rewards

But it may take years for those diversifying into farming to reap rewards