China is one of the world’s oldest agricultural societies. At the same time it has one of the fastest growing e-commerce sectors in the world, with highly adapted mobile payment systems and the most rapid 4G network expansion of any country.
It’s no surprise that Chinese agriculture and e-commerce are coming together in a big way. China’s Ministry of Agriculture estimates that online transactions for farm products were valued at over 100 billion RMB ($16.1 billion) last year. There’s still plenty of room for growth however. E-commerce accounts for only 3% of the total agriculture trades in the country, which is perhaps why is becoming a hotly contested battle field for internet companies.
The Internet Plus strategic policy recently introduced by China’s government aims to integrate traditional sectors with online tools. Agriculture was singled out in the plan. Between government support, growing urban demand for agricultural products and an increasing tech-savvy rural residents representing 46% of the total population, every sign indicates it is a good timing for e-commerce services to go deeper in to rural market.
Aside from selling agricultural products via online retailing channels, Chinese internet giants have started to sell agricultural production tools online, moving up one link in the industrial chain. Research show that the market for agricultural production resources including seeds, fertilizers, pesticides and machinery, is worth more than 2 trillion RMB ($312 billion USD). However, the lack of standard practices and multiple middle men has created an asymmetry of information between factories and farmers.
It’s a problem that China’s biggest retailers are keen to tackle. Here are some of the companies working to reconcile China’s agricultural past with a its digitally-driven future.
JD.com’s Dedicated Farm Products Mall
On August 11 of this year, JD rolled out a dedicated page for farming-related products and services. In addition to delivering seeds or fertilizers to the customers, JD also opened its installment pay, credit and insurance services to users.
In order to better control product quality, JD purchases the seeds, and holds inventory in its own or merchant partners’ warehouses, and then have them delivered with its own logistics system. While the sales of fertilizers and pesticides is mainly run by third-party merchants at present, it is expected to be included into JD’s core business by the end of this year in a bid to guarantee the quality.
The service benefits from JD’s strong delivery system. Local media reported that the company’s existing logistic network has covered over 70% of the country, and is available in 50,000 villages. The e-commerce company plans to open 500 service centers in the country by the end of this year, employing up to 100,000 promotions and marketing staff.
Alibaba’s Platform And Data-Driven Planting Advice
As part of its rural expansion, Alibaba’s Taobao marketplace launched a special agricultural channel, through which farmers can access a one-stop service for buying seeds, farming tools as well as farming guides. The company also promised to give data-driven planting advice to users.
Legend Holdings & Lenovo’s 200 Service Centres In 10 Provinces
Legend Holdings, the parent company of Lenovo, has invested 8-digit USD funding in Yunnongchang, or Cloud Farm, an e-commerce site primarily engaged in the sales of farming products and tools. The site set up service centers in more than 200 county-level cities, covering more than 10 provinces like Shandong, Jiangsu and Henan.
Lenovo has been involved in the agricultural industry since 2010, and holds stakes in a series of agricultural related portfolio companies include liquor company Fenglian Holdings, investor and operator of modern agriculture and food companies Joyvio Group, and eLoancn, a P2P online lending platform focused on agriculture and rural consumers.
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