How Can Chinese Livestock Enterprises Act Under the Grand Innovation Landscape?
From September 10 to September 12, the eighth Summer Davos Forum was held in Tianjin, with more than 1,600 guests from 90 countries and regions around the world attending. At this forum, regarded as the most authoritative interpretation of China's annual mid-year economic summary and the next step in policy measures, Premier Li Keqiang of the State Council attended the opening ceremony and delivered a special address, explaining to the outside world the ideas and methods for innovating China's macro-control and the policy measures for advancing structural adjustment.
As a basic industry, China's livestock industry is closely tied to the country's macro policies. The signals released by Premier Li Keqiang at the Davos Forum also pointed out a certain direction for the development of the livestock industry, namely innovation. For China's livestock industry, to complete its self-transformation, it needs to keep pace with the times at all times, break the state of the traditional agriculture and animal husbandry industry working behind closed doors, and pay attention to the development of the overall grand social landscape with an open vision. In Premier Li Keqiang's address, he interpreted the current overall situation around the word “innovation.” Premier Li Keqiang proposed making innovation the “engine” and the “golden key,” encouraging all industries to actively innovate. The Premier proposed that although China's economy now ranks among the world's forefront, many industries are still at the middle and low end of the world. Regarding this problem, we need not shy away from speaking of it. Among the “many industries” mentioned by Premier Li Keqiang, the livestock industry is also included. Facing contradictions directly is the first step to resolving development; self-innovation is the key step to promoting development. For Chinese livestock enterprises, they need both to face contradictions directly and to seize opportunities and meet challenges in the grand landscape of innovation.
Reform Gains Momentum During Economic Downturn
Eliminating Excess Capacity and Cultivating New Growth Points Are Equally Important
In Premier Li Keqiang's speech, he mentioned that in the first half of this year, China's economy grew by 7.4%, and the increase in consumer prices was 2.3%. Overall, downward pressure on the economy increased. However, despite relatively great downward pressure on the economy, China's economy also welcomed many positive changes, not only achieving increased employment and rising residents' incomes, but also completing structural optimization. Streamlining administration and delegating power, plus fiscal, tax and financial measures such as “targeted tax cuts” and “targeted reserve requirement ratio cuts,” strongly supported the development of the service sector, “agriculture, rural areas and farmers,” small and micro enterprises, private enterprises and emerging business forms. For livestock enterprises that are in the small and medium-sized board or preparing to enter the small and medium-sized board, the two major means of “streamlining administration and delegating power” + “targeted measures” are undoubtedly an effective “booster.”
In the part on improving the quality of economic growth, Premier Li Keqiang emphasized that with reform and innovation as the driving force, one hand should reduce excess capacity, especially eliminate excess capacity, while on the other hand new growth points should be cultivated. These two strategies can also solve the main problems currently faced by the livestock industry. This year's turbulent pig cycle caused serious losses for downstream pig farmers, and the crisis triggered by overcapacity plunged the whole industry into anxiety. Unlike the past, this year the government did not intervene deeply, but instead advocated leaving problems that the market should solve to the market itself. Under such circumstances, the pig farming market entered a new period of “self-repair.” Many enterprises with backward capacity withdrew on their own under the regulating effect of the market, and the turbulent market will return to stability after a series of pains. At the same time, for the pig farming industry, this transformation also presents both opportunities and challenges. While emphasizing the elimination of excess capacity, Premier Li Keqiang also emphasized the need to cultivate new growth points, and new growth points are inevitably in innovative and modernized fields.
In his address, Premier Li Keqiang proposed that we have not relied on “strong stimulus” to drive economic development, but on “strong reform” to stimulate market vitality. The Chinese government will continue to adhere to a prudent monetary policy. While stabilizing the aggregate, on the one hand it will carry out structural regulation and targeted regulation, tilting existing stock money and incremental money toward agriculture, small and micro enterprises, emerging industries and high-tech industries; on the other hand, it will advance structural adjustment through structural reform, carry out financial reform while using monetary policy, and strive to control and reduce the leverage ratio of enterprises. Such a monetary policy is undoubtedly a positive signal for developing livestock enterprises, and the policy tilt will bring new opportunities for small and micro livestock enterprises.
Encouraging Innovation During the Period of Structural Adjustment
The “Three Lists” Guarantee a Good and Sustainable Innovation Environment
In his address, Premier Li Keqiang pointed out that if streamlining administration and delegating power is the “opening move,” then institutional development is the “continuous barrage.” As a guarantee, there are three lists. On the one hand, the government should produce a “power list” for what the government should do: “what is not authorized by law cannot be done.” Only in this way can the abuse of public power be prevented, rent-seeking phenomena be reduced, and the government truly fulfill its duty of serving the people and the public. On the other hand, the government gives a “negative list” for what enterprises cannot do: “what is not prohibited by law can all be done.” Only in this way can an open, transparent and stable-in-expectation institutional arrangement be formed, promoting the full burst of enterprise vitality. There is also another aspect, which is to produce a “responsibility list” for how the government should regulate the market: “statutory responsibilities must be performed,” so as to establish and maintain a market environment of honest operation and fair competition, stimulate enterprise motivation, and encourage innovation and creation. With the above three lists as guarantees, a good environment is created for innovation. The innovation referred to by Premier Li Keqiang includes institutional and mechanism innovation, management innovation and model innovation. These three kinds of innovation work together to change the previous development environment lacking in innovation.
At this year's Two Sessions, Minister of Agriculture Han Changfu pointed out that the characteristics of China's livestock industry are small and scattered, a smallholder model of thousands of households, and such characteristics determine the many obstacles China's livestock industry faces on the road to modernization. In terms of breeding alone, for a long time our country's domestic breeding situation has not been optimistic, with more than 90% of enterprises introducing breeding pigs of foreign lines. The reason why more results have not been formed involves many aspects, including institutional and mechanism, management and model factors. The “three lists” proposed by Premier Li Keqiang provide a good environment for independent innovation. For livestock enterprises, especially those with a certain influence in the industry, they should all the more take advantage of this opportunity to increase the intensity of independent innovation, form a good innovation mechanism, and make the primary industry also radiate new vitality.
At the same time, Premier Li Keqiang also pointed out, “Although China's economy already ranks among the world's forefront, many industries are still at the middle and low end of the world. The traditional extensive growth path no longer works, and we must rely more on scientific and technological progress to adjust the structure. This is a strategic, structural and innovative adjustment. We will persist in supporting some and controlling others, maintaining some and pressing down on others, cultivate and strengthen new products and new business forms, and promote the accelerated development of the service sector, high-tech industries and emerging industries.” Such remarks undoubtedly also provide many new ideas for the livestock industry in the midst of development and transformation. With the development of the internet economy, the boundaries between industries have gradually blurred. The livestock industry is not only a production-oriented enterprise in the traditional model; it can also combine with the internet, with tourism, and with every field that can be combined to strike new sparks through cross-pollination. Premier Li Keqiang mentioned in his address that a new situation of “mass innovation” and “innovation by all” should be formed. Under such circumstances, many development opportunities are also provided for small and medium-sized enterprises in the livestock industry. From solving employment to encouraging entrepreneurship, this is a transformation adapted to the development of the times. As many high-tech talents or “new farmers” returning to the land join this traditional industry, this traditional enterprise in the agriculture and animal husbandry industry is bound to set off a new wave of innovation.
Paying Attention to the Environment During the Period of Accelerated Development
Fulfilling Responsibilities, Firming Up Determination, and Declaring War on Pollution with Scientific and Technological Innovation
In Premier Li Keqiang's address, a signal was revealed: “We are studying China's action targets for controlling greenhouse gas emissions around 2030, including the peak of carbon dioxide emissions, the decline in the proportion of carbon emission intensity, and the rise in the proportion of non-fossil energy.” As a global issue, “greenhouse gases” have always attracted worldwide attention. Although the problem urgently needing solution in the livestock industry at present is manure treatment, in the long run, the state's monitoring of environmental pollution caused by the primitive and extensive farming model will inevitably become stricter. Since the beginning of this year, various places have been shutting down pig farms one after another, yet such compulsory measures cannot fundamentally solve the dual problems of environmental pollution and farmers' income generation. As for how to prevent and control pollution, Premier Li Keqiang also gave a clear direction, which is to rely closely on scientific and technological innovation. Governing pollution through innovation is a long-term development direction for livestock enterprises. Sticking to old ways cannot bring development, and following the beaten track can only lead to falling further behind. The development of China's livestock industry needs to go through a process from learning to innovation, first drawing advanced ideas and advanced technology from abroad, while at the same time strengthening independent innovation, so as to drive the development of the whole industry. In the development process of the livestock industry, only by paying more attention to the environment and innovating recyclable models can one gain a foothold in the highly competitive broader environment.
At the end of his address, Premier Li Keqiang proposed, “Great wisdom revitalizes the state, but it is nothing more than gathering the thoughts of the many,” thereby encouraging all industries to carry out reform and innovation and share the fruits of reform and innovation. For livestock enterprises in the grand landscape of innovation, they must first change their concepts and deeply embed the idea of independent innovation into corporate culture; second, they must put innovation into practice. Implementing innovation includes two aspects: one is model innovation, and the other is scientific and technological innovation. In model innovation, it is necessary to break fixed thinking, carry out cross-industry resource integration, and establish one's own sustainable “industrial chain,” forming a distinctive development model while resisting market risks; in scientific and technological innovation, it is necessary to establish a good internal innovation environment within the enterprise and encourage innovation by everyone and innovation by all staff. 2014 was a year of very rapid progress in the large-scale development of China's livestock industry. However, if the “modernization” and “scientific and technological advancement” that closely follow large-scale development are ignored, then “fast” can only plunge the industry into a new crisis.