Agricultural product e-commerce urgently needs production and circulation standards as support

On September 4-5, the “2014 International Symposium on Brand Agriculture Development” was held in Beijing; at the same time, the “2014 China E-commerce Innovation and Development Summit” was held in Guiyang. These two seemingly unrelated conferences became connected because of “agricultural product e-commerce,” a topic that has been very hot recently. The “2014 International Symposium on Brand Agriculture Development,” approved and convened by the Ministry of Agriculture and co-hosted by the China Agricultural Products Development and Service Association, among others, set up special topics including “Regional Strategies and the Path of New-Type Agricultural Modernization with Chinese Characteristics,” “Jilin Rice High-End Forum,” “Giving Play to the Leading and Driving Role of Regional Characteristic Brands,” “Tapping Brand Culture to Enhance Product Soft Power,” and “Agricultural Product E-commerce and Trust Mechanisms.” Among them, the special seminar on “Agricultural Product E-commerce and Trust Mechanisms,” co-hosted by The Beijing News, had the highest participation and attention.

Agricultural product e-commerce is the first stage of agriculture-related e-commerce

Data from the Ministry of Commerce show that last year, the total transaction value of China's agricultural products was around 4 trillion yuan, 80% of which was realized through wholesale markets, while the volume of online shopping was still negligible. Agricultural product e-commerce is therefore regarded as a large cake with a potential market worth trillions, and it is also one of the few virgin lands in China's e-commerce sector.

Zhang Jianshe, vice president of JD Group and director of its Policy Research Office, introduced that agriculture-related e-commerce currently falls into three stages. The first is agricultural product e-commerce, the second stage is agricultural e-commerce, and the third stage is rural e-commerce, which means transforming the environment for rural e-commerce development in all aspects including informatization, e-commerce, logistics and finance.

Rural e-commerce not only sends agricultural products from the fields to the dining table, but also allows ordinary people in the fields to enjoy the convenience of e-commerce. It involves information technology, intelligent logistics, e-commerce platforms, and also the currently quite hot financial services.

Zhang Jianshe said that rural e-commerce is ultimately devoted to changing the entire mechanism of urban-rural factors and exchange, and may ultimately form a trend of equalization of public resources between urban and rural areas. “Of course, this is the vision for the future. At present, all three stages are being tried.”

Cold chain remains the main problem faced by fresh food e-commerce

Hong Tao, director of the Institute of Business Economics at Beijing Technology and Business University and dean of the China Food Safety E-commerce Research Institute, believes that the main problem faced by fresh food e-commerce is the cold chain. The costs of logistics, distribution, express delivery and home delivery are relatively high, generally 30%-40%. For ordinary fruits and vegetables, the fresh product distribution cost can even exceed 50%, or even 100%. If the cold chain quality is not high, all previous efforts may be wasted.

Improve the standardized production and modernized operations of fresh agricultural products, and connect them with modern circulation, avoid the disconnect between the field and the market, achieve seamless connection under highly informatized conditions, reduce circulation costs through large-scale operations, and improve circulation efficiency. Otherwise, fresh cold-chain product distribution cannot be realized. Only when scale and modernization are achieved can costs possibly be reduced, thereby allowing residents to purchase in large quantities, which in turn will lower costs and also increase farmers' income.

The main production methods in countries such as Europe and the United States are farm-based production, industrialized production, modernized production and intelligent production. Cold-chain logistics is easy to connect, so costs are relatively low. In China, however, more than 200 million farmer households produce, production is decentralized, production is non-standardized, and there is a lack of accurate market guidance. Today there is more production, tomorrow there is less; sometimes money is made, sometimes losses are incurred. Modernization cannot be realized in the short term, so the difficulty is very great.

Both the production and circulation of agricultural products lack standards

Sui Bin, director of the National Agricultural Exhibition Center of the Ministry of Agriculture, believes that current agricultural product e-commerce faces four major challenges: lagging legal construction, low standardization levels, poor distribution services, and great difficulty in coordinating among government departments. The standardization level of the agricultural product e-commerce industry is relatively low, manifested in two aspects: first, the lack of quality standards for agricultural products, which causes situations in the production process where there is no standard to follow or standards are not followed, leading to a lack of public credibility in agricultural product quality; second, circulation-link standards are not sound, reflected in the lack of sorting standards, packaging standards, distribution standards, acceptance standards and management standards. Sui Bin believes that competition in agricultural product e-commerce is already very fierce and will become even more intense next. If enterprises want to remain invincible amid competition among many contenders and achieve greater development, adopting a branding strategy is crucial.

First, the scope of business operated by merchants should be determined as high-quality branded agricultural products. This is the foundation for building brand points. Second, service content and methods should be standardized, convenient and efficient, gradually improving customer awareness and satisfaction. Third, learn from and draw on the operational management experience of advanced e-commerce companies at home and abroad, continuously improve their own business development and management capabilities, and make their own brands bigger and stronger.

■ E-commerce voices

Supply chain management solves agricultural product circulation

Although the future of agricultural product e-commerce looks beautiful, recently there have been many reports that “no agricultural product e-commerce business is profitable,” and arguments that “agricultural product e-commerce does not make money” and “agricultural product e-commerce is difficult to do” are also incessant. Zhang Jianshe, vice president of JD Group and director of its Policy Research Office, said that at present, limited by logistics costs, product standardization and various industrial form systems still need to be improved, and agricultural product e-commerce is indeed relatively difficult. But JD will still unswervingly carry out agricultural product e-commerce. Once it can use efficient and low-cost supply chain management to solve the problem of agricultural product circulation, it will bring great changes to production and life.

Agricultural product e-commerce is a field requiring long-term investment

Jia Ming, co-founder of Benlai Life Network, introduced that Benlai Life Network is still in the investment period. Its original goal was not to make money within one or two years of starting the business. Agricultural product e-commerce requires long-term investment and is also a field requiring high-intensity investment. If you want to make money within two or three years, it is suggested that you choose another industry. If you do not build a platform and only sell a single product, profitability is actually easy. As long as you find two star products and sell them on Tmall, Taobao or JD to make some quick money, that is easy. If you want to build a platform and set standards, investment is necessary.

■ Data

The latest data from the National Development and Reform Commission show that in recent years, China's e-commerce has developed rapidly. In 2013, the total e-commerce transaction value reached 10.28 trillion yuan, a year-on-year increase of more than 20%. Online retail transaction value exceeded 1.85 trillion yuan, and China has become the world's largest online retail market. E-commerce has changed traditional forms of production organization and management models. Relevant statistics show that in 2013, online sales of agricultural products exceeded 50 billion yuan.

Quotes

After more than three years of research, the current situation of agriculture-related e-commerce is not very optimistic. Twenty-eight types of problems have been found, mainly caused by the fragmentation of China's agricultural production, processing, transportation and sales.

Because of fragmentation, the entire industrial chain from the production of primary agricultural products to the dining table will form many breakpoints, and problems are likely to occur. For example, production is very good, but if a certain link in processing, transportation or storage has a problem, in the eyes of consumers, this product has a 100% major problem. This also leads to mutual distrust among links in the industrial chain, and the market also lacks confidence in purchasing high-quality agricultural products. This is very fatal.

——Zhang Li, vice president of the China Agricultural Products Development and Service Association