Why on earth are bosses crossing sectors into farming?
Several decades ago, Chairman Mao said: “The countryside is a vast world where much can be accomplished!” And so, a great many young people set out on the journey of going up to the mountains and down to the villages with their ideals; several decades later, with policy guidance, the continuous development of China's agricultural industrialization, and the need for diversified corporate transformation, some entrepreneurs voluntarily “took up farming”, and words such as cross-sector cooperation, capital infusion and technical support frequently appear in all kinds of announcements and news reports.
In just the past month or so, another big wave of enterprises has rushed to enter agriculture: on August 26, Evergrande made a high-profile announcement of its entry into modern agriculture and animal husbandry; on August 25, LeTV announced that it would advance its ecological agriculture strategy, launching the e-commerce platform “Le Life”, focusing on fresh products and saying it would build its own logistics system; on August 20, Zoomlion spent 2.1 billion yuan to acquire Chery Heavy Industry and enter the agricultural machinery industry; on August 4, Jianghuai Power announced that the company planned to spend 114 million yuan to purchase Shanghai Nongyi Information Technology Co., Ltd., taking its business into the fields of agricultural informatization and IoT applications; on August 1, Tianze Information joined hands with Tuojia Fengsheng to cooperate on precision agriculture products and services; on July 30, the well-known crowdfunding platform Zhongchou.com entered the field of agricultural crowdfunding……
On August 28, Deloitte China pointed out in its newly released report on China's agricultural development trends that PE/VC merger and acquisition investment in China's agricultural sector reached a peak in recent years in 2010. Since then, the agricultural industry has been rapidly magnified and segmented, the directions in which enterprises enter have become increasingly precise, and the “blue ocean” of the agricultural industry has also been turning ever more “red”.
There is a creed in the Internet age: “As long as you stand in the path of the wind, even a pig can fly up into the sky.” Wherever the wind blows, that is where the pig flies. For enterprises entering agriculture, the policy “wind” is the reason the “pig” chooses to stand in its path and the key to flying up into the sky.
From 2004 to now, the central government has issued No. 1 central documents focusing on agriculture, rural areas and farmers for 11 consecutive years, which seems to have sounded a powerful assembly call to entrepreneurs. In particular, the “No. 1 documents” of 2008, 2012 and 2013 focused respectively on agricultural infrastructure, agricultural science and technology innovation, and modern agriculture.
A person in charge at the Ministry of Industry and Information Technology told reporters that from an industry perspective, for cross-sector enterprises and capital, the policy dividends are mainly reflected in two aspects: first, cross-sector entry into agriculture can enable enterprises to pursue diversified development, and for manufacturing enterprises it can effectively carry out development across the entire industrial chain, finding an entry point in the upgrading of the whole value chain; second, with the help of policy, at a time when industrial land is increasingly scarce, enterprises or capital can effectively occupy land resources and related resources.
However, is such cross-sector entry into agriculture truly beneficial to farmers and to agricultural development? An analyst at the Ministry of Agriculture said this remains open to debate. Enterprises and capital entering agriculture across sectors can bring funds, technology and advanced management concepts; however, entrepreneurs and capital are profit-driven, and whether cross-sector entry into agriculture will compete with farmers for profits, whether it will affect the existing agricultural structure, and whether it is truly beneficial to agricultural development are questions that still await further study.
Wang Ruibo, a researcher at the Chinese Academy of Agricultural Sciences, once said that there are mainly three factors constraining investment in agriculture: first, agricultural enterprises are mostly located in remote areas, their appeal to talent is not high, and the quality of practitioners still needs to be improved; second, agriculture is an asset-heavy industry, and whether it is crop farming or livestock farming, the demand for capital, land and personnel is very large; third, agricultural enterprises often have weak brand awareness, and products without brands can ultimately only be dragged to death by costs.
Is entering agriculture really timely? For such a highly cyclical industry, cross-sector entry into agriculture requires the courage and perseverance to cultivate deeply, and the pursuit of short-term returns is clearly difficult to achieve. Campaign-style, trend-following cross-sector entry into agriculture is bound to harm agricultural development and the enterprises themselves; on the contrary, this “going up to the mountains and down to the villages” is more like the best moment for entrepreneurs to express rationality and demonstrate maturity.