The Internet sector has developed at a very high speed in China. Farmers have been selling online for the past ten years or so, but they have not yet taken full advantage of this boom. Significant changes are on the horizon. Indeed, most of the major Internet players in China are beginning to implement strategies in a sector that is considerable in size. Zhigu’s research bureau on its Weibo account takes stock. Let’s see what they have to say!
A gigantic market
The market for agricultural products and food attracts them. It accounts for 1 trillion yuan ($142 billion) a year, 10% more than that of household appliances, and five times that of clothing. The labour force will comprise 313 million people in 2019.
Online sales and its benefits
The Internet makes it possible to make the immense diversity of products available to all Chinese consumers. For example, Chinese grapes have 700 varieties, sweet potato varieties abound, such as Six Turtle Honey Potato and Linyi Purple Potato. When I lived in Shanghai, I used to buy a lot of passion fruit and pomegranates on the Internet in Yunnan or Guizhou.
The final consumer and the producer are winners. For example, in Mengzi, Yunnan, the purchase price from the producer for a 30-kilo bag of onions is 30 yuan, or 0.5 yuan per pound. Beijing supermarkets sell the pound at more than 5 yuan per pound. By eliminating the middlemen, the farmer can sell the pound at 1.5-2 yuan and make more profit.
The BATs (Baidu, Ali Baba, Tencent) are at the rendezvous.
The kings of the Internet have understood that this market, which is still under-exploited, offers immense potential. Tencent is working on artificial intelligence projects in agriculture. Meituan is setting up an agricultural products purchasing service. Baidu is working on technology for remote pest detection, robotics and satellite control. Ali Baba and Jingdong devote more resources to be the best distributors. Huawei wants to take advantage of 5G to expand in this sector, which is once again very competitive.
These groups, in particular, have transformed the country and consumer behaviour in recent years. The agricultural sector should benefit from the constant innovations in the future.
10 July 2020