Chinese e-commerce companies are struggling in the battle to supply 1.4 billion people with fresh fruits and vegetables, especially in the country’s remote areas, as they try to revolutionize centuries-old agricultural practices to secure future supplies of the thriving online grocery business.
The government of Chinese President Xi Jinping has always made self-sufficiency in food a number one issue, as it seeks to avoid a looming food crisis. The need to modernize 200 million very small farms in China has become more urgent during the outbreak of the Corona epidemic when production and logistics disruptions coincided with the shift from home shoppers to Alibaba Group Holdings Limited and other online retailers in order to purchase their products.
Now, some of the country’s largest private companies have joined the state’s efforts to help farmers increase production, improve food quality, and lower prices. For the e-commerce giants, this is a way to cement a foothold in the online grocery market that is expected to be worth more than $ 120 billion by 2023, without conflicting with Beijing’s recent crackdown on monopolistic practices such as unfair pricing and exclusive selling (forcing producers to sell). Exclusively for a specific company).
In Fujian along the east coast, Alibaba provided chicken farmers with smart bracelets that track the health of their poultry, while rice farmers in arid North China installed smart sensors to get instant visual tracking of irrigation under JD guidance. Com inc.
In the western region, scientists in Yunnan Province are collaborating with Pinduoduo Inc. to use artificial intelligence to automate strawberry cultivation.
Agriculture is a critical field supported by the Chinese government, said Liu Yu, an analyst at market research firm Equil Ocean. With rural youth flocking to cities in search of better jobs and food safety being increasingly threatened by outdated pesticides and farming methods, the country’s technology champions are champions. Keen to extend a helping hand to Beijing.
The driving force behind e-commerce platforms pushing smart farming is the boom in online grocery stores, which is expected to double from last year to 820 billion yuan ($ 127 billion) by 2023, according to research firm iResearch.
This category surpassed Consumer Electronics as the largest shareholder in J.D. Com in the first half of last year, while Alibaba is pushing further for business by acquiring a larger stake in Hypermart SunArt Retail Group Ltd.
Meanwhile, a group of smaller competitors, starting with Shengcheng Yuxian Corporation and Mesfresh Corporation, both backed by Tencent Holdings Ltd. extending to Dangdong Maesai Corporation are in the process of raising billions of dollars to acquire larger shares in the fresh food distribution market online.
That prompted state media to warn last December of overcrowding in the sector, saying instead that the internet giants with massive data and advanced algorithmic software should do more in terms of technological innovation.
“The COVID-19 outbreak has helped speed up the conversion of such purchases into online channels,” said Vi-Cern Ling, an analyst at Bloomberg Intelligence. It’s a huge untapped market, and companies must choose between participating or being left behind.
As Chinese leaders crackdown on monopolies in areas from fintech to e-commerce, smart agriculture is one of the areas in which the tech giants’ business interests align with the national agenda.
The State Council of China called, in guidelines issued yesterday (Sunday), to increase private investment to develop modern agricultural technologies and enable villages to use advanced technologies. Education and agricultural sciences have been listed as one of the most important technology priorities in Beijing for the next five years, along with artificial intelligence and computing Quantity and computer chips.
JD said its smart agricultural projects are funded by at least 50% government support.
Despite the efforts made, the growing appetite for fresh fruits and vegetables cannot keep pace with most labor-intensive Chinese farms, as they work traditionally, as nearly 98% of the 200 million workers are families or small companies, which face difficulties in order to keep pace with the development of demand.
The state’s restrictions on land ownership and the varied terrain that stretches from the steppes of Inner Mongolia to the tropical shores of Hainan Island in the south make it difficult to implement sector-wide agriculture, as is common in the United States and Europe.
National Bureau of Statistics data also shows that about a third of farmworkers are 55 years of age or older and that the birth rate is at its lowest, leading to higher labor costs.