A Blog by Jonathan Low


Feb 14, 2014

Why Are Chinese Internet Companies Raising Pigs and Growing Organic Produce?

The wealthier societies get, the more they want lots of things that make their lives more enjoyable. Nicer homes, more entertainment, cars, faster technology - and richer food.

These items are not always good for the people who can now afford them - or for the societies in which they live - but that doesnt seem to stop anyone.

The application of technology to agriculture has become a dominant force: from plant culture, to GPS-directed planting, watering and fertilizing, to stock breeding, science now drives both the direction and the economic sustainability, if not always the environmental factors.

All of which is nice, but that's not really what we're talking about here. Chinese internet firms are among the wealthiest enterprises in that country. They are significant employers and cultural icons. Their transformative potential is both a beacon for a nation looking to improve its lot and a source of concern for those among its leaders worried about maintaining control.

There is a tradition in China and other countries of large institutions providing their employees and their families with housing, sustenance, health care and many other basic necessities that the society itself may not be able to offer either in abundance or at the preferred level of quality and safety. Beyond that paternalistic instinct, the tech industry has always viewed a significant aspect of its mission - whether monetized or not - as changing lives.

Given the chronic problems food safety in China, as well as broader societal concerns about health, it is not surprising that Chinese internet companies, with their capital, scope and sense of purpose, are investing in changing what people eat as well as how they do so. American techies are experimenting with the application of technology to food production, but the Chinese approach is, in many respects, more ambitious - and potentially far more transformative. JL

Sydney Brownstone reports in Fast Company:

"You cannot ignore that [tech firms] have become a gigantic, powerful force. It could be political, could be economic, could be social, could be cultural. So it's not just food safety,"
Stories about Chinese farm animals don't tend to end very well. Just yesterday, the Shanghai Daily stumbled across a slaughterhouse that had been injecting pond water into its sheep meat. And who could forget that time when 16,000 diseased pigs bubbled up in Shanghai's Huangpu river?
Yet, the middle class clamors for bacon. And one Chinese industry in particular has risen to the challenge of trying to provide contamination-free food, according to a report from the South China Morning Post. Where food scare scandals have rocked the new bourgeois consciousness, China's tech firms are getting into the business of growing purportedly safe meat and organic veggies.

In 2011, one of China's largest online providers, NetEase, launched a pig farm experiment that would allow the public to track the progress of their next barbecue, pig-by-pig, online. But while NetEase still doesn't have any slaughter-ready animals to show for its investment, other tech firms are honing in on agricultural investments. The latest is LeTV, Beijing's video viewing portal, which has announced its plan to grow organic grapes, vegetables, flowers, and seedlings on 200 hectares of farmland, complete with an "ecological manor."
"The situation now is that everyone--rich or poor--has no idea whether cooking oil or flour or other foodstuffs are safe," Li Rui, CEO of Beijing Wangjiu Electronic Commerce, the LeTV subsidiary in charge of the project, told the Post. "Safe, better-quality food is what all Chinese hope for."
Other Chinese tech companies have launched successful agricultural ventures, too. Lenovo, the world's largest personal computer manufacturer, for example, has also become China's largest blueberry and kiwi distributor through its agricultural subsidiary, Joyvio.
But what makes Chinese tech firms qualified to start growing food for a nation? Isn't there a lot that could also go wrong, considering computer processing chips work very differently than, say, pigs?
"There's a big demand for this, and people will pay more for meat that's safe," Jennifer Turner, director of the China Environment Forum at the Woodrow Wilson International Center for
PeaceScholars, tells Co.Exist. Turner explains that it's actually fairly intuitive for a tech company to go after both pork and food safety. China already maintains a strategic reserve of frozen pork for when prices inflate and become unstable, and the government has made modernization of food technology a major imperative in its 12th Five-Year Plan.
"The government is investing in modern agriculture, professionalizing it, and even in food production--the Chinese pig farmer with half a dozen pigs is becoming less common. Factory farms are becoming more common," Turner says. "The food safety supervision in China is really prone to corruption, so projects with these types of [tech] companies is really appealing," she added.
Cheng Li, director of research at the Brookings Institute's John L. Thornton China Center, explains that with the growth of the Chinese tech industry, too, it's only natural that companies would want to diversify their interests. In November, Alibaba, China's largest online shopping company, broke records when it sold $5 billion worth of goods in one day, the country's Single's Day holiday.

"Basically, these online companies are not only involved with Internet, but also become financial institutions as well, because of the tremendous amount of money they allocate," Li says.
Li also points out that tech firms already have tremendous reach and built-in advertising across China's massive population. Some 600 million people in China, roughly a third of the population, are subscribed to texting app WeChat. "You cannot ignore that [tech firms] have become a gigantic, powerful force. It could be political, could be economic, could be social, could be cultural. So it's not just food safety," Li says.
It would appear that what's going on in China also holds some kind of parallel to U.S. techies' burgeoning interest in agriculture. Silicon Valley investors are devoting themselves to futuristic food in an unprecedented way--there's Bill Gates, who recently invested in synthetic eggs, and the co-founders of Twitter, who back synthetic meat, and Google co-founder Sergey Brin, who funded the world's first lab-grown burger.
But that doesn't mean that the tech world won't run into food and drug regulation issues down the road. "It's unclear how China's regulations will deal with this phenomenon. You need a license to operate these businesses, but there are some gray areas, and [tech firms] are taking advantage of this," Li notes. "You cannot imagine this 10 years ago."


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