China’s goal of ‘common prosperity’ – coupled with its recent crackdown on the country’s largest tech companies – has produced an unlikely beneficiary: even more investment in agriculture, writes Mark Tanner from The China Skinny
Having already taken a hammering from Beijing’s antitrust initiatives in the tech industry, tech firms have become a lot quicker in reading the tea leaves and acting upon them.
Beijing’s increasing use of its “common prosperity” catchphrase has seen a rush of China’s tech giants pledging money to social responsibility programmes in recent months. RMB 500 million (£55.9 million) has come from the ByteDance founder Zhang Yiming’s personal wealth, Xiaomi is donating £1.58 billion in shares, Meituan is gifting £1.66 billion in shares, and Tencent has promised two massive pledges totalling £10.8 billion.
Last week, agriculture-focused interactive shopping platform Pinduoduo announced that it will give RMB 10 billion (£1.1 billion) to support China’s farmers and agricultural areas. This is arguably the smartest pledge by a tech company yet, as it ticks many of the boxes on Beijing’s scorecard.
Firstly, it supports rural residents, who have benefitted less from China’s rise than city-dwellers and are an important piece of the “common prosperity” puzzle. It also involves investment in smart technology to bolster China’s standing, which remains key to Beijing’s aspirations, regardless of the crackdown on tech giants. No less important is that it aids Beijing’s aspiration for greater food security, safety and efficiencies, and reduced exposure to natural disasters. The plan also aligns perfectly with Pinduoduo’s position as the world’s largest agri-tech platform, with 12 million farmers in China already using it.
Pinduoduo is likely to be feeling flush with cash, having just announced its second quarter results, which saw sales jump 89% and monthly active users increase 30% from a year ago, contributing to a net profit of £270 million. The company claims that the initiative will “not be driven by profit or commercial goals,” but strive to facilitate the advancement of agritech, promote digital inclusion, and provide agritech talents and workers with greater motivation and a sense of achievement.
The plan also aims to improve downstream market access for farmers to help them build their brands, training younger talent to set up agri-businesses, and revamping midstream logistics infrastructure to reduce waste, lower costs, and speed up the delivery of agricultural food products.
Although RMB 10 billion is just a blip in China’s enormous agricultural market, it is representative of the measured move away from peasantry farming on postage-stamp-size plots and dangerously fragmented supply chains. China is investing large sums to modernise and industrialise its agricultural sector. Last year, while venture capital funding fell by more than half in China, agri-food tech funding increased 66% to £4.3 billion. From monitoring chickens through blockchain and facial recognition, to agricultural drones that increase crop yields, high-rise hotels for pigs, and two-metre-high ‘giant rice’ – large tracts of China’s food production is moving from the primitive to the futuristic, which will have an impact on food producers globally.
Beyond providing another bump for domestic food production, distribution and sales in China, Pinduoduo and the other tech giants’ pledges illustrate that we have reached a new phase of corporate social responsibility in China. There will be more and larger initiatives, and they will need to be supported by more thoughtful campaigns than ever to get noticed.