Internet Giants Drive Digitization of Chinese Agriculture Forward

Productivity will determine the future of Chinese agriculture, and technology is one of the most impactful ways to improve productivity. Digital agriculture has become the focus of China's agricultural development, and no Chinese internet giant is absent from this revolution. The internet giants represented by Alibaba, Tencent, Baidu, and JD.com have become an important force in promoting China's agricultural transformation.

Nowadays, the realization of digitization in China’s cities should pose no difficulties. But on farmland, the digital connection between production and consumption is harder than one would imagine. The complex conditions of natural environments and agricultural industry organization make it difficult for technology-based companies to engage the whole agriculture industry chain. Drone enterprises and data-service enterprises are the main agricultural technology players. They help farmers solve difficulties in the planting process, such as pest control, meteorological prediction, soil nutrition analysis, and so on. Other agriculture-related companies focus on sales platforms to solve selling problems and supply chains to solve transportation problems. Both are indeed critical for effective connections within the industry’s chain. However, they cannot fundamentally improve product quality, product value, or prices.

The engagement of technology giants makes all this possible. By virtue of exquisite digital technologies and complete business models, technology giants can systematically solve problems using digital technologies to improve production efficiency, track product safety, drive precision marketing, and build agricultural brands. Tech giants have penetrated the industry from production to consumption, either through direct cooperation with farmers or through cooperation with agricultural enterprises, to realize the smart cultivation, processing, and sale of agricultural products.

Technology and network advantages help IT giants take the initiative in the digital transformation of agriculture, and also make small and medium-sized agricultural technology enterprises dependent on these giants for further development. Because giants have all the capabilities to provide infrastructure and services for businesses based on internet technology, such as big data, cloud computing, digital payment, etc., giants already have the advantage for building an ecosphere in the digital world.

In addition to taking the lead in digital agriculture, tech giants can also achieve deeper, more strategic goals to win future competition.

Promote technology’s market share. Chinese agriculture has many pain points. However, it also has huge potential. If farmers' needs are well understood and technology can be perfectly integrated with a complicated agriculture environment, tech giants will get more than just a slice of the ‘digital agriculture’ pie.

Promote e-commerce business. Although the sale of agricultural products on online platforms can greatly shorten the value chain, the quality problems posed by uncertainty during the whole process risks damaging consumers’ online purchasing experience. By going deep into agricultural production and creating a closed loop from production to sales, tech giants can guide planting decision-making, efficient production, and differentiated services, and boost a sustainable ecommerce business.

Bet on the future digital society. The charm of agriculture to internet companies is that it provides the broadest audience and more opportunities to participate in offline entities’ business, which in turn will facilitate subsequent net-flow upgrades, new retail, and finance. Internet companies can further expand their digital city business with experiences in digital agriculture, such as infrastructure construction, big data application principles, and system management methods. In the long run, digital agriculture and digital cities will eventually connect. Huge amounts of data and accurate analysis in a thoroughly digital society will bring new business and value to these giants.

In our recent paper, the Digital Pathway to Power, we addressed the power of technology to help farmers overcome the growing complexity of on-farm decision-making. Agriculture, the industry with the most pain points in China, now stands at a new starting point. Policy support solves the problems of land and labor, while technology offers a way to improve efficiency. Nowadays, Chinese farmers, mainly small and medium-sized farmers, may have a much higher demand for information technology than large farms in the US. Because it will be a big step for them, even a little work improves efficiency. Chinese farmers are likely to have priority over farmers elsewhere in the world in terms of digital agriculture support, and the impact of this support is very influential. In the future, the ability of small farmers to provide diversified agricultural products can satisfy diversified consumer demand. In addition, the risk of uncertain events is rising, like the restrictions on labor migration during the Covid-19 pandemic. But the food supply cannot be stopped for a moment. Agricultural enterprises should take precautions and realize that the need to accelerate the integration of digital agriculture and traditional business is urgent. Now, policies and technologies are in place, so be ready to embrace new technologies and consolidate the industry’s position through their application.