Tech firms’ actions in China have long been a bellwether for trends in the market. Their vast data mines have enabled them to adapt to changes, however their latest undertakings have been less about distilling consumer data and more about interpreting messages from Beijing.
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. $77m (¥500m) has come from the ByteDance founder’s personal wealth, Xiaomi is donating $2.2bn in shares, Meituan is gifting $2.3bn in shares, and Tencent has promised two massive pledges totalling $15bn.
Last week, Pinduoduo (PDD) announced that it is giving ¥10 billion ($1.5 billion) to support the country’s farmers and agricultural areas. This is arguably the smartest pledge 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 PDD’s claim as the world’s largest agri-tech platform, with 12 million farmers in China already using its platform.
PDD are likely to be feeling flush with cash, having just announced their June quarter results which saw sales jump 89% and monthly active users increase 30% from a year ago, contributing to a net profit of $374 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 $1.5 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% up to $6 billion. From monitoring chickens through blockchain and facial recognition to agricultural drones that increase crop yields to highrise hotels for pigs to 2-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 China’s domestic food production, distribution and sales, PDD’s and the other tech giant’s pledge, illustrate that we have reached a new phase of corporate social responsibility in China. There will be more initiatives, larger initiatives, and they will need to be supported by more thoughtful campaigns than ever to be noticed.
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