Agricultural technology companies: A new highlight of China's economic growth

Today, almost every major sector in China is developing technological applications, from trading and retail to healthcare and industrial applications. However, China's vast yet scattered traditional agriculture sector is one that is still lacking in tech applications.

After 20 years of rapid growth in China's internet industry, Pinduoduo has become a rising titan that is systematically entering the agricultural sector.

China's traditional agricultural sector is scattered and has low profitability, making it difficult for tech companies to change or penetrate the industry. As a result, over the past 40 years, the traditional agricultural sector has only seen support from government policies and practically none from companies for the use and upgrade of technology.

In consideration of farmers' livelihoods, the Chinese government does not allow capital to take over land held by farmers, which has consequently led to another issue - aside from government-planned industrialised agricultural bases, many of China's farmland resources are scattered among farmers.

In Western countries, the traditional agricultural sector is improved by first scaling up agricultural resources through capital; coordinating resource mobilisation; optimising the industrial framework and raising efficiency; and then capturing the market with the improved product system.

Scattered land resources make it difficult for farmers to coordinate and act together, and standardise their process in the production and marketing of agricultural products. A non-standardised production process is also resistant to the systematic introduction of technology.

While the start of China's reform and opening up was marked by the implementation of farm output quotas for each farming household, 40 years later the traditional small farming economy itself has shown the slowest growth.

The only continuous and systematic technological investment in China's traditional small farming economy is the government-led agricultural technology extension stations, which are spread out over various areas. These stations are a sustained effort to bring technology into rural villages, but because they are run by the government and carry no incentives, very few tech experts are willing to join this tough sector that promises low returns.

The sticking point in reforming the traditional agricultural sector is that policies do not allow capital to consolidate and integrate the resources and land necessary for agricultural production.

However, a market integrator such as Pinduoduo can resolve this problem. Market integration means coordinating agricultural producers and making systematic industrial improvements, thus offering another solution in the mobile internet era.

The traditional agricultural market is made up of many dispersed buyers and wholesalers of agricultural products, as well as market operators, spread out over various regions. These sales channels are no less divided than the agricultural producers - not only is it impossible to standardise and coordinate production, they do not even have a standard communication channel among themselves.

Herein lies Pinduoduo's advantage. The platform directly connects to nearly 900 million consumers - even more than Taobao - making it the platform with the most number of active buyers in China.

Pinduoduo can not only coordinate the agricultural market within the same region, it is fully capable of coordinating the market for agricultural products all over China. This allows the sector to minimise the sunk costs of new agricultural technology in the shortest time possible, while maximising the returns on investment in new agricultural technology.

As Pinduoduo distributes business among agricultural producers and other market integrators that are widely spread out across various areas, it can play the role of a resource integrator in upgrading the traditional agricultural sector.

This is precisely why agricultural technology companies will become a new highlight of economic growth. Previously, if an agricultural technology company wanted to develop a certain technology, it was cumbersome to go from place to place to promote it, but now all they need to do is get in touch with one buyer: Pinduoduo.

It is likely that in the near future, agricultural farming technology will be another highlight of China's internet growth.

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