When SARS hit China the digital developments that have already been there, really took off, Tsui explained earlier in the panel conversation with Mary Shelman and Aidan Connolly. Plastic money is as outdated in China as cash. The Chinese pay with WeChat or AliPay. “Even a beggar in the metro, I pay with WeChat by scanning his code”, Tsui said. “Thanks to WeChat or Alipay it is easy for everyone and every business to pay digitally, and sell or order online.”

The last few years e-commerce has grown exponentially in China. The extreme volume of customers and e-transactions, together with the large group of cheap labor from the rural areas, makes e-commerce in China profitable.

“People expect to receive their package rather soon. From outside the city, within 2 days. From the same city, people expect it the same day”, Tsui explains what e-commerce means for customers. “Before Covid-19 it was difficult to sell fresh produce online profitably. People were used to buy products like clothing and electronics online. Fresh food e-distribution had a small market share, although it was already growing rapidly. Customers were used to go to the wet market, where you can feel the produce and see if it is fresh. Since two months, consumer behavior has changed.” The number of e-transactions in fresh went up by 400% in the past 2 months. Tsui expects that this shift is here to stay post Covid. From order to delivery in cities can take as little as half an hour, less than preparing and cooking a meal or bite yourself or going out for it. For the affluent in cities, fresh food deliveries are an affordable luxury making life easy as well as safer.

Due to the rapidly growing demand for trusted fresh foods, the nation needs to produce trusted foods
Agricultural revolution
As a consequence, a revolution is taking place in agriculture in China. Due to the rapidly growing demand for trusted fresh foods, the nation needs to produce trusted foods. That's why companies that sell and deliver food tend to become forward thinking farmers assuring food integrity.

Whereas the last mile in China isn’t a problem, the first 10.000 miles are. Tsui: “The investments in the last mile, e.g. e-payment, has been tremendous over the past five years. The limitation to evolve form here is on the production side, farming.”

Tsui defines a couple of reasons. Firstly, due to China’s family based land policy, farming plots are usually very small, making it difficult to organise and invest for large scale production. Secondly, knowledge and knowhow: “in the past 20 years the GDP growth has been driven by industrial growth. Young people would leave rural areas and try to get a job in and around cities. Overall, farmers are not well respected, since it is not a money making business.” To solve this problem and make farming a respectable job, Tsui believes that the agriculture should evolve into a more high tech, more attractive business, and should offer good prospects.

Peaches on TikTok
If you can launch a rocket, why can’t you improve agriculture? Tsui: "Food is a long chain. Lots of middlemen prevent farmers to connect with the people who eat what originated from their land and stables. They have no idea what urban consumers want. That prevents them from creating value for their final customers. However, digitization assuring the identity and life cycle of a product or set of ingredients is extremely valuable for digitalized offerings Tsui thinks there lies a huge task for the government to create the infrastructure - like 5G in rural areas - to make this happening. “Big companies will follow where the government points.”

There appears to be a no man's land between the low end and the premium market
Digitalization can help shortening the food chain. “More and more farmers broadcast themselves on channels like TikTok to promote their products directly to consumers. Live streaming is now the biggest development in e-commerce. This holds especially for niche products with something unique to it.”

“A producer can announce via TikTok or WeChat his live stream. You can see the owner for instance together with the officials acting as ambassadors of the product. It’s like a traditional market, but it’s live. It has a component of authenticity, which provides trust.”

Food distrust is widely spread in China. “Chinese people are willing to pay for trust. It is a very big value.” According to Tsui the market is polarized. She identifies a low end “with a lot of production, large volumes, and the quality is not guaranteed” on the one hand. On the other hand, there's a premium market defined by assured green or organic food, or endorsed by the store's or the online channel's reputation. Tsui says that although people are willing spend 5 to 10 times more for a premium product, the do not really know what the labeling really boils down to. “At least it gives them a little more reason to trust it." That's one big big commercial opportunity for digitalization.

There appears to be a no man's land between the low end and the premium market. According to Tsui, that's where the opportunities for entrepreneurs are: “give consumers what they care about, good quality, a trusted product, but not with all the high costs associated with it.” Chinese agriculture needs to follow that huge market opportunity.

Connecting directly through live stream and social media
Two examples that represent the trend in live-streaming are very popular Key Opinion Leaders (KOLs) and 'authentic' farmers/local government officials. They both build trust from their followers.

A real farmer in remote area in China recording his story. He uses social media channels to promote his products from his village directly to urban consumers.

“Vaya’ (left) who is the number one live-streaming star/KOL in China who turns over €300 million in revenue for the products she promotes.