Seed Industry E-commerce Marketing in China is Filled with Hopes as well as Challenges

Date: 2015-08-09

“There has recently been heated discussion on rice raises in China’s seed industry. The cause of this discussion is the report that was published by Southern Weekly on 9 April, 2015, which revealed that a rice variety, Liangyou0293 which is bred by Longping High-Tech, was affected by rice blast, which caused yield reductions and complete harvest losses over large areas in Anhui Province in Oct. 2014.
Rice has several properties which are of importance, namely high yield, high resistibility, mechanized planting and high quality. As for varieties, high yield is the most important, followed by high resistibility, high quality and mechanized planting. However, it doesn’t means that high yield is the only target that seed enterprises should chase.
Chinese seed industry is facing a new circumstance during the whole process from production to distribution then to consumption which is coming from the new marketing mode of e-commerce. There are both pros and cons when e-commerce is applied in the seed industry. That is to say, seed industry e-commerce marketing in China is filled with hopes as well as challenges. 
On 25 March, 2015, Huazhi Rice and LGC reached a strategic cooperation agreement in London, the UK, for the application of LGC’s innovative KASP? technology and SNPLine? genotyping platform in developing a world-leading rice molecular breeding platform.
On 6 March, 2015, Beijing Dabeinong planned to issue 1 56 million shares to its actual controller, eight organizations and one natural person at a price of USD6.1 3 (RMB1 4.07) per share. The total value of the directional shares will reach USD358.11 million (RMB2.20 billion), USD1 54.64 million (RMB950 million) of which will be allocated to the construction project of agricultural network and financial ecosphere. This will enable Beijing Dabeinong to transfer from a provider of feed, veterinary drugs, vaccines, seeds and agrochemical products into a modern agricultural comprehensive service provider through high-tech and the internet.
On 30 March, 2015, Hefei Fengle released its 2014 annual report, showing that its net profit hit USD9.93 million (RMB61 .02 million) in 2014, increasing by 8.01 % year on year.
On 1 0 April, 2015, Winall Hi-tech released its 2014 annual report. According to the report, in 2014, Winall Hi-tech achieved a revenue of USD76.35 million (RMB469.02 million) with a YoY increase of 0.63% and a net profit of USD0.85 million (RMB5.23 million) with a YoY decrease of 32.41 %.
The performance of Winall Hi-tech was not satisfactory in 2014. However, three highlights of Winall Hi-tech in 2014 are worth carrying on in 2015, namely, expanding marketing channel, increasing input in the R&D of new products and strengthening mergers and acquisitions.
In China, planting of potato is at different stages in different production areas due to different planting systems, climate and geographical conditions. It is predicted that in 2015, China’s planting area of potato may decline for the potato price dropped significantly in 2014.
Large-scale farming has changed the marketing and purchasing of seeds in China. Seed enterprises and distributors are doing their utmost to look for service channels and to build stable supply-demand relationship with large farms.

“In recent years, with the revolution of the traditional marketing modes (distribution level by level and sales in retail stores), Chinese seed enterprises are further enhancing innovation on marketing modes. 
There are four new representative marketing modes in Chinese seed industry: 
First of all, farmers book seeds after visit the seedling samples. Many seed enterprises grow their seeds elaborately and then organize farmers for spot visit. They sign advance sale agreements with farmers. 
Secondly, seed enterprises sell seeds under the precondition of booking the agricultural produces. That is to say, seed enterprises with high-quality varieties sell their seeds directly towards larger farms and they purchase agricultural produces from large farms to ensure sales of seeds. 
Thirdly, seed enterprises enhance promotion through visible media. Some seed enterprises cooperate with media institutions such as TV stations and make advertisements for their varieties and services. 
Fourth, seed enterprises combine with e-commerce platform and real stores. Seed enterprises take full advantages of the internet and do e-commerce. Meanwhile, they change the functions of their real stores from sales to experience and service and they also provide whole-process solutions to farms. 
These new marketing modes are popular among farmers since the after-sales service is enhanced, the distribution links are reduced and farmers can gain more profits. At present, the new marketing modes are harmonizing with the traditional ones. Maybe someday, after times of challenges, the new modes will take the places of the traditional ones. 
The USD/RMB exchange rate in this report is USD1.00=RMB6.1434 on 1 April, 2015, sourced from the People’s Bank of China. All the prices mentioned in this report will include the VAT unless otherwise specified.

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