The agriculture sector in China is undergoing a digital transformation that will bring benefits to both farmers and consumers, according to Pinduoduo Chairman and CEO Chen Lei.
Speaking on April 25 at the 4th Digital China Summit in Fuzhou, Fujian Province, Chen shared his views on the practice of digital agriculture on three levels: sales, supply and production. He said that changes in the agricultural business chain are triggering a profound transformation from a supply-push model to one driven by demand.
“At present, the modernization of agricultural production is not yet high. But with the trend of urbanization, demographic shift and digitalization, many farmers will quit agricultural production in the next decade,” Chen said in his speech. “This trend will put Chinese agriculture on a path to become standardized, scaled, branded and intelligent.”
Pinduoduo will commit itself to transforming agriculture “from ‘'production, supply and sales' to 'sales, supply and production' through digitalization and Internet technology,” he said.
Pinduoduo recorded more than 270 billion yuan ($42 billion) in agriculture-related GMV in 2020, up from 136 billion yuan in 2019. which is the highest in the e-commerce industry. Chen has said agriculture will remain a strategic focus for the company and that Pinduoduo will build the world's largest agricultural and grocery platform.
"In the past six years, Pinduoduo has employed digital technologies to create a virtual national market by connecting scattered agricultural capacity with dispersed demand,” said Chen. This has “turned the once hard-to-sell agricultural products into the new favorites on people's tables, enriching consumers 'vegetable baskets' and boosting farmers’ income."
Even so, Chen pointed out that the supply chain of agricultural products remains a constraint on China's agricultural sales. About 20-30% of fruits and vegetables are lost in distribution in China, compared with 11% in the U.S.
At present, the existing supply chain for general goods can accommodate a limited number of types of fresh fruits and vegetables thanks to the modernization of packaging technology. But the vast majority of non-standard, perishable fresh agricultural products require a new, digitized supply chain system, Chen said.
Pinduoduo is working to reduce food loss by investing in upgrading the state of agriculture logistics in China. Globally, food loss and waste generates about 8% of total greenhouse gas emissions, almost equivalent to emissions from road transport.
Cold-chain logistics is a vital part of maintaining the quality of perishables, especially in the summer months when heat and humidity can lead to higher-than-average spoilage. Pinduoduo applied late last year to patent a proprietary cold-chain logistics network system with the aim of minimizing loss and quality degradation. It is working with partners to expand cold-chain logistics so that consumers can buy a wider range of perishables.
Its Duo Duo Grocery service allows consumers to order and pick up their groceries within 24 hours. By matching local demand with local farm supply, the company shortens the time for the produce to get from farm to fork. It also provides another channel for farmers to sell their produce, reducing the likelihood that unsold crops are left to rot in the fields.
Pinduoduo will also seek to optimize and standardize the nutritional quality of agricultural products through technology to add value for health-conscious consumers, said Chen.