Chinese meat giant enters the digital space
New Hope Group, a company with interests in feed, pigs and poultry, has signed a “strategic cooperation” agreement with AliCloud, an ambitious subsidiary of ecommerce giant Alibaba which will see data from New Hope’s various operations mined for more targeted sales of meat and other agri products to consumers in various regions of China.
The deal is significant given New Hope is China’s leading privately owned agribusiness firm with over 80,000 employees, an annual kill of nine million pigs, and hundreds of subsidiaries across the value chain.
According to the agreement Alicloud will store and analyse data from various New Hope operations using high-performance computers to spot patterns and trends that the company can then exploit for commercial gain. Alicloud is a subsidiary of Alibaba, which dominates e-commerce through its market-leading sites Tmall, Taobao and Tmall International as well as the business to business (B2B) focused Alibaba site.
The AliCloud deal will improve “synergy” and “efficiency” in the New Hope group while also “allowing us to change our business models,” noted the group boss Li Jianxiong in a statement announcing the deal. Li pointed to the group’s massive footprint of offices, sales yards and distribution networks across China, suggesting that related data from these operations will prove valuable in determining spending power and preferences among consumers across the regions.
While it had long focused on feed production New Hope has been keen in recent years to enter more high-margin activities like packaged meat sales and the firm has pledged significant investments in overseas beef and lamb operations for sale back into China.
Having studied similar services provided by Amazon and Microsoft, Alibaba has in recent years invested massively in data: its location-based technology, cloud computing and mapping services generate revenue but also give the company an incredible edge over e-commerce competition in terms of the ability to target potential customers for particular goods, including meat products.
The AliCloud – New Hope deal has been cheered by China’s government, which has made much of the need to use cloud computing and ‘big data’ to sharpen the competitive edge of the nation’s companies both in domestic and export sales.
Alibaba cooks competiton
Helped by the fact that China blocks most of the major western internet brands like Facebook, Google and Twitter, Alibaba has come to dominate China’s internet space. Ironically the firm raised its funding from western investors in a record-breaking US$21 billion initial public offering (IPO) in New York in 2014.
With that cash Alibaba has been busy buying up competition and potential competition right across the online sector. It has invested for instance in online food ordering and delivery sites while also investing in the leading micro-blogging site Weibo and in emerging portals in real estate, autos and pharmaceutical sales.
Especially given its abilities to analyse data and target saels, the potential of China’s ecommerce market remains enormous for Alibaba. Online sales rose by 40 percent between 2013 and 2014, with sales worth CNY2.4 trillion (USD 0.36 trillion) in 2014 expected to rise to CNY3.8 trillion (USD 0.57 trillion) in 2016 according to iResearch, a Beijing consultancy. The online market will expand to USD1.5 trillion in scale by 2020, according to another research consultancy, Bain & Co.