Entrepreneurs turn to the land for profit

Modern farming can afford better returns than manufacturing

Many owners of manufacturing-based trading companies in Zhejiang province are investing in the modern agriculture industry for better profits because the gloomy economic environment has severely affected their businesses over the past year.

Wang Sheng, 48, a businessman who has run a company producing lingerie for mainly European countries, especially Italy, over the past five years, has found it is no longer an effective way to make money as a long-term strategy.

Over the past two years, Wang, originally from Wenzhou, spent more than half of his working time researching the modern agriculture industry to prepare for the formal opening of his own farm next year in Guizhou province.

"Running a farm, living with animals and making money out of it has been a childhood dream that I never before had time to realize," said Wang, whose lingerie factory is in Dongguan, Guangdong province.

He is currently negotiating with the local government in Guizhou over an agreement to rent 88.7 hectares for 30 years to breed sheep and cattle and plant organic fruit and vegetables using his animals' droppings as fertilizer.

The rent is 150,000 yuan ($23,995) a year for the first five years and will be raised according to inflation.

"I will start with planting grass all over the farm and have 1,000 sheep as the first step next year," said Wang, who will operate the farm initially with a team of five.

Shutting down his clothing business and becoming a farm owner has been a strong ambition of Wang.

"The trading industry for textile products has reached a dead end without any sign of recovering from its misery, which was caused by the gloomy economic situation and tougher competition."

Wang added that it is the time to apply the management skills obtained from running a business to the innovative farming sector, which has potential to be profitably exploited.

As Wang's long-term plan for the next decade, he will farm high-quality animals to produce meat that has a good market value, such as the Angus, a type of cattle imported from abroad, the embryo of which is valued at 100,000 yuan.

"I'm going to have a team of 100 employees to run the farm as a small enterprise with organized departments and systems to ensure all the animals and the plants will continuously make profits," said Wang.

Wang is not the only businessman in Zhejiang province to realize he would be better off giving up a struggling manufacturing-based company for a fresh start working the land.

According to statistics released by Zhejiang Provincial Administration for Industry and Commerce, the average annual amount of money invested in agriculture by Zhejiang businessmen has exceeded 10 billion yuan over the past five years. The total amount reached 20 billion yuan last year.

The investments covered the traditional industries of seeding and agriculture technology, as well as the emerging organic market with high-quality agricultural products.

"With more businesses being forced to cut production lines and even close their factories due to the worsening economy, finding other ways to make money is the best solution to survive at the moment," said Zhou Dewen, chairman of the Wenzhou SME Development Association.

Zhou added that investing in agriculture-related projects such as setting up organic farms, building farmhouses for tourism and putting money into innovative agricultural products will be a new method of boosting private capital.

Zhejiang businesspeople, one of the most active in the country and known to always be on the lookout for profitable projects, have noticed the great potential of modern agriculture and are giving up on the poorly performing property market and unstable stock market and turning to the land.

"The majority of Zhejiang businesspeople have a common knack in seizing opportunities and the courage to put their instincts into practice without being afraid of losing money at the beginning," said Zhou.

Zhou added that applying their experienced management abilities and a sufficient amount of money to the traditional agriculture industry will bring a win-win result for investors and the unused land in undeveloped regions.

Huang Shengfang, the chairman of Zhejiang Juke Group, a company that produces electrical equipment for export, took over a local farm in Yueqing county, Wenzhou, Zhejiang province, earlier this year for 5 million yuan and started to breed pigs to make more money.

"The rapidly surging price of pork in China enabled me see a great opportunity to make money from pig farms. It will bring me much more profit than I get from electrical appliances at the moment," said Huang.

Unlike Wang, who gave up his company in its entirety to run a large farm, Huang recognizes the move as an additional investment to make money during a tough period.

"I will treat it as a part-time job to make extra profits at the moment because I am not qualified to run a farm and don't have any relevant experience," said Huang.

Officials and experts in the agriculture industry regard the contribution from private capital as good in that it helps provide local farmers with higher earnings.

"Those benefiting from the business chain in the modern agricultural industry will be local farmers who used to struggle with traditional farming of the land," said Tong Rihui, the senior officer in the agriculture management sector in the department of agriculture in Zhejiang province.

Tong added that investment from private businesses in the agriculture industry should be encouraged by the local government in the future to bring wealth to farmers and investors.

In addition, there has also been more investment made in the agriculture-related tourism market by Zhejiang businessmen in recent years.

Houses have been built for tourists to rent in attractive locations in the countryside in Zhejiang province, more than 90 percent of which have received investment from private capital. They make up to a 20 percent annual return.

The total amount of investment in farm tourism exceeded 20 billion yuan up to the first half of this year, according to statistics provided by Zhejiang Provincial Administration for Industry and Commerce.

"More people like to spend their holidays in these farmhouses in the countryside to enjoy the freedom. It benefits the farmers by providing an incredible increase in their earnings," said Lou Xiaoyun, the senior officer of the economic development department of the agriculture office in Zhejiang province.

Lou added that participating in agriculture-related projects has become a trend for businessmen who want to make money rather than focus on their original manufacturing-based trading industry.

yuran@chinadaily.com.cn

(China Daily 12/24/2012 page15)