Liu Chuanzhi, founder of both the Legend Holdings Ltd. and the sub-company of China's computer giant Lenovo Group Ltd., has turned his attention to fields beyond IT. The company's entry into agriculture could be the most remarkable one: Chen Shaopeng, the newly appointed senior vice president of Legend Holdings, will lead a new core business line: modern agriculture.
Chen, who Joined Lenovo in 1993, is widely known for his rare talent in sales. He set a sales record by bringing Lenovo a 585% year-on-year sales growth. To transfer such a tiger commander to lead Legend Holding's modern agriculture efforts is an apparent declaration of the company's ardent and aggressive pursuit in the agricultural arena. And that deserves considering how big the "cake" could be.
According to official figures, as of August 31, the revenue and net profit of 54 listed agricultural companies in 2011 stood, respectively, at RMB 67.12 billion ($10.57 billion) and RMB2.95 billion ($465 million), increased respectively by 28.9% and 49.6% from last year. Agriculture belongs to the high price-to-earnings ratio in Legend Holdings.
But it is not the only company to explore the agricultural sector. According to statistics released by Qingke group, a Chinese risk-based investment research institution, from 2006 to the June 2013, China had 114 investment cases in agriculture. The unveiled sum involved in 104 of the cases stood at $1.76 billion. The year 2010 accounted for the largest investment sum, with 47 cases unveiled totaling $891 million. Liu Ka, top manager with China Sunshine Insurance Group Corporation Ltd., told reporters "It's a great chance for Legend Holdings in stepping into agricultural sector; there are boundless business opportunities there."
Legend Holdings is not the only Chinese company with a IT background to step into agriculture. Ding Lei, CEO of China's top-rated web portal NetEase, has put money into pig-rearing; while Liu Qiangdong, CEO of China's leading B2C e-commerce company Jingdong Mall, announced that he has invested in growing rice to sell online. Take Legend Holdings as an example: It recently purchased mostly traditional companies such as those engaged in livestock rearing, aquaculture and fruit cultivation. How to use information technology to transform those traditional businesses has proven extremely difficult for the group. Moreover, the current situation in China has ruled out the possibility of vast developing modern agriculture.
But Li also affirmed that Legend Holdings was determined to develop modern agriculture. "We would do modern agriculture as an industry, we do not depend largely on agriculture to contribute to overall profit in 2014, and we do not demand immediate returns from modern agriculture." Said by Liu.
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