Dialogue With Zhang Tianli, A Partner In Investment In Health And Welfare: Half Of The Investment Related To African Swine Fever And Food Consumption To Speed Up The Pig Industry Reshuffle

Contributing author Zhu Lina Singapore Report

"We also saw Impossible Foods, Beyond Meat, which was not convincing enough at that time. It may not have been so clear at that time that no young consumers have been so popular with environmentally friendly products. Zhang Tianli, a partner in investment in health, laughed at the interview with the economic news reporter in twenty-first Century.

Zhang Tian Li

Nearly 10 years ago, in March 2010, Wang Hang and Zhang Tianli, the founding partners, launched joint venture investment. As an agricultural investment platform under the new hope group, it is an investment institution focusing on big agriculture, pan food and health consumption. At present, it manages many RMB and US dollar funds with a total scale of about 6 billion yuan.

In the field of food consumption, Beijing has been earning many famous multinational companies, including Burger King, Budweiser beer, Heinz and so on. From the largest agricultural products wholesale market in China, the new dairy farm to the largest dairy group in China, the new hope dairy industry, from the largest oceangoing tuna fishing company in Asia to the US group, every investment of Sheng Sheng is trying to grasp the pulse of the development of the extremely complex and big industry of agricultural food.

According to the information released by the official website, the LP of the current investment in the health sector includes new hope group, Huaxi hope, pan Hai, Jingdong, Wuming, seabed and so on. It also includes international sovereign funds, family funds, large parent funds, large Japanese trading companies, large agricultural business groups in the United States, and international financial companies under the world bank.

Half of agricultural food consumption investment

Twenty-first Century: why is the investment in China's agricultural sector concentrated in the lower reaches?

Zhang Tianli: investment opportunities in the agricultural sector are always somewhat lower. From the perspective of added value, the output value of downstream industries will be larger than that of the upstream. China's agricultural investment is very difficult. Because land property rights are not private and can not be pledged, (farmers) only have contractual rights and management rights, leading to the upstream industry is very dispersed.

This is not to say that there are no investment opportunities in the upper reaches of Chinese agriculture, such as early pesticides, chemical fertilizers, agricultural machinery, and agricultural integration opportunities. Later opportunities come from agricultural science and technology, such as seeds and modern farming. In the future, I believe there will be some sudden changes in China's upstream investment in agriculture.

As China's retail industry has undergone tremendous changes, it has changed the entire retail structure and forced the restructuring of the entire industry chain. The entire Chinese food supply chain will not undergo gradual evolution like the United States, because it has been highly dependent on the electricity supplier. For example, some pet food and e-commerce channels account for 60% in the country, while in the United States only about 10% of the electricity supplier channels, so the format has become very different.

Speaking of the new economy, we often talk about the flow economy, but the real traffic comes from only three things. Food and beverage, children's education and entertainment, and other retail outlets do not generate traffic. This will drive all kinds of changes in the entire supply chain.

Twenty-first Century: what is the current investment layout of health capital in the field of agricultural food?

Zhang Tianli: in this field, almost half of us invest in consumption related aspects, about 40% of which go to the supply chain, and 10%-15% is invested in agricultural technology and food technology. At present, the industry is discussing more about plant protein (plant-basedprotein), but in our view, more opportunities are to improve the efficiency and quality of the entire supply chain of agriculture and food technology.

For example, food packaging materials and equipment, food packaging is very important to ensure the quality of food, although not much high-tech, but the potential is enormous. When we look at agricultural technology, we do not have to be rocketsci.ence.

In fact, many of those with huge commercial potential are not necessarily high-tech. We recently voted for a company that produces aircraft meal bags. We have put in some biological enzyme preparations and animal vaccine items. Recently, we are looking at some items of plant protein and gene breeding. At present, the market is too chasing for so-called black technology. To a certain extent, capital also has an excessive influx.

African swine fever incident into industry accelerator

Twenty-first Century: what are the far-reaching implications of the African swine fever incident on the whole Chinese food industry?

Zhang Tianli: we saw a lot of influences, and this incident produced a nationwide vigilance. In fact, China is not a big agricultural country. Our natural endowments determine that the cost of pork production in China is at least 50% higher than that in the United States. This is because the cost of upstream soybeans and corn is too high, the cost of feed is high, and the technology of integrated farming is not in place.

We are actually the largest importer of food in the world. This is basically a conclusion. From soybeans, corn, pork, beef and mutton, seafood, and even some snack foods, basically they are imported. The animal protein manufacturing industry in China needs tremendous pressure of modernization and integration.

After this incident, some small pig farms with a scale of 300 or less than 500 would be lost. There are several pressure points in these piglets, one is the lack of breeding technology, the two is the impact on environmental protection, and the three is the breeding talent system. China's animal protein industry will enter a large scale enterprise led situation. This event is an accelerator, which will speed up the process of integration and modernization. Once agriculture can be integrated to a certain scale, capital will be valuable. When dispersed, capital will be difficult to value.

Twenty-first Century: as an investor, how do you view the investment challenges of China's agro food industry?

Zhang Tianli: first, grasp the trend of the industry. China's food consumption accounts for 25%-30% of household disposable income. China's CPI is mainly affected by the price of food. On the whole, the investment opportunities of this line are good, and it is a big industry with growth prospects.

We have just invested in Feipu milk powder. It has recently been listed in Hongkong. This is a fast growing ethnic regional brand. The growth of local brands in China's consumer industry has been quite good in the past few years.

Twenty-first Century: how do you invest in projects? What are the interesting trends that you see at the moment?

Zhang Tianli: when we choose investment projects, we mainly look at the maturity of technology, the application prospect of the market, and whether there is a prospect for the application of a technology, and whether the people who use it have the ability to make things successful and bring value. We also saw ImpossibleFoods, Beyond Meat, and didn't feel convincing enough at that time. Perhaps it was not so clear at that time that no young consumers were so popular with environmentally friendly products. So we learn from it and see what China's young consumers are pursuing. This trend is obvious in China.