The Biz View From Peking U | Why Jack Ma becoming a dairy farmer is a big deal

Jack Ma has become a dairy farmer. In June, his private equity firm Yunfeng made a $320M investment in an Inner Mongolian dairy company owned by Yili Industrial Group. In doing so, he has joined the ranks of Legend Holdings, Netease and other Chinese technology giants who have made surprising jumps into agriculture (often through private equity investments).

These new “agri-tech nerds” are popping up all over China. Internet giants, mobile entrepreneurs and other tech nerds are suddenly launching projects in cows and blueberries. For example, Lenovo owner Legend Holdings now lists agriculture as one of its five core investment areas.

This is a very big deal. This new collision of technology and agriculture is one of the most important phenomena in China today. It is also one of the weirdest. We’re pretty sure Bill Gates never owned a pig farm.

What is really happening is that cutting-edge Chinese brainpower is finally being applied to food quality and safety. High tech innovation and new business models are being brought to a very low-tech sector of the economy. And this collision is already yielding important insights. Here are a few worth noting:

Technology can reshape the economics of food production.

Can you engineer a better cow? That’s going to be a key question as tech-smart companies apply their process management skills to pretty low-tech Chinese farms. This can be biogenetics, targeted crop management, food processing and so on. But expect technology to fundamentally change the economics of food production in China.

Branded advantaged food products can scale quickly.