Hong Kong and Yongji, Shanxi, China | 7 – 18 August 2017
In August 2017, GIFT's Global Leaders Programme (GLP) brought together leaders from Asia, Latin America and Europe to explore the opportunities and challenges associated with China's agricultural sector. In collaboration with the Puhan Cooperative, one of the largest cooperatives in China, and the Shijie Company, an expert in Natural Farming technology, participants designed a business model for rural regeneration in the Yellow River Golden Triangle (YRGT) with a focus on healthy and high quality food.
The GLP offered a unique opportunity to understand the rural economy and contribute social value in a real case, through which we realized the diversity of the rural market and became aware of unexpected and overlooked investment opportunities.
Li Yu, Assistant Vice President, PE Investment, ORIX Asia Capital (Hong Kong)
Business leaders have for too long trusted just the Western economic models. As a European with about 20 years of experience in business model innovation, the GLP broadened my horizons and aligned my leadership style to capture new opportunities.
Stefan Koch, Head of Inclusive Business ASEAN, Covestro (Germany)
The GLP is a journey on many levels; it is both an empowering and highly personal experience. The programme is demanding, intellectually challenging whilst being insightful and impactful. It is a process of self-realization that has helped me view issues from a broader perspective and gain a better sense of purpose.
Chern Huan Chee, Senior Manager, Branch Business Headquarters, ORIX Leasing Malaysia
The Yellow River Golden Triangle
The Yellow River Golden Triangle contains parts of Shanxi, Shaanxi and Henan Provinces: namely, the cities of Yuncheng, Linfen, Weinan and Sanmenxia. It covers about 57,800 square kilometers, and has a population of 17.21 million. 68% of them are smallholder farmers.
China aims to develop the YRGT into a new regional economic engine to act as an example of integrated, "leapfrog development" in an underdeveloped region. The government has called for joint efforts towards protecting ecological systems, promoting circular low-carbon development, improving resource utilisation and providing basic public services.
This important region of central China is also known as the cradle of Chinese civilisation. The region includes such historical locales as Henan Lingbao, where Lao-tze wrote the Tao Te Ching, and Shanxi Yongji, an ancient capital during the reign of Emperor Shun 4,300 years ago.
Distinguished Guest Speakers
Partner & Head of Leadership Advisory, The Human Factor
Member of the Board of Executive Directors, BASF
Managing Director at Sard Verbinnen & Co.
Former Asia Finance and Deals Editor at the Wall Street Journal
On the ground in the yellow river golden triangle
China is the world's largest producer, importer and consumer of food. In 2016, the agricultural sector accounted for 8.6% of China's total GDP, with an added value of RMB 6.37 trillion (USD 936 billion). As China's appetite for meat, fish and dairy products continues to grow, there has been an increasing move towards large-scale industrial farming.
This has exacerbated the use of chemicals: China now uses about one third of the world's chemical fertilizers and 2.5 times the level of pesticides used in developed countries. This has led to water and soil pollution, as well as contaminated food.
Participants travelled to Shanxi Yongji, Henan Lingbao and Shaanxi Tongguan in the Yellow River Golden Triangle to talk to farmers, local authorities and community members and learn more about how a community could pursue sustainable agriculture, community organisation and cultural heritage at the same time.
While most private sector investment in agriculture centers on large-scale industrial farming, Puhan Cooperative's integrated community-based and service-oriented approach presents an alternative path to sustainable agriculture and rural regeneration. Puhan introduces circular farming to their members and connects the well-being of smallholder farmers with the increased demand for high quality food among urban consumers.
Participants visit a persimmon vinegar cooperative in Lingbao. This cooperative is trying to preserve the traditional artisanal methods of the Yellow River Golden Triangle region.
Puhan offers weaving workshops where members, especially seniors, can spend their free time. Many Chinese rural communities have seen their working-age populations leave, leaving behind the elderly and the very young.
Participants are shown an example of Puhan's "Zero-waste" fermentation bed technology. Proprietary microbes and enzymes digest waste into organic fertilizer for crop production.
Participants were treated to cultural performances from the region, including traditional opera (pictured above) and Lao Qiang (pictured below).
Lao Qiang is sometimes called "ancient Chinese rock'n'roll", and features rousing and rhythmic folk singing. It is thought to have descended from sea shanties sung by boatmen on the Yellow River. UNESCO has recognised the musical tradition as an integral part of the world's musical heritage.
Shijie Company and the puhan cooperative
The Shijie Agricultural Technology Development Co. was founded in 2009, and has promoted natural and circular farming systems that result in meat, vegetables and grains far higher in quality than from industrial farming. Shijie has trained over 300 producers and cooperatives over the past ten years in the use of its zero-waste "Fermentation Bed" technology. GIFT partnered with Shijie on the 2016 China Global Leaders Programme.
Established in 1998, the Puhan Cooperative is a bottom-up community-organised multifunctional cooperative. It has a membership of 3,865 rural households, or 58% of the population cultivating a total of 5,300 hectares. The Cooperative not only provides agricultural services, but also elderly care and child education for the wider community.
Working towards a solution
The GLP uses real-world field projects as a learning platform for participants to develop and hone the practical skills needed to manage diverse teams in unfamiliar situations. Through meetings with government, local communities and business leaders, and through frank and open discussions, participants learn to navigate conflicting and contradictory views to transform concepts and theories into realities and practical solutions on the ground.
Below are a few slides from the recommendations developed by participants.
A key recommendation is the creation of a company to be invested in by the three provincial governments (Shanxi, Shaanxi and Henan) and both local and foreign private investors. This would create a first-of-its-kind agricultural company in China, which will be based on a Public-Private-Partnership model, and will include farmers through hundreds of cooperatives. The plan also recommends the establishment of city-level enterprises which would support local farmer cooperatives with training, microfinance, technology transfer and social services.
The Global Leaders Programme culminated with a public forum in the city of Tongguan, during which participants presented the highlights of their business model to the project partners and to an audience of local community, business leaders, government officials and students. Most impressive were twenty rural agricultural graduates who decided to walk all the way to the Forum — a trip that spanned thirteen hours!
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