Unique BiMBA Teaching: From Classroom to Field
Nov 14-2013
Investors wonder at alpha dogs like William Ding, Guo Guangchang and Liu Chuanzhi racing into organic agriculture one after another. The charm of organic agriculture seems just irresistible to investors, who are forced by the growing threat of food safety crisis or are itching to emulate at the gold rush that involves RMB of over a billion. Statistics show that more than one thousand greenhouses and farms of various types have sprung up around Beijing in just a few years.
For consumers, it is brain-cudgeling to tell apart green agriculture, pollution-free agriculture and organic agriculture, let alone see any distinctions from the mixed lot of organic agriculture.
As operators wonder, will organic agriculture eventually turn out to be heaven, or just hell? How will agriculture and farmers be standardized? Is it as convenient as a shortcut, or the most difficult?
With these questions in mind, National School of Development and Beijing International MBA (BiMBA) at Peking University, guided by the mission of exploring the frontiers of management, moved the MBA classroom in between the ridges on October 19, 2013 for a field research on the Noah Organic Farm and in-depth discussions with farmers. The course is expected to pinpoint true opportunities and real challenges for this emerging industry by a typical case study.
The event also marks the opening of a lecture series named “Langrun – Frontiers of Management “for the celebration of the 20th anniversary of National School of Development of Peking University and the 15th anniversary of Beijing International MBA (BiMBA).
MBA Course in the Vegetable Greenhouse
Noah Organic, situated at Machangying County of Pinggu District of Beijing, has experienced rapid growth since its establishment three years ago and has become the fastest growing organic agriculture brand in Beijing. The number of greenhouses has grown from the originally two or three to over 200 today, taking up area over 1,500 mu. Same goes for the orders, from zero to over 1,000 today, expecting to contribute over RMB 20 million sales in 2013 and making Noah Organic one of the organic farms with the most orders. During a recent investigational tour to Pinggu, Guo Jinlong, CPC Beijing Committee Secretary, came and visited Noah Organic.
However, under all these attractive appearance, there are many knotty problems for Noah Organic.
On the morning of October 19, dozens of MBA, EMBA students and alumni from National School of Development of Peking University and Beijing International MBA (BiMBA), together with reporters from Sino-Foreign Management, China Management Magazine, Zhongguancun and other media, came to Noah Organic and attended a special MBA course in the vegetable greenhouse.
CEO Zhu Xun first showed us into an eggplant greenhouse, a typical greenhouse for solanaceous vegetables. Standing on the ridges covered with rice hulls, Zhu Xun and chief technician of the farm explained the organic standards at home and abroad and their similarities and differences.
According of Zhu Xun, the biggest difference for China and foreign organic agriculture was whether the use of pesticide would be allowed. Foreign countries allow using chemical pesticides within a safety range, while China requires using 100% organic pesticides. From the view of the whole industry, the biggest characteristic or challenge for China is extremely high demand of vegetable variety by the customers. In Europe and the United States, a few kinds of vegetables may satisfy the needs for all the year around, while, in contrast, here many customers are still unsatisfied with over 50 kinds of organic vegetables provided by Noah Organic.
Balanced supply of around 50 kinds of vegetables from spring to winter comes as a challenge for the over 200 greenhouses due to unbalanced vegetable yields. In the same tomato greenhouse, the yield per day may reach 500 kg during peak period, and may also drop to 25 kg for slump period, a twentyfold gap, while at the same time, customer demand is steady. Noah Organic has to arrange about 2,000 crop rotations each year so as to guarantee balanced supply of fresh vegetables.
Challenge continues to grow.
Honeybee pollination is required for genuine organic vegetables, but the activity of honeybees in each hive differs. If the honeybees in one hive are lazy and miss the best blooming period, the yield for solanaceous vegetables would be greatly reduced. After the flowering period of solanaceous vegetables, if chemical fertilizer is used, the yield would be greatly increased, but Noah Organic must stick to organic fertilizers, which result in about 50% yield loss.
What’s more unexpected for the MBA and EMBA students is that organic agriculture should use organic pesticides produced by purely biological purification; however, there are parts of counterfeited organic pesticides in China. According to Zhu Xun, a mere 5% chemical pesticide adulteration can break our organic commitment a the consumers and ourselves. Consequently, all vegetables in the greenhouse need to be sold at super low price, and even cannot be used as feed for the sheep. Therefore, all organic pesticides are applied in small area first, and then applied for official use after passing the tests, which surely brings investment cost and time cost for the detection system.
As Zhu Xun was introducing the organic farm, students and alumni from National School of Development of Peking University and Beijing International MBA (BiMBA) together with media reporters fired away with questions: What is the true standard for organic agriculture? What is the biggest difficulty for organic agriculture? What is the cost ratio for labour, greenhouse and management fees in the organic agriculture? What are the challenges for the standardization of organic agriculture? EMBA alumni like Liu Hui, Cheng Junsheng who were also into organic agriculture even exchanged experience for farmer management and natural enemy prevention & control in the greenhouse.
Difficulty in growing vegetable, more difficulties in selling vegetables
“My original intention was to grow pollution-free vegetables for my family, so I built a few greenhouses with my friends. Later the number of greenhouses seemed to be insufficient, and the vegetables seemed to lack of variety, then we expanded their numbers.” Zhu Xun talked about this business and felt like falling into a trap. He smiled and told us that his entrepreneurship was “originally for fun, but then got involved”.
Since Zhu Xun started this business on his own accord, he wants to wrap it up with fortune rather than failure. Even though this catch always calls himself a farmer, the rigorous German style can be found everywhere from seeds, to organic pesticides, and to the absolute control of the organic fertilizers. Even if the company eventually ended in failure, he said, the bottom line of product quality would not be overstepped like what happened to many other entrepreneurs.
Unlike many people who rack their brain for selling products from the beginning, Zhu Xun always focuses on the products. For the past three years, aside from working in the greenhouses, he busied himself visiting academies of agricultural science, Shouguang, Shandong Province, peers in Europe and the United States, Korean farms, for exploring the standardization and localization for advanced facilities and methods of various types.
On the case seminar in the afternoon, Zhu Xun shared his experience from operation and visit with students and alumni from National School of Development of Peking University and Beijing International MBA (BiMBA), especially for several dominant operation modes in China, the operation modes of the three most successful foreign organic agriculture companies, and exchanged with each other for all questions found in the operation of Noah Organic.
During the explorations in the past three years, Noah Organic cooperated with China Agricultural University, Beijing Academy of Agricultural and Forestry Sciences, School of Environment of Tsinghua University and other colleges and R&D departments, introduced organic cultivation technologies from Israel and Netherland and integrated them with its own practices; therefore, it managed to establish a scientific cultivation and management system capable of growing organic vegetables of variety throughout the year, and produce natural non-GM vegetables free of pesticides, fertilizers, hormones and with honeybee pollination, thus creating numerous innovations to this industry.
Good products are far away from being sufficient. As a start-up, Noah Organic also needs to cope with the pressure of profit, in which the most important question is marketing, or simply put, “selling vegetables”.
Zhu Xun has known pest control and crop rotation very well, becoming a true expert in growing vegetable thanks to the past three years of practices and learning. However, as to selling vegetables, he was powerless, “We don't know how to sell vegetables. Even though spending several hundred thousand RMB in newspaper advertising, we still got no calls for vegetables.”; “We used to promote our vegetables in upscale communities, but after supplying baskets and baskets of vegetables for free, our efforts ended up in vain for vegetable takers won't easily turn into vegetable buyers.”
One student pointed out the biggest strength for Noah was that all three founders studied science and engineering, which gave them the rigorous style, a guarantee for the product quality, while the biggest weakness was the same: they were not good at selling themselves and may think little of promotion. Therefore, marketing became one of the important topics for the seminar of the day. When a student asked Zhu Xun why he didn't employ one marketing expert, the answer was kind of frustration “We tried, but if it was not because we could not afford one, then we failed to retain one.”
Later in the seminar, Zhu Xun indicated that they indeed should strengthen customer research “We later found that all customers knew Noah Organic from their friends, and almost every customer has come to the farm for a site visit and communication”. For this reason, Noah Organic identifies its direction of marketing in the future, i.e. to invite potential customers to the farm for interactions.
Many students and alumni were still excited after the day’s survey and seminar. In the classroom of Langrun Garden of Peking University, what they have learned is the management of standardized products and services; no one has ever thought that the most traditional and simplest agriculture would encounter so many standardization challenges: thunderstorm, gale, farmers, pest and continuous cloudy weather, which are all random and uncertain factors.
Some students expressed that, despite the frontier industry name of organic agriculture, its nature of “dependence on the weather” remained unchanged. How to find the balance between “dependence on the weather” and “dependence on the human efforts” by technology innovation and how to target the profit point, especially for a start-up, are challenges faced and needed to be solved by Zhu Xun, and also the topic of management frontier worthy for further explorations by National School of Development at Peking University and Beijing International MBA (BiMBA).
