Chinese consumers are yearning for fresh vegetables and fruit, and a bevy of recent e-commerce agricultural deals are giving netizens the ability to buy goods online from Chinese farms.
So news that Chinese e-commerce firm JD.com Inc. has just established a strategic partnership with five-year-old Yimutian, a controversial agricultural products supply platform supposedly backed by Sequoia Capital and GX Capital, shouldn't be so newsworthy. However, Yimutian has come under scrutiny in recent years for corporate governance issues related to its search for investment.
Chinese media report that Yimutian received a series A funding round worth several million U.S. dollars from Sequoia Capital in 2013, and then the company reportedly received US$20 million series B round from Sequoia Capital and GX Capital the next year, and a series C round in 2015. But some media indicate that Sequoia later withdrew its support and the company never completed a series C round. And Sequoia China's website currently does not list Yimutian as a portfolio company.
In 2015, it was widely reported that Yimutian, which operates Ymt.com, mobile apps and offline stores, inflated the transaction volume of its online platform, a common practice among Chinese start-ups. The company claims to have over two million users buying or selling 12,000 products, making it the largest agriculture e-commerce company in terms of registered users in China.
China's agricultural market is estimated to be worth around RMB10 trillion, while e-commerce transactions in the sector reached RMB144 billion, indicating a penetration ratio of 1.5% and enormous growth potential.
With the controversies as a background, JD.com and Yimutian announced in Beijing yesterday that they would cooperate on agriculture financing services, agricultural product retail both online and offline. In the partnership with JD, Yimutian will provide resources and expertise complementary to JD's own agriculture e-commerce platform, which sells seeds, fertilizers, pesticides and farm tools.
The partnership is another milestone in JD's push to expand its agriculture e-commerce strategy. JD has established 1,500 agriculture e-commerce centers in China.
JD.com's rival Alibaba is also expanding its agriculture e-commerce unit. Alibaba has built more than 10,000 village-level service centers that promote general e-commerce services and provide delivery services in more than 20 provinces as of the beginning of this year.