Planting Profits: Forbes Magazine Picks a Winner in China

Forbes Magazine says Chaoda "could very well revolutionize agriculture in a country that grows half the world's vegetables," in a recent 3-page long story under the bylines of Andy Stone and Shu-Ching Jean Chen. The article included an extensive interview with Kwok Ho, chairman of Chaoda Modern Agricultural (Holdings).

"The blueprint for this green revolution is simple," the authors write. The keys to Chaoda's success include:

• Chairman Kwok's role in spotting the potential of agriculture. After his first crop of cherry tomatoes, "Kwok realized he was involved in a surprisingly lucrative business," and his first deal had a 90 percent profit margin.
  
• Chaoda's giant "production bases" improved productivity compared with those small farmers. Chaoda's farms, which average 375 acres, have been assembled plot by plot in deals negotiated with village governments, another key to Chaoda's success.
  
• The fact that Chaoda achieves high product quality standard gives it an advantage with huge retailers such as Wal-Mart, as well as export markets willing to pay a premium for untainted crops. Most of China's farmers rely heavily on chemicals to improve yields. China's urban dwellers are newly sensitive to the health and safety issues arising from pesticides, another advantage for Chaoda as China's consumer market goes upscale.

Despite many challenges, Chairman Kwok remains "bullish" on large-scale agriculture, and the article notes Chaoda's recent expansion into the dairy business. It quotes Mr. Kwok, saying "We are setting up a model in China." That model is likely to continue to build profits at China's first modern agricultural enterprise, Chaoda.