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Tony Zhangs Passion for Organic Farming

EMBA 20055 6 5 Driven by a commitment to providing safe, healthy food, Tony Zhang (EMBA 2005) has spent the last five years making Shanghais Tonys Farm into urban Chinas largest supplier of organic agriculture. His long-term goal: to grow 600%, gain 50,000 customers, and become Chinas #1 urban organic agriculture brand.
/ Charmaine n. Clarke

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2 GREEN DREAM Tony Zhang has invested RMB200 million to prepare his soil and water for growing 100% certified organic produce.

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201011310007000 FINANCIAL BOOST On November 3, 2010, Tony's Farm announced a US$10 million (RMB70 million) investment from venture capital fund Tsing Capital, a strong vote of confidence in the companys future.

By Charmaine n. Clarke

ive years and more than RMB200 million after Tony Zhang (EMBA 2005) decided to transform 290 acres of land near Pudong International Airport into Shanghais largest organic farm, his efforts have begun to pay off. After spending four years preparing the land to meet the standards needed to grow certified 100% organic produce, and another year getting the operation up and running, Tonys Farm began supplying customers with tasty, nutritious vegetables in 2009. With revenue finally coming in, the farm broke even that year; a welcome change from the RMB10million-a-year loss it had been haemorrhaging for four years. Then on November 3, 2010, Zhang announced a US$10 million (RMB70 million) investment from venture capital fund Tsing Capital, a strong vote of confidence in his companys future. The funds, Zhang told TheLINK just a few hours after announcing the capital injection at a press conference, push the total investment in the farm to RMB300 million and will be used to increase our scale of operations and optimise our management system. Already Chinas largest organic farm located in an urban area, Tonys Farm will have grown six times bigger by next year. The farm has come a long way from the initial years, when it sapped the resources Zhang pumped into it, with about RMB80 million of help from the Shanghai government. In those days, the Sichuan native took a lot of flack from friends and family members who questioned the wisdom of his investment. Adding to the challenge, Zhang and his 10 employees also struggled to

convince local farmers, who make a living by selling their crops, to rest the land for three years. That was our biggest challenge in the beginning: a lack of understanding from the local farmers. What we were suggesting was so different from the traditional methods and mindset, Zhang recalls. It wasnt easy, but I stuck with it because this project means a lot to me. Today, the farm has a 70-member management team plus another 450 employees who work on the production side; and the local farmers are finally convinced that the model works. The challenge, now, is to convince Shanghai residents that they should buy organic. Organic vegetables typically cost more than produce that has been grown with the aid of chemicals such as fertilizer or pesticides. Zhang argues that the price of organic vegetables only seems high because non-organic produce is so inexpensive. One of his long-term goals, he says, is to narrow the price gap between the two and to change the way people think. I dont think the cost is the barrier, its the mindset, he says. Some people who smoke spend about the same on cigarettes each day as what a typical family would spend on organic vegetables about RMB30. The challenge is how to convince more people to spend money on organic vegetables. The size of the farms customer base is now about 5,500 members (it uses a membership system to deliver vegetables to customers). Existing clients include big names such as the U.S Consulate in Shanghai, the Intercontinental Hotel, Park Hyatt Hotel, Tomson Villa, Shanghai Securities Exchange, the National Accounting Institute, Shanghai Baosteel and CEIBS. But they are still
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1750 FRESH HARVEST Tony Zhang proudly displays some of his organic produce, grown on Shanghais largest organic farm, 20 minutes away from the Pudong International Airport.

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ThAT wAS OUR BIggeST ChAlleNge IN The BegINNINg: A lACk OF UNdeRSTANdINg FROM The lOCAl FARMeRS. whAT we weRe SUggeSTINg wAS SO dIFFeReNT FROM The TRAdITIONAl MeThOdS ANd MINdSeT. TONy ZhANg

a long way from Zhangs long-term target of 50,000 members in Shanghai. It is expected that the exposure provided by the farms participation in the six-monthlong Shanghai Expo will translate into an expanded customer base. Shanghais only organic farm with a booth at the Expo, the Tonys Farm exhibit welcomed 30,000 to 50,000 visitors each day, and they were also an official supplier for a number of pavilions. Our long-term plan is to be the number one urban organic agriculture brand in China, Zhang says with a calmness that exudes confidence in his mission. After making a name for himself as a restauranteur for the chain aptly named Tonys Restaurant, and finding success in international trade and mining, Zhang changed careers midlife, driven by a desire to provide a safe food supply. He also changed his personal eating habits to include more vegetables and achieves work/life balance by exercising more. The 47-year-old is motivated by a combination of social responsibility and the drive to see his business venture succeed. At the forefront of my mind is ensuring that more and more people eat safe food. This is very important and I see this as my social responsibility, he explains. Having said that, we must be a profitable business in order to sustain our social responsibility initiatives. The ideal situation is that we can do both at the same time. And its not just talk: in 2009, after the farm broke even for the first time, it donated a big part of its profits RMB3 million to the local g ove r n m e n t a n d l o c a l f a r m e r s to i m p rove t h e

infrastructure and production capacity of their farms. It also collaborated with the Swiss Pavilion, during the Shanghai Expo, to help fund the Angel Mother project which pays the medical bills for children with life threatening illnesses, whose families cannot afford treatment. Other initiatives included donations to help victims of the Sichuan earthquake and the Taiwan flood. Following an underlying mission of fostering a sustainable lifestyle, the company is also serious about minimizing its carbon footprint. Vegetables are delivered in eco-friendly boxes made from 100% natural fibre that is sun-dried to reduce energy use. The aim is to use each box 8-10 times, then recycle. All vehicles on the farm are electric-powered and delivery routes are planned to maximise fuel use and minimise pollution; greenhouse lights are solar- and wind-powered and cargo containers are re-used as building material for offices and product centres. In some places, we put half of the container into the earth, which works as a natural air conditioner. And for the heating system, we use the earths heat to reduce power use. We also use the waste generated on-site as fertiliser, so no chemicals are used, Zhang explains. Eager to share its philosophy, Tonys Farm frequently entertains visitors who are enthusiastic about healthy eating and natural living. The experience may include anything from nature walks, harvesting produce, or fishing, followed by delicious meals prepared with 100% organic vegetables and chickens raised on the farm. In fact, the farms chicken soup has become legendary
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What makes it organic

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among the companies that have used the location as a retreat for team-building activities or meetings. The farm, most popular during the peach blossom season in March, attracted 200,000 visitors in 2009. Soon, there will be a RMB500-800 a night hotel on the property for longer stays. These visits are a vital part of Zhangs strategy to offer clients a holistic experience. Why do people buy our produce? Because of the strength of our brand and

1. Soil Preparation

Organic vegetable farms must go through a three- to-five-year transformation period of soil improvement. During this period and during planting, the use of pesticide, additives, fertilizers and other chemicals is strictly forbidden. The use of transgenosis technology (which involves transplanting alien genes into certain plants) is also prohibited. The entire growing process is conducted under tight quality control and investigation by an authoritative organic food certification organization.

2. Authentication & Inspection

In China, food is labelled organic based on authentication at the main farming ( site as well as inspection, certification and testing. This analysis and certification process focuses on the actual records and production methods, purchase records, and records of how guidelines are met.

3. Accreditation

OFDC Tonys Farm is accredited by the Organic Food Development most authoritative organization for Centre (OFDC), the IFOAM organic vegetable growing in China. The OFDC falls under the

State Environmental Protection Administration of China and is the only Chinese organization accredited by the International Federation of Organic Agriculture Movement (IFOAM).

their unforgettable experiences on the farm; plus our vegetables are both delicious and good for you, he says. The companys website even offers recipes and cooking tips aimed at enhancing the taste of the vegetables which are delivered on the same day they are harvested. In addition to ensuring freshness and safety of the produce, direct delivery also fits in well with the busy lifestyles of many of his customers, Zhang explains. He is 100% convinced that the strategy he has been using is the right one and will guarantee him long-term success. He credits his CEIBS EMBA with providing the strategic thinking and the networking skills needed to get and keep his project up and running. His CEIBS study complements his Bachelors Degree in Agriculture and his earlier years in the business world. The management knowledge and experience I got at CEIBS was a great help. CEIBS also gave me the mindset needed to fulfil my social responsibility. At the same time, the interactions with professors and alumni helped me better understand the field of agriculture from a business perspective. Studying at CEIBS broadened my vision; I can look much further ahead than before, he says. One of his ongoing projects that shows the depth of his visionary skills is his plan to add a model agricultural farm to the Internet of Things. Zhang signed an MOU with CEIBS on November 10, 2010, that will see both sides collaborating on the project. We chose to cooperate with CEIBS because the school is a very good source of management knowledge, he explains. The long-term goal is to use the model internet farm to help improve the t e c h n o l o g y o f C h i n as a g r i c u l t u r e a n d environment. And whats the long-term plan for Tonys Farm itself? We will be Shanghais first listed company that produces organic agriculture, says a confident Zhang. There will be a lot of opportunities in agricultural development in the coming years. Everyone has to eat, and the market is becoming bigger and bigger. As long as we work hard, we can be successful in this field.

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