The capital of Hubei province has started a program to allow businesses to flourish in run-down and abandoned villages. Zhou Lihua and Liu Kun report from Wuhan, with Chen Mengwei in Beijing.

At a time when large cities are still sucking in rural residents from across the nation, a major city in Central China is working hard to reverse the trend by encouraging people to move to the countryside.

In April, Wuhan, capital of Hubei province, proposed a program – the “20 Golden Terms”, as it was dubbed by the media – that would allow urban residents to conduct business in the city’s rural areas.

The drive came in response to rapid urbanization which has seen villages in and around the city sucked dry of residents.

According to research conducted by the municipal government, more than 116,000 houses, nearly 16 percent, of the 1,902 villages around the city have been abandoned. By the end of last year, nearly 1 million of Wuhan’s rural residents had moved to the city’s central areas.

Tan Benzhong, director of the Wuhan Municipal Agriculture Committee, said the rising number of empty houses in villages has been caused, in part, by the rapid pace of urbanization.

Some villagers have obtained hukou, or household registration, in Wuhan, while many young people are leaving to look for work in big cities.

When government officials conducted a random survey in 38 villages, they discovered that more than 78 percent of those interviewed were willing to lease their empty homes to gain extra income. There was only one problem – who would rent the properties?

In response, the government came up with the “golden” package, which essentially cleared the way for people who want to make money in the countryside, and promised hard cash encouragements for qualified applicants.

The policy ensures that outsiders enjoy the same business terms as their rural counterparts, no matter which village they choose to invest in. Green lights and express passes will be provided for all application procedures.

The city government is committed to spending large sums to improve the infrastructure, including providing private and public toilets, to ensure that newcomers and tourists enjoy their time in the city’s villages. The final details of the funding arrangements have yet to be released.

Most attractively, entrepreneurs are eligible for cash stipends of as much as 100,000 yuan ($14,700) for undertaking certain types of business, such as agritainment (farm-based entertainment) and agritourism.

Positive expectations

Zhang Qun, chief of the new countryside development department at the Wuhan Municipal Agriculture Committee, said the government has positive expectations for the campaign, mainly because nearly 3 million urban residents, or 30 percent of the population, are age 60 or older in Wuhan.

“Quite a few of these people have both the enthusiasm and financial capability to move to the countryside and enjoy life after retirement,” Zhang said. “If 10 percent of them want to do this, that’s 300,000 people. That could present a huge market opportunity.”

Despite the benefits on offer, Zhang conceded that there are potential problems for tenants, landlords and regulators.

Some tenants are concerned that house owners may not honor long-term agreements and will terminate contracts when they feel like it.

Moreover, others want to buy the houses as an investment, but the current laws only allow outsiders to rent properties for no longer than 20 years.

Some villagers are worried that the tenants will adapt the houses for business purposes to such an extent that they will not be able to live in them in the future.

Some government regulators, especially those in charge of housing, doubt whether people who rent houses for business purposes will abide by the rules and refrain from expanding the properties illegally.

“But one thing is for sure, if your business loses money, the government will not cover your loss. The current policy does not even consider that,” Zhang said.

“Our stipend policy is equal for everybody. We will put our focus on providing guidance in advance. People should act based on their own situations.”

Source: China Daily Date: 2017-06-14

There’s growing demand for U.S. beef in Asian markets, and the Illinois Beef Association sees an opportunity for cattle farmers in the state to expand operations as the call for high-quality beef in Japan and South Korea increases.

Reid Blossom, executive vice president of the association, said Japan is one of the best markets for Illinois cattle farmers, and President Donald Trump is working to open the Chinese market for U.S. beef, which would add an additional 1.4 billion potential consumers.

“An increase in exports to the Pacific Rim and Asia will absolutely lead to higher consumer demand and an increase in cattle prices,” Blossom said.

Approximately 15 percent of domestic beef production in Illinois is exported every year, and roughly $275 of the price of an animal in an Illinois feedyard can be attributed to international demand, Blossom said.

“With some of our largest and strongest export markets being Japan and South Korea currently, it’s obvious that those markets are having a very positive impact on cattle farmers in Illinois,” Blossom said.

The cattle population has grown over the past several years. Blossom said that while it’s not tied to market access or international trade, increased trade opportunities are welcome.

Cattle producers operate with the market fundamentals of supply and demand. The way to augment demand is to add more consumers and give them more opportunities to purchase Illinois beef products without changing supply, according to Blossom.

“That increases the price we get for our animals, and so we’ve been very supportive of efforts on the national level to increase market access overseas,” Blossom said.

China has been a target for Illinois cattle farmers for quite some time because it has the largest population in the world, according to Blossom.

Blossom said there are other beneficial opportunities in the future for Illinois cattle farmers.

“Looking further ahead beyond China, we think the European Union is a wonderful, tremendous target to expand access, as is the Middle East and, after the Brexit vote last year, the United Kingdom,” Blossom said.

Source: Illinois News Network. Date: 2017-06-15

A forum on high-tech agricultural cooperation between Vietnam and Japan took place in Ho Chi Minh City on June 8.

The event, the second of its kind this year, aimed at connecting southern enterprises with their Japanese peers and helping Vietnamese high-tech farming centres promote their products and indicate their collaboration needs.

Tu Minh Thien, deputy head of the management board of HCM City’s High-Tech Agricultural Park, said constructive relations between the two countries have brought mutual benefits for their people, with Vietnam seeing more opportunities to export goods to Japan.

Japan is a demanding market with strict requirements on food safety and quality, which is a challenge to Vietnamese firms, he added.

Vietnam has zoned off 29 high-tech industrial parks in 12 provinces and cities, seven of which have been operational in cultivation, aquaculture and animal husbandry. The Vietnamese Government has also issued various incentives and support policies targeting hi-tech agriculture, with the latest being a credit package worth 100 trillion VND (4.4 billion USD).

Representatives of Vietnamese high-tech agricultural parks said they hoped for not only Japanese investment but also cooperation in human resources training, laboratory research and technological transfer.

Participating Japanese firms stressed their willingness towards the cooperation.

They asked the Vietnamese Government to offer more incentives and help them remove barriers when investing in the local high-tech farming, particularly land issues.

As part of the forum, a pact was signed among the management board of the HCM City High-Tech Agricultural Park, Fuji Consulting Japan Co. Ltd, and Nakashima Bussan Co. Ltd. Under the deal, they will pilot the fine-bubble water treatment system and the use of bio-microorganisms in aquaculture.

Source: VNA Date: 2017-06-15

China plans to digitize the management of its grain industry by 2020 to enhance food security, as grain transportation between provinces and the amount of imported grain have been high in recent years, State authorities said.

One national management platform and 20 provincial ones will be established by the end of next year, and the whole country will be covered by a digital network by 2020, Zhang Wufeng, head of the State Administration of Grain, said on June 6 during a national video conference on grain security.

A foundation has already been laid for the national digital network. In Anhui province, for example, one provincial-level and 16 prefecture-level platforms have been established, and 100 “smart” grain depots have been connected online, he said.

He asked that more digital and information technology be used to monitor the operation of grain depots, and keep watch on safety and market management so that the warning system can be improved and hazards can be responded to more efficiently.

Grain transfers between provinces have been kept at around 170 million metric tons in the past two years, while more than 100 million tons of grain have been imported annually in the past three years, he said, noting that 85 percent of soybeans in the domestic market are imported.

“All of these have raised the need to stabilize the grain market and ensure supplies, especially emergency supplies,” he said.

While praising the development of China’s grain industry, Zhang said the industry still faces challenges, including an incomplete legal system and a shortage of supervisory officials below the State level with the necessary knowledge.

After a grain safety project was launched in 2015, 75 million tons of new grain reserves were constructed, while depots for another 120 million tons have been renovated, he said.

According to China Grain Reserve Corp, known as Sinograin, grain depots at 336 of its subsidiaries can be monitored with the help of 56,000 surveillance cameras. Its rate of reserve grain loss has decreased from 1.33 percent to less than 1 percent.

While a grain law has yet to be enacted, some of the current regulations for grain circulation and reserve, which were enacted at least a decade ago, need to be updated in line with the current situation, Zhang said.

Source: China Daily Date: 2017-06-08

The global giant that owns Budweiser wants to dominate the craft-beer market in China.

In late 2015, Chandler Jurinka realized someone was spying on his beer taps.

Jurinka and a partner own Slow Boat Brewery, a Beijing craft-beer maker that distributes its beers across a dozen cities in China and runs a new three-level brewpub in Beijing’s nightlife district. (Jurinka named the brewery after the 1940s Frank Loesser love song “On a Slow Boat to China.”) The business is driven in part by sales of kegs to restaurants and bars in China’s capital, where good beer isn’t as easy to find as it is in, say, Seattle or Kansas City.

One of those restaurants, a popular spot called Home Plate BBQ, once sold five Slow Boat drafts on its nine taps. Slow Boat sent a technician weekly to take care of the tap lines: “We bought them, installed them, and maintained them,” says Jurinka. But one day the tech was startled to find a device called a flow meter monitoring every line. Flow meters measure the beer passing through the taps, as a way for restaurants to track sales.

A server at Slow Boat, a pioneering Chinese craft brewery. Photograph by Mark Leong for Fortune 

Home Plate itself hadn’t installed the meter: The global beer giant AB InBev (BUD, -1.51%) had. The restaurant owners told Jurinka it was a free perk from the brewer of Budweiser, Corona, and Stella Artois. With one move, AB InBev had earned goodwill with the restaurant and got a source of intel on its competition—since the meter could monitor Slow Boat’s sales in real time. Jurinka, a broad-shouldered former U.S. Army sergeant, was incensed, he says, “but other than take our beer off tap, there was little I could do about it.”

Then last summer Home Plate hosted a four-day event for AB InBev—a Beijing unveiling for the craft brand Goose Island that included free beer and selfie opportunities with the goose mascot. China’s news sites covered the event like a fashion show. By autumn the restaurant had replaced all but one of Slow Boat’s taps. Now sitting atop Home Plate’s draft menu: three Goose Island beers.

The flow meter was one of the first salvos in a new marketing war. AB InBev is bulldozing its way into China’s nascent craft-beer market: Since early 2016, the Belgian-Brazilian beer conglomerate has inundated Beijing and Shanghai with Goose Island, the Chicago-based craft brand it acquired in 2011. Goose Island brews exotic beers that it ages in French wine casks and bourbon barrels and has the kind of cute animal logo that can turn heads, and tastes, in China. The campaign is central to AB InBev’s strategy of promoting pricier beer to China’s growing ranks of wealthier young consumers. While competitors—including Heineken and Duvel—are importing their own craft beers, none have moved with the same gusto.

At Beijing’s Home Plate BBQ, AB InBev’s Goose Island now tops the draft beer list. Photograph by Mark Leong for Fortune 

AB InBev is seizing an additional advantage: Thanks to China’s weak regulatory climate, it can muscle into the market in ways that wouldn’t pass muster in the U.S. AB InBev has leaned on distributors to keep them from carrying other craft beers. It has given bars incentives to promote Goose ­Island while shoving other beers off the taps—deals that would be illegal in the States. It’s offering lavish salaries to poach local brewing talent. “AB InBev wants to be a craft-beer brewer,” says Gao Yan, who owns a Nanjing craft brand called Master Gao. “But they want to act like a big brewer.”

The leviathan is turning to China, the world’s biggest beer market, to compensate for a catastrophic mistake it made in the U.S.—missing out on the craft revolution. Over the past decade craft brews grabbed 20% of the U.S. market in dollar terms, largely at the expense of mass-produced lagers like AB InBev’s Budweiser and Bud Light. In 2016 the company’s U.S. sales fell 2%; Budweiser sales have taken the biggest hit, falling 35% since 2008. “Craft beer would never have become as big under independent ownership if [AB InBev’s] Anheuser-Busch had not more or less ignored the sector,” Sanford Bernstein analyst Trevor Stirling told the website Just-Drinks in December.

Related: These Are China’s Biggest Beer Brands

AB InBev has purchased nine craft breweries in the U.S. over the past six years—Goose Island was among the biggest acquisitions, at ­$39 ­million—but they haven’t turned around slowing sales. China’s tiny but booming craft market offers a second chance to capitalize on a global trend.

Brewers endlessly haggle over the definition of craft beer. Generally speaking, it’s beer produced by small breweries that is more flavorful and (usually) higher in alcohol content than what you typically find in the grocery store. (Whether brewers remain small enough to hold the label “craft” after being acquired by giants like ABI is a contentious topic.) However it’s defined, the craft market in the Middle Kingdom is booming. A dozen successful breweries have popped up across Beijing and Shanghai, with more appearing in Chengdu, Nanjing, Shenzhen, Wuhan, and other cities. Beer is the most consumed beverage after tea in China, which now gulps a quarter of global beer output. Retail sales have doubled since 2008, according to Euromonitor, and Chinese consumers spend 550 billion yuan (roughly $80 billion) annually on beer.

Diners at Slow Boat’s Beijing taproom. AB InBev and its rivals hope that their more profitable craft brands will catch on with younger, affluent Chinese consumers. Photograph by Mark Leong for Fortune 

Craft’s share of that total is undoubtedly small, though analysts can only offer guesses. “Right now it might be 0.1%,” says Jonny Forsyth, global drinks analyst at Mintel. But he adds that craft beer tends to take off as a market matures, as China’s is. Gary Brown, owner of beer distributor Top Shelf Asia, says AB InBev’s appearance in China is a sign of heady times to come. “It’s like Starbucks: If you see a bunch of their coffee shops going up in an area, you know it’s a pretty good one to be in.”

There’s another reason China is a good market for AB InBev: Regulations disproportionately favor the biggest players. In the U.S., brewers can’t legally own bars or monopolize the beer a bar offers. In China, brewers can and do buy bars, in addition to controlling distributors. Rules around product safety give another edge to the giants. AB InBev imports Goose Island into China from the U.S., where it’s brewed under American regulations. China’s own brewers, however, have to obey more restrictive rules. Regulations require a stamp of quality approval on bottles produced inside China. Those stamps are available only to production lines that generate at least 12,000 bottles an hour—huge multiples of what craft brewers produce. Beer bottled in China also must be pasteurized and filtered, eliminating yeast and sediments that give craft beers character.

In practice, those rules mean microbreweries have to sell their beer in kegs on-site in brewpubs, while “craft” imports can be easily distributed anywhere. The upshot: Beer is the rare market in which China plays favorites with big foreign companies at the expense of local producers. And AB InBev is racing to tap that advantage.

AB InBev began when three Brazilian investors—the founders of the private equity firm now known as 3G Capital—bought a declining brewer called Brahma in the late 1980s. That operation merged with Belgian giant Interbrew in 2004 to create InBev, which then obtained America’s largest brewer, St. Louis’s Anheuser-Busch, in 2008 in a stunning $52 billion deal. The new AB InBev outdid itself last year by paying $103 billion for rival SABMiller. It now controls 200 brands and nearly a third of the global beer market. Last quarter, AB InBev sold $14.2 billion worth of beer.

But diminutive Davids continue to wound this sudsy Goliath. AB InBev has missed analysts’ estimates for seven quarters in a row. Sales have sunk for not just Budweiser but Bud Light, Busch, and other mainstay brands. So, like other multinationals, AB InBev is looking for growth in China, and it’s pulling no punches. The heart of its strategy: Squash—or someday soon acquire—small breweries before they have a chance to capture market share.

AB InBev coordinates its moves through a division called Disruptive Growth; competitors call it the Craft Beer Disruption Unit. The first step: controlling the bars. “This is something that you just don’t see in the U.S.,” says Michael Jordan, the American expat brewmaster at Boxing Cat, a Shanghai brewery that last year won China’s first medal at the World Beer Festival. He argues that the incentives brewers like AB InBev offer in China would run afoul of Western laws. “There’s just no regulation on this side.”

It’s unclear how many deals AB InBev has with bars like Home Plate, but rival brewers say these “tap takeovers” are widespread. One bar owner in Beijing’s Sanlitun nightlife district described a recent deal he says AB InBev proposed to him and his partner. (The owner insisted on anonymity for fear of harming his business prospects.) AB InBev reps approached him last spring and offered to pay 60,000 yuan a month—enough to nearly cover about two-thirds of his bar’s rent—if his bar agreed to host its assortment of beers including Goose Island. He said AB InBev told him it was planning to purchase all the outdoor advertising space in the area, which would put his bar on better negotiating terms with local officials. “Often the government official says, ‘If we let you have a big sign, your neighbor restaurant won’t have one, and that will be bad,’ ” he said. “AB InBev will just buy the neighbor a sign!”

Related: These Are China’s 5 Best Craft Breweries

Still, he and his partner were uneasy. Would they still be able to show rugby matches sponsored by Heineken? And the craft beers he already offered, from California’s Firestone Walker and Kansas City’s Boulevard? Under the agreement, he couldn’t price those for less than AB InBev’s beers. “So how would that look, those being sold at 25 kuai [yuan] when Goose Island is 20 kuai?” he says. Ultimately, he and his partner didn’t sign: They didn’t want to lose control.

AB InBev’s offer may have been heavy-handed, but in China it’s legally unproblematic. If it tried a similar takeover in the U.S., it would face antitrust action under laws that have been in place for 80 years. Before Prohibition, the brewers owned the bars. They sold their product cheaply, squeezing the profits out of saloons and tempting bar managers to juice margins by introducing gambling and prostitution. After Prohibition was overturned, a three-tier distribution system—including a middleman distributor to negotiate with bars—became a staple of alcohol regulation, keeping big brewers’ influence at a remove from bars.

On the other side of the world, this system doesn’t exist, and Chinese bars have a tough time turning down the kind of money AB InBev offers. John Guy, a quick-talking Australian whose ­McCawley’s chain of bars in southern China had sales last year topping $10 million, says he has heard of bar owners being offered 1 million yuan (about $150,000) to switch all their draft beer to AB InBev brands. Guy prides himself on his range of overseas craft beers and says he would never accept such a deal. But other bar owners don’t have the same choice. “Some bars run at break-even and make money on tap bonuses—$15,000 a year on some,” he says. For them, AB InBev looks like a lifeline.

The bar at Beijing’s Pei Ping Machine Brewery. Two-thirds of the beers on tap are Chinese, but AB InBev’s Goose Island is on the menu too. Photograph by Mark Leong for Fortune 

AB InBev is also targeting China’s distributors. Fortune has seen a contract between AB InBev and one of the country’s nationwide distributors under which the distributor must report to AB InBev before it signs a craft-beer deal with another brewer. “Dealers and AB InBev should gather statistics and written confirmation regarding the super premium beer products’ brand and sales volume before both sides sign the agreement,” says the contract, issued last year. In essence, AB InBev gets veto power over whether the distributor sells another company’s craft beer.

Previously in China, distributors would sign similar contracts but could carry other beers through side deals. But through contracts like this one, AB InBev has hamstrung distributors. A distributor owner who requested anonymity because he didn’t want to antagonize a powerful player told Fortune he was offered a deal to carry Goose Island, but it would have restricted him from storing competing brands in the same warehouse—effectively keeping his small company from carrying the rivals.

Behavior like this would likely get quashed in the U.S. During AB InBev’s acquisitions of breweries in North America in recent years, craft brewers complained that the beer behemoth was trying to curb competition by striking similar deals with distributors. The Justice Department scrutinized the practice, and in July it announced a settlement with AB InBev curbing such deals and requiring the opportunity for formal DOJ review of future acquisitions. As far as anyone knows, there’s no similar action afoot in China.

Rebecca Kuo, an AB InBev spokesperson, declined to comment on AB InBev’s relationships with China’s bars, calling them “commercially sensitive matters.” She added that InBev had given away flow meters to improve availability and sales promotions of the company’s beers and that “it is ultimately up to the wholesalers as to which beers they choose to carry.” Goose Island president Ken Stout said in a statement that drinkers in China and other non-U.S. markets “have responded really well to our beer.”

In a country where imported beers—even mass-market ones like Budweiser—have a patina of luxury, AB InBev has steadily expanded. The company controlled 15.7% of China’s market by volume in 2015, up from 11.7% in 2011, according to Euromonitor, trailing only domestic giants China Resources Holdings (which brews the world’s top-selling beer, Snow) and Tsingtao.

AB InBev doesn’t break out craft numbers, but its China sales grew 4%, to $3.4 billion, in the first nine months of 2016, and earnings before taxes and adjustments jumped 19%, to $973 million. That’s a 30% profit margin—impressive in a country that ranks dead last among the world’s top beer markets for profitability.

Nicolas Rapp

That gives the company piles of cash to throw around. China’s beer veterans say AB InBev has launched a frenzied hiring blitz for its craft unit, offering salaries three to four times what the pros could earn elsewhere. Two salespeople from Slow Boat left last year, Jurinka says, and Gary Brown’s distribution business had two defections. Daniel Dumbrill, owner of Shenzhen microbrewery Taps, was stunned when the AB InBev district manager for all of Asia called one of his staff and demanded, “Why are you not working for us?” The company is even poaching the beer proselytizers who helped build China’s craft scene. Two hip women from Shanghai and their Chihuahua—a team known collectively as BrewGirl—sold homebrewed beer out of their Mini Cooper for two years before one joined AB InBev last year.

AB InBev will even hire customers. In September, Goose Island advertised on Chinese social media looking for young people to fill bars: “Do you LOVE drinking Goose Island? Do you think it’s even better when it’s FREE? Or, better yet, getting PAID to attend these events? Join the Goose Family and these dreams really can come true.” The company promised drinkers in Beijing and Shanghai, ages 20 to 40, that they would earn money in addition to “beer and swag.” If AB InBev is going to go to the trouble of controlling China’s bars, they had better be crowded.

The brewer also offers discounted and sometimes free kegs to bars to build Goose Island’s popularity—and that’s the tactic some competitors fear most. Craft brewmasters believe that AB InBev is distorting the market, dragging down prices for craft beer while incurring losses that smaller brewers can’t sustain. Joe Finkenbinder of Bionic Brew in Shenzhen says he has heard of Goose kegs selling for a third of the cost of his kegs. “They’re using that as just the tip of the spear and then driving the prices into the ground,” he says.

Not everyone selling craft beer in China is critical of AB InBev. “I’m actually excited about what they’re doing,” says Dumbrill, the Taps owner. Dumbrill opened a location in Chongqing, in ­Sichuan province, a less affluent city where his staff is constantly explaining to customers why craft beer is more expensive than what’s being sold down the street. He expects that the multi­national’s splashy marketing campaigns will help teach Chinese drinkers about the differences between, say, an IPA and a lager.

Heavy promotions of Goose Island also help bars attract customers who, in theory, will try other beers. Li Wei, a 35-year-old host on CCTV, co-owns a Beijing brewpub called Pei Ping Machine Brewery. He added two Goose Island taps last year. In return, AB InBev last October delivered two free kegs of Goose Island’s Bourbon County Brand Stout, a special-edition beer whose annual short-term release in the States is celebrated among the craft cognoscenti. Li’s tap house sold it in eight-ounce glasses for $14. He calls AB InBev a partner.

Some of AB InBev’s freebie promotions mirror the way craft beer is sold worldwide. Mass-market brands like Budweiser lend themselves well to conventional advertising, says Anna Ward, drinks analyst at Euromonitor, but “when you advertise craft, you take away from its credentials.” Hollywood doesn’t market an indie film the same way it does the latest Transformers blockbuster; the same logic applies to beer. That’s a key distinction, because the distaste for “big beer” that fueled the craft boom in the U.S. is bound to migrate to China, if it hasn’t already. Total beer volumes sold in China have declined since 2014. AB InBev has told analysts it plans to boost profits in the country by focusing on premium beers, and it may be working—its China revenue is growing even as sales by volume decline.

For all its recent spending on Goose Island, AB InBev is still waiting for a payoff. After the company blanketed Chinese cities with events and discounts last summer, there were reports of tepid sales. Insiders say at one point Goose Island flooded bars and restaurants with kegs priced at cost, eager to move the beer before it went stale.

The consequences of such hiccups may be tiny in a craft-beer market that’s still tiny itself. Once upon a time, the U.S. craft market was equally microscopic, and AB InBev missed the trend. That’s a misstep it doesn’t want to repeat. And in early March it showed it was serious, acquiring the Boxing Cat brewery for an undisclosed sum. Jordan, the brewmaster, no longer has to worry about competing against the new giant in town. He’s now on the team.

A version of this article appears in the March 15, 2017 issue of Fortune.