Estimates of the financial loss during the first two months alone were up to $10 billion, Liu says. Well-off investors suffered with farmers: Net profit at New Hope Liuhe dropped 15% in the first half of the year to $141 million. The effect spread to Yum Brands of the U.S., whose KFC fast-food chain is pervasive in China and a client of New Hope Liuhe.
Unfortunately for Liu and his industry, the H7N9 virus is likely to return this year. The risk will be highest in November and December, according to the Chinese Center for Disease Control.
What were the harshest business lessons for Liu? One is that bigger, modernized operations are better for warding off disease. “Large-scale operations are sealed off” from potentially infected birds, he says. “There wasn’t one bird raised in large-scale operations that had H7N9.”
Liu, who uses his appointment to high-level government bodies to speak up for ag interests, says that businesses need to more candidly explain crisis actions to the media. “Many people did a lot of work and shouldn’t have been discriminated against,” he says.
The H7N9 outbreak also got Liu thinking more about overseas. “This time China had bird flu, but not many other countries had it,” he says. Subsequently he’s seen the purchase of Smithfield Food by Shuanghui International of China in a $7.1 billion deal. (Shuanghui’s Wan Long, with a stake below $600 million, is short of this list.)
For its part, New Hope Liuhe already has investments in 30 (mostly developing) countries in feed and poultry-processing facilities. Now, Liu says, “We may buy or invest in the shares of some good companies” in developed countries in order to obtain brands, management and overall skills, maybe by the end of this year. The goal would be to lift New Hope’s foreign revenue to as much as 30% in the next three years.