SEATTLE, Washington — China’s e-commerce market is the largest in the world. In 2019, China produced $1.94 trillion in online sales, making up 54.7% of the global e-commerce market. In recent years, Chinese e-commerce companies have begun to target rural buyers and sellers. Doing so could lift thousands out of poverty, which would contribute to President Xi Jinping’s plan to eradicate poverty in China by the end of 2020. E-commerce in rural China has seen many successes so far.
Farmers and e-commerce
Many e-commerce companies have partnered with rural farmers and producers, allowing them to sell agricultural goods directly to consumers. In addition, e-commerce companies have given rural consumers access to the online marketplace, giving them more choice at better prices. The rural poor could be lifted out of poverty with easier access to resources produced in urban areas and the ability to sell products directly to urban dwellers.
Some argue that e-commerce has negative effects on certain people working in the agricultural supply chain and on farmers themselves. Informal markets in rural areas rely on interactions and bargaining between buyers and sellers. Farmers may lose the ability to bargain on an online marketplace. In addition, farmers may lose power at the hands of the company hosting the marketplace, since the company may decide how the item is branded and marketed. Even if farmers are able to market their own products online, they may not know how to brand their products uniquely or know how to use search engine optimization. Many farmers and rural sellers are beginning to rely on a new type of middleman: an e-commerce agent, who helps rural sellers manage their online marketplaces and reach consumers across the country.
How Companies Reach Rural Buyers and Sellers
The main challenge facing e-commerce companies in reaching rural areas is establishing infrastructure and logistics support. Some people living in rural areas have little experience using computers and some do not have access to the internet at all. Both the Chinese government and e-commerce companies see the rural population as a large and untapped market, making up 45% of China’s total population. The government has developed a series of policies to promote e-commerce in rural China, ranging from subsidies and development programs to regulations on the market. For example, the government has subsidized the modernization of rural lifestyles through technologically improved farming practices and funded training programs for rural sellers on basic business and e-commerce skills. Some large e-commerce companies have invested large amounts of money to expand their accessibility to rural buyers and sellers. Alibaba, for example, has invested $717 million in Huitongda Network Co. which assists rural sellers with online merchandising and marketing across China.
Accessing the online marketplace for buyers and sellers is quite simple. Taobao, for example, an online marketplace subsidiary of Alibaba, has established a strong presence in rural areas. From 2014 to 2018, the number of Taobao shops in rural areas increased from about 70,000 to 660,000. Rural consumers can sign up on a Taobao site that caters towards rural buyers. Rural sellers can set up their own online shop and begin selling their products right away.
Successes of e-commerce in Rural China
The effects of increased access to online marketplaces in rural areas in China are profound. Per capita income in e-commerce households in rural areas has been shown to be 80% higher than households not using e-commerce in the same communities. In areas called Taobao Villages, a village with 100 or more Taobao shops or a village that generates 10 million (RMB), e-commerce workers tend to earn more money than the national average of urban private-sector workers. From January to September of 2019, the per capita disposable income in rural areas grew 6.4% compared to a 5.4% growth rate in urban areas.
E-commerce in rural China is proving to be an innovative solution to reducing poverty levels. Farmers and agricultural producers are able to sell their products directly to urban consumers across China and rural consumers are able to buy products tailored to their needs. Both the government and numerous e-commerce companies see rural areas as an untapped market and have invested significantly in expanding rural infrastructure and logistics support. The effects of e-commerce have been great so far and China could continue to see decreasing poverty numbers in the future. Xi Jinping may not reach his goal of eradicating poverty by year’s end due to COVID-19 but China could move closer to eradicating poverty in the near future with the help of e-commerce.
– Harry Yeung
Photo: Flickr