How e-commerce changes lives in rural China

Concerns over fake goods have also prompted some people to turn to online shopping.

PUBLISHED : Sunday, 05 June, 2016, 5:49pm
UPDATED : Sunday, 05 June, 2016, 6:27pm

Like several of her rural peers, Wang Xia, a farmer from Houtuan village in Shouguang city of Shandong province is reaping the rewards of China’s rapidly expanding rural e-commerce.

“I buy several of my daily necessities, clothing, fertilisers and even home appliances online. Not only is online shopping convenient, but also cheaper. In addition, I do not have to make long, trips to shopping malls,” she said.

E-commerce is not only helping to revitalise Chinese rural villages, home to half the population, but also opening the doors to a huge market for companies.

Wang’s family makes a living growing tomatoes in a 2,666 square-metre farm in the village and earned about 100,000 yuan (HK$118,000) last year. She purchased a new television set last month on Taobao, Chinese e-commerce giant Alibaba’s online shopping platform and made a single transaction of more than 5,000 yuan in a month.

Alibaba, which started its Rural Taobao strategy in late 2014 has set up 16,000 village-level and 380 county-level service centres to support its e-commerce activities and provide delivery services in rural areas. Alibaba owns the South China Morning Post.

Villagers like Wang can pick up goods they buy online at the nearest service centre which also sells products pre-ordered from merchants.

Concerns over fake goods have also prompted Wang to turn to online shopping.

“I buy infant milk formula for my two-year-old son from Tmall (Alibaba’s brand-focused e-commerce platform) and I don’t need to worry if it’s fake as the platform ensures the” product is genuine, she said.

Shi Binting, a Rural Taobao partner of Antao village’s service centre in the county-level city of Shouguang, said the gross merchandise volume (GMV) could reach 3,000 to 6,000 yuan per day.

“Most of our consumers are villagers. One of them once spent more than 200,000 yuan to buy a car and sent the same to this centre. There are some others who have spent more than 10,000 yuan to buy home appliances such as air conditioners,” Shi said.

Shi, who previously ran a shop selling cell phones in the village, said his income has more than tripled to about 10,000 yuan a month by being a partner who generates income primarily from charging service fees.

The income prospects offered by Rural Taobao for its partners have encouraged many youngsters to leave their jobs in cities and return home to run their own businesses.

Sang De, partner of a Rural Taobao service centre in Shouguang city’s Beiluo Township, is one of those.

“I had gone to Japan for work a few years ago. But I could not find anything that was to my liking, nor did I make any significant gains. I happened to learn about Rural Taobao and decided to come back last year,” she said.

The Beilou service centre was set up last October right before the Singles’ Day shopping festival.

Sang said the GMV at the service centre reached 430,000 yuan on that day (November 11) while monthly sales are about 400,000 yuan. During some festivals such as the Lunar New Year, the sales during a single month could surpass 1 million yuan, she said.

Sang declined to reveal how much she usually earns a month, but said she is happy with her income and the fact that she can stay with her family.

Another e-commerce giant, JD.com, is also expanding in the rural market by opening self-operated service centres and Jingdong Bang, a home appliance delivery and maintenance team in partnership with local shops.

JD.com, which runs about, 1,000 service centres, plans to have 1,500 of them by the end of this year. Jingdong Bang has opened more than 1,300 outlets.

Changjiang Securities analyst Li Jin said the rural e-commerce market has become more complex due to limitations in logistics, payment systems and product diversity.

Brick-and-mortar outlets are therefore important as villagers can get access to e-commerce and delivery services through these services centres, Li said in a study. One-stop services can also help build up rural residents’ online shopping habits.

Unlike Alibaba and JD.com, electronics and home appliances retailer Suning Commerce Group’s rural strategy is to open self-operated stores. It plans to invest 5 billion yuan this year to open 1,500 physical stores and expand its agent and authorised services network in rural areas.

The strategy of opening self-operated stores will allow Suning to have deeper integration with the local market, internet consulting company iResearch said in a report.

It’s hard to say which company’s business model will have an advantage, but Suning’s strategy will be more welcomed by local governments as its investment will also drive growth in other sectors and create more jobs in underdeveloped areas, it said.