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Rural Ecommerce in China: Opportunities and Challenges
By admin October 3, 2018

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Due to significant development in logistic infrastructure and the rising Internet penetration rate in China, ecommerce has become an increasingly familiar term for Chinese rural residents- approximately 45 percent of the total population. This segment of the population has long been excluded from the convenience of buying and selling goods online. According to the ministry of commerce, rural online sales accounted for 17.3 percent of total e-commerce in China this year. Realizing the huge opportunities in rural ecommerce, both Chinese government and private companies are making strategic moves to help rural residents become as connected as their urban counterparts.

This April, Alibaba, the largest e-commerce company in China, has invested $717 million in a Chinese rural online services platform, which specializes in supply chain logistics, warehousing and technology. Attracted by the huge market potential, JD.com, another ecommerce giant in China, is focusing improving logistics services in rural China by hiring more delivery personnel and even testing drone delivery. China Minsheng Investment Group (CMIG), the country’s largest private investment conglomerate, just announced its plan to invest 10 billion yuan (US$1.46 billion) to connect farmers with their urban customers through an Online-to-Offline model.

Meanwhile, having realized the potential of e-commerce as an economic force driving rural development, the Chinese government has developed a series of policies to encourage and regulate the market. These policies cover a variety of aspects, including building logistics infrastructure in rural areas, regulating third-party payment platforms to make online transactions safer, and the setting up exemplary ecommerce zones.

So, how does ecommerce in rural China operate and what exactly is an Online-to-Offline model? Take Alibaba’s online retailing platform, Taobao, as an example. Rural residents can sign up on a website designed specifically for rural users, they can buy goods that are tailored to their needs, or set up their own online shop to become a seller. In some villages where tourists are abounding, rural retailers even set up physical stores to display their products. This strategy of attracting customers online and enticing them to purchase offline is call Online-to-Offline model.

The positive impact of rural ecommerce is pronounced. The online transactions and ecommerce-related services such as delivery and warehouses greatly contribute to the local GDP and household disposable income, while creating new jobs directly and indirectly. It has also transformed the mentality of rural residents and encouraged them to actively participate in the market economy.

Despite the opportunities for rural development, further progress in rural ecommerce was hindered by poor computer literacy and talent drain in these areas. Many farmers sell similar goods without unique branding, which causes fierce competition in prices among sellers. They are not savvy enough to create better web design or do searching engine optimization, they also lack the ability to manage and retain a large amount of customers when their businesses scale up. The challenge for the next phase of ecommerce development in rural China has moved on to building human capital towards a digital economy.

 

FURTHER READINGS:

Alibaba invests 4.5 billion yuan in online services firm to boost rural strategy in China

China Minsheng bets on rural economy with 10 billion yuan investment fund

JD.com is leapfrogging rural China into online shopping

How E-commerce is Transforming Rural China


Thanks for sharing !


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