'Taobao Villages' spark China's rural economy

In a year when college graduates are struggling to find jobs, a growing number of Chinese farmers are getting rich at the click of a mouse.

An Baokang has become a millionaire by selling crafts online from his hometown of Wantou Village in east China's Shandong Province, with sales exceeding two million yuan (about 326,800 U.S. dollars) last year.

"Urban people revere a natural way of living, and I offer it to them with pure, natural crafts," said An, who runs an online store selling handwoven household supplies, such as tatami and tea tables made from straw.

Wantou, a village 350 km from Beijing, has become known as one of China's "Taobao Villages," home to over 500 online stores on Taobao, China's largest online shopping site under the e-commerce giant Alibaba.

EMPL0YED AT HOME

With a stable but "boring" job in a nearby town, An in 2009 pioneered online sales of handwoven crafts in Wantou, where a tradition of wicker handicrafts has been handed down for at least 600 years.

An has since opened a physical store and a small factory with the cooperation of six neighboring family workshops in order to fill the orders flooding in from customers across the country.

"The online store has gained popularity and trust among netizens, who also bring business to my physical store," said An, adding that he has plans to expand the 150-square-meter physical store to about 1,000 square meters.

"Customers keep pouring in and I should seize the opportunity to expand production," he said.

At first, most of An's fellow villagers, who seldom set foot in large cities, didn't believe virtual shops could bring in customers, so they didn't follow suit, said An.

Now, nearly all households in Wantou have linked their family workshops to online stores. Their products are sold to customers as far away as northwest China's Xinjiang Uygur Autonomous Region, about 2,000 km from Wantou.

In this small village, the success of online sales is also driving other business. To date, there are over 20 express delivery companies in the village serving more than 500 family workshops and online stores.

GRASSROOTS IN E-BUSINESS

Wantou Village is just one of 14 "Taobao Villages" in China, according to Alibaba, a leading business-to-business website under the Chinese Internet giant Alibaba Group.

Alibaba defines a "Taobao Village" as a village in which over 10 percent of households run online stores and village e-commerce revenues exceed 10 million yuan per year.

By the end of 2012, more than 1.63 million Taobao stores were registered in rural areas. Total transactions from the 14 "Taobao villages" hit 5 billion yuan last year, according to a report released by Alireserach.

The growth of "Taobao Villages" has brought vitality to traditional agricultural areas of China, said Chen Liang, senior expert with Aliresearch.

Chen said that the villages are exploring a new path for China, with potential to realize sustainable economic growth and narrow the urban-rural income gap, much like the miracle created in Xiaogang Village over 30 years ago.

Located in eastern Anhui Province, Xiaogang Village is known for its1978 reforms in which rural collectives distributed land-use rights to households through 30-year contracts. The move boosted grain supply significantly.

"A 'Taobao Village' is similar to Xiaogang Village in the information age," Chen says, adding that online business will revitalize the small-scale peasant economy and increase domestic consumption in rural areas.

Earlier this month, the government of Shandong Province, a region known as China's farm produce powerhouse, put forward preferential policies for developing e-commerce, including helping graduates and migrant workers start online farm produce trade in remote areas.

China's Internet users reached 591 million in the first half of 2013, and e-commerce revenues hit 4.98 trillion yuan in the same period.

"We should pay closer attention to 'Taobao villages' in the long term. They are a transitional stage in agricultural and rural modernization," said Qiu Zeqi, director of the Center for Sociological Research and Development Studies of Peking University.