Alibaba targets rural expansion with major investment

Chinese e-commerce giant Alibaba Group plans to invest 10 billion yuan (1.6 billion U.S. dollars) within three to five years to build thousands of facilities in rural China to tap rising demand in these areas, it announced on Monday.

The facilities will include 1,000 "county operational centers" and 100,000 "village service stations" and will see Alibaba's network extend to one third of China's counties and one sixth of its rural areas. The centers will focus on improving logistics services and cultivating more buyers and sellers in rural areas.

"We hope people in rural areas can enjoy the same consumption choices as in the cities and talent can set up businesses in rural areas," said Zhang Yong, chief operating officer of Alibaba, which is on an expansion drive after its New York IPO on Sept. 19 raised 25 billion U.S. dollars and made it the world's second-largest Internet company in market value.

"We hope farmers can directly purchase materials from manufacturers to lower costs and sell farm produce all over the world without leaving home," he said.

China's online retail volume increased by 41 percent year on year to 1.85 trillion yuan in 2013, but the rural market has been identified as a new growth engine as urban demand for online shopping tempers.

Sales from rural areas on Taobao, Alibaba's major shopping platform, accounted for 9.11 percent of the total in the first quarter of 2014, rising from the 7.11 percent in the second quarter of 2012, according to a market report released by Alibaba on Monday.

Alibaba Vice President Gao Hongbing predicted that the size of the rural e-commerce market will reach 460 billion yuan in 2016.