Companies, authorities move to tap rural e-commerce

The burgeoning popularity of online shopping in rural China is driving e-commerce companies to the countryside and fueling local businesses.

China's e-commerce superstar Alibaba Group is set to lead the trend after it announced plans this week to invest 10 billion yuan (1.6 billion U.S. dollars) within three to five years to build thousands of facilities in rural China.

The facilities will include 1,000 "county operational centers" and 100,000 "village service stations," extending Alibaba's network 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.

The move comes at a time when e-business is decelerating in China. According to the China Internet Network Information Center, overall online trade in China saw a year-on-year expansion of 40 percent in 2013, a tepid growth after years of unstoppable sales.

Companies are looking to the vast countryside to sustain growth, as rural residents show more potential than their city peers. In a report published earlier this year, Alibaba said that the online shopping growth rate in Chinese counties exceeded that of cities by 13.6 percent year on year in 2013.

"There is huge potential in the rural market, given that the number of people with access to the Internet is constantly rising in remote areas, laying the foundation for online shopping," said Gao Hongbing, vice president of Alibaba.

Other companies like JD.com, Dangdang.com have all waded into the rural sector.

While the e-commerce giants crave more consumption by the rural population, farmers are taking advantage of the companies' platforms to sell their produce online, driving local economic growth through healthier sales and increased employment.

In Longnan City, northwest China's Gansu Province, stores selling local products via the Internet can be seen in almost every village, allowing people from across the country to purchase specialties such as walnuts, honey and mushrooms with a click of the mouse.

Liu Yafei, a farmer in Zhongba Village, said that the turnover of his online walnut business topped 3.8 million yuan in 2013, an achievement he could barely dream of a few years ago, when the specialty could only fetch extremely low prices from retailers in neighboring counties.

"In the past, walnuts were sold to local retailers at about 15 yuan per kg, but now with the Internet, buyers are offering much higher prices," Liu said.

During peak seasons, Liu often hires about 30 people to help him polish, pack, load and transport the products, generating jobs.

A similar situation can be seen in Feixi County, Anhui Province. The government manages online sales platforms that have allowed retailers to post 17,000 adverts for specialty products over the past six years. Total turnover via the platforms has reached 200 million yuan, effectively improving farmers' earnings.

Migrant workers are also bringing their virtual shopping habits to the countryside when they return from cities, putting more steam behind the trend as they introduce e-commerce to friends and family.

Li Xue, who lives in Sanren Autonomous Township of She Ethnic Group in east China's Zhejiang Province after years of laboring in big cities, acts as an informal agent to help her fellow villagers with online shopping.

"There are five orders every day on average, and the products range from clothing to agriculture tools to domestic appliances," Li said.

Recognizing the economic potential, governments are offering e-commerce training to locals and working to improve logistics.

The government of Longnan, for instance, has decided to allocate up to five million yuan in funds to support its e-business development each year. In Yinchuan, capital of northwest China's Ningxia Hui Autonomous Region, the city government plans to train 10,000 people in e-commerce this year.

Despite bright prospects, authorities have several stumbling blocks to remove, such as poor broadband infrastructure and low levels of logistics.

Pan Hong, head of the business department of Yishang Digital Technology Co. Ltd in Anhui Province, said that training is essential.

"Currently, there is a dearth of talent in marketing, operations and designing, which hampers the development of the industry," Pan said.

Gao Hongbing said that it will take the intervention of e-commerce companies and government support to solve the quandary.

"Companies need to beef up support for the rural sector in terms of technology and resources, while governments should step up efforts in infrastructure construction and development guidance for local people," Gao said.