E-commerce: Changing the landscape of rural poverty
By Zhang Ling
Original, GPIG, 11-02-2016
E-commerce rural service center in Cheng County [GPIG/Photo by Jiao Meng]
As the Internet becomes more widely accessible, creative ways to reduce poverty such as e-commerce have been applied in many areas. These make full use of the channels connecting rural and urban markets, thus creating potential jobs and boosting rural economy.
From Street Vendor to Online Seller
Cheng County, in northwestern China's province of Gansu, has recently made exemplary efforts: it has managed to shake off poverty by selling agricultural products via warehouse-based online trading.
The county is a land rich in minerals as well as solar and animal agriculture resources. Many residents engage in the sale of agricultural products. They process these regional specialties in scattered family workshops and then carry them in bags to markets around neighboring counties and villages. Transaction volumes are low, sales are uncertain, and the marketing model is energy-consuming.
To make the matter worse, it is difficult to connect farmers to markets, particularly those living in poor regions with scant commercial infrastructures and information imbalances.
In June 2013, the county became the first pilot zone for poverty reduction through e-commerce in northwest China. It not only decreases information asymmetry between producers and consumers, but also accelerates connectivity between sales channels and platforms. Keeping in touch with changes in consumer demands and market fluctuations, local farmers expand their income and reduce poverty by selling their agricultural products on the national market.
According to the local government, there are 102 impoverished villages in the county, among which 81 are now connected to high-speed Internet, offering the possibility to start local online businesses. Up to now, 17 towns have been covered, with 890 online shops opened and even more e-commerce service providers engaged.
Importantly, e-commerce not only provides more employment opportunities for rural residents, but also drives more college graduates and migrant workers back home where they can be self-employed.
"Zhang Xuan, a college-graduate village official who served for Cheng County, used to help us sell our products, such as free-range chicken and walnuts, via an online shop," said local farmers.
"Farmers are expected to escape poverty by increasing off-farm income. In the past, farmers spent their leisure time playing cards, gossiping or watching TV during the off-season. But today, sitting in front of computers, they manage online stores," added a local official.
Villager from Cheng County smiles. [GPIG/Photo by Jiao Meng]
Buying Online
In April 2015, Cheng County set up its own Taobao (an Internet distribution website launched by China's e-commerce giant Alibaba) rural service center to help rural citizens shop and do business online.
The center also serves as a platform for distribution, supply chain optimization, quality inspection as well as employee training , aiming at cutting the living expenses of local citizens and improving their economic performances.
"In addition, the center also employs locals as its partners and increases their off-farm opportunities. These partners are trained and sustained financially and technically; they are also tasked with helping villagers, most of whom know little about online shopping, to make purchases on the Internet," said Tang Zhongqiang, Alibaba's regional manager of Taobao Villages.
According to the local center, villagers pay after receiving goods and can also return goods back if they are not satisfied with their purchase. If people buy large equipment, the center’s partners can also help with installation and provide post-sale services. Moreover, locals can also pay phone and utility bills at the center’s location.
"My neighbor Chen Huaimin, a 60-year-old online shopper, can't help buying daily supplies via the Internet. It is because he enjoyed good service when buying a leather jacket online last April," pointed out Chen Yanping, also a villager from Cheng County.
In the case of another villager Chen Xiangxiang, Taobao Village helped her save money and energy in buying large electric appliances like a refrigerator, oven, washer and air-conditioner when renovating and decorating her house.
"For example, a Haier three-door refrigerator might be sold for 2,680 yuan (U.S $398) in stores, but only costs 1,299 yuan (U.S. $193) online. Chen Xiangxiang can save 1,381 yuan (U.S $204) through e-commerce," introduced Chen Yanping.
"In the past, deliveries could only reach counties and towns, but now they can reach villages directly. The center is introducing locals to online shopping for the first time. It also pushed logistics platforms to reach villages at the grass-root level and occupy rural markets," indicated a partner working for the Taobao Village.
Tang Zhongqiang of Alibaba said helping locals make purchases on Taobao can also help improve e-commerce-related knowledge among rural people, and it's expected that in the future rural online buyers, or at least some of them, will become online sellers.
Up to now, a total of 40 rural service centers has been established in about 15 towns in Cheng County. Their sales volume now stands at more than 8.55 million (U.S.$ 128), accounting for 77,000 transactions.
Online seller shows how to buy via WeChat. [GPIG/Photo by Jiao Meng]
Digitizing Traditional Enterprises
"In an effort to respond to the needs of online shoppers, we created an online retail store that makes all our new products exclusively available online. It makes our business more profitable as revenue grows quicker," spoke Chen Yanjun, who used to be a storeowner in Cheng County.
E-commerce brings new market opportunities across China for enterprises, while pushing traditional retailers to reinvent and upgrade by embracing "O2O". All information about a product or service is available just one click away.
A company from Cheng County specializing in honeysuckle began to integrate its online and offline retailing in 2014 with the help of the local government. In the past, it only sold honeysuckle vines to other factories for further processing, which could then be used in herbal medicine, but the profit margin wasn’t that big.
Now, it has digitized its retail services and opened up its official Taobao online store. Furthermore, a new honeysuckle tea factory was also set up after integrating natural resources into the digitization of sales and management. With an enlarged customer base and market, its online income reached 1 million yuan (U.S. $148,000), accounting for 33 percent of its sales revenue.
Going digital has been a trend and can be observed across many industries in Cheng County today. For instance, hotel and retail businesses have taken a digital initiative to go online via e-commerce, thus reaching a larger customer base and improving business visibility as well as profitability.
Setting off a Chain Reaction
Since e-commerce businesses have been rapidly growing and are expected to grow even more in Cheng County, they also became a major factor changing the shape of local logistics industries, scenic-spot-based agritainment, and rural informatization.
To build an e-commerce platform based on supply chain management, local government and business retailers have mobilized their social resources to attract more investments. Those investments are used to set up more physical warehousing locations, distribution centers and courier firms, as well as to support local start-ups.
An increasing number of independent online stores from Cheng County have signed up for a Taobao Account or teamed up with JD.com. Additionally, villagers also managed to open stores via WeChat, a do-it-all super mobile e-commerce platform. By using tierce e-commerce platforms, a well-designed WeChat store can be built within 5 minutes and offer multiple payment options. And the best part is these services are free.
"This kind of business model shrinks the distance between villagers and urban areas. As they get closer they get to know more about each other, and so rural-urban integration benefits all," a local official claimed.
To solve delivery issues and boost the sales of agricultural products, much of rural roads are paved and well-maintained with these investments. And Countryside Inns, privately owned rural hotels, are also being established, boosting rural tourism, helping the generation of employment, as well as improving the earning capacity of locals.
Meanwhile, rural information service centers are also formed, covering 17 towns in Cheng County, where local people can easily learn about supply and demand, job opportunities and national agricultural policies. The center is also helps the elderly and people without an Internet access to buy daily necessities and pay bills.
"Cheng County set a fine example for all rural counties in China. While tapping into market methods and Internet technologies to alleviate poverty, we should still employ traditional circulation systems, explore new business models, and nurture a supportive environment for e-commerce in rural areas," indicated Hong Yong, an assistant researcher at the Research Institute of the Credit and E-commerce School, Ministry of Commerce.
"A booming e-economy in rural China will help us realize the goal of building a moderately prosperous society in all aspects," Hong believes.
By Zhang Ling
Original, GPIG, 11-02-2016
E-commerce rural service center in Cheng County [GPIG/Photo by Jiao Meng]
As the Internet becomes more widely accessible, creative ways to reduce poverty such as e-commerce have been applied in many areas. These make full use of the channels connecting rural and urban markets, thus creating potential jobs and boosting rural economy.
From Street Vendor to Online Seller
Cheng County, in northwestern China's province of Gansu, has recently made exemplary efforts: it has managed to shake off poverty by selling agricultural products via warehouse-based online trading.
The county is a land rich in minerals as well as solar and animal agriculture resources. Many residents engage in the sale of agricultural products. They process these regional specialties in scattered family workshops and then carry them in bags to markets around neighboring counties and villages. Transaction volumes are low, sales are uncertain, and the marketing model is energy-consuming.
To make the matter worse, it is difficult to connect farmers to markets, particularly those living in poor regions with scant commercial infrastructures and information imbalances.
In June 2013, the county became the first pilot zone for poverty reduction through e-commerce in northwest China. It not only decreases information asymmetry between producers and consumers, but also accelerates connectivity between sales channels and platforms. Keeping in touch with changes in consumer demands and market fluctuations, local farmers expand their income and reduce poverty by selling their agricultural products on the national market.
According to the local government, there are 102 impoverished villages in the county, among which 81 are now connected to high-speed Internet, offering the possibility to start local online businesses. Up to now, 17 towns have been covered, with 890 online shops opened and even more e-commerce service providers engaged.
Importantly, e-commerce not only provides more employment opportunities for rural residents, but also drives more college graduates and migrant workers back home where they can be self-employed.
"Zhang Xuan, a college-graduate village official who served for Cheng County, used to help us sell our products, such as free-range chicken and walnuts, via an online shop," said local farmers.
"Farmers are expected to escape poverty by increasing off-farm income. In the past, farmers spent their leisure time playing cards, gossiping or watching TV during the off-season. But today, sitting in front of computers, they manage online stores," added a local official.
Villager from Cheng County smiles. [GPIG/Photo by Jiao Meng]
Buying Online
In April 2015, Cheng County set up its own Taobao (an Internet distribution website launched by China's e-commerce giant Alibaba) rural service center to help rural citizens shop and do business online.
The center also serves as a platform for distribution, supply chain optimization, quality inspection as well as employee training , aiming at cutting the living expenses of local citizens and improving their economic performances.
"In addition, the center also employs locals as its partners and increases their off-farm opportunities. These partners are trained and sustained financially and technically; they are also tasked with helping villagers, most of whom know little about online shopping, to make purchases on the Internet," said Tang Zhongqiang, Alibaba's regional manager of Taobao Villages.
According to the local center, villagers pay after receiving goods and can also return goods back if they are not satisfied with their purchase. If people buy large equipment, the center’s partners can also help with installation and provide post-sale services. Moreover, locals can also pay phone and utility bills at the center’s location.
"My neighbor Chen Huaimin, a 60-year-old online shopper, can't help buying daily supplies via the Internet. It is because he enjoyed good service when buying a leather jacket online last April," pointed out Chen Yanping, also a villager from Cheng County.
In the case of another villager Chen Xiangxiang, Taobao Village helped her save money and energy in buying large electric appliances like a refrigerator, oven, washer and air-conditioner when renovating and decorating her house.
"For example, a Haier three-door refrigerator might be sold for 2,680 yuan (U.S $398) in stores, but only costs 1,299 yuan (U.S. $193) online. Chen Xiangxiang can save 1,381 yuan (U.S $204) through e-commerce," introduced Chen Yanping.
"In the past, deliveries could only reach counties and towns, but now they can reach villages directly. The center is introducing locals to online shopping for the first time. It also pushed logistics platforms to reach villages at the grass-root level and occupy rural markets," indicated a partner working for the Taobao Village.
Tang Zhongqiang of Alibaba said helping locals make purchases on Taobao can also help improve e-commerce-related knowledge among rural people, and it's expected that in the future rural online buyers, or at least some of them, will become online sellers.
Up to now, a total of 40 rural service centers has been established in about 15 towns in Cheng County. Their sales volume now stands at more than 8.55 million (U.S.$ 128), accounting for 77,000 transactions.
Online seller shows how to buy via WeChat. [GPIG/Photo by Jiao Meng]
Digitizing Traditional Enterprises
"In an effort to respond to the needs of online shoppers, we created an online retail store that makes all our new products exclusively available online. It makes our business more profitable as revenue grows quicker," spoke Chen Yanjun, who used to be a storeowner in Cheng County.
E-commerce brings new market opportunities across China for enterprises, while pushing traditional retailers to reinvent and upgrade by embracing "O2O". All information about a product or service is available just one click away.
A company from Cheng County specializing in honeysuckle began to integrate its online and offline retailing in 2014 with the help of the local government. In the past, it only sold honeysuckle vines to other factories for further processing, which could then be used in herbal medicine, but the profit margin wasn’t that big.
Now, it has digitized its retail services and opened up its official Taobao online store. Furthermore, a new honeysuckle tea factory was also set up after integrating natural resources into the digitization of sales and management. With an enlarged customer base and market, its online income reached 1 million yuan (U.S. $148,000), accounting for 33 percent of its sales revenue.
Going digital has been a trend and can be observed across many industries in Cheng County today. For instance, hotel and retail businesses have taken a digital initiative to go online via e-commerce, thus reaching a larger customer base and improving business visibility as well as profitability.
Setting off a Chain Reaction
Since e-commerce businesses have been rapidly growing and are expected to grow even more in Cheng County, they also became a major factor changing the shape of local logistics industries, scenic-spot-based agritainment, and rural informatization.
To build an e-commerce platform based on supply chain management, local government and business retailers have mobilized their social resources to attract more investments. Those investments are used to set up more physical warehousing locations, distribution centers and courier firms, as well as to support local start-ups.
An increasing number of independent online stores from Cheng County have signed up for a Taobao Account or teamed up with JD.com. Additionally, villagers also managed to open stores via WeChat, a do-it-all super mobile e-commerce platform. By using tierce e-commerce platforms, a well-designed WeChat store can be built within 5 minutes and offer multiple payment options. And the best part is these services are free.
"This kind of business model shrinks the distance between villagers and urban areas. As they get closer they get to know more about each other, and so rural-urban integration benefits all," a local official claimed.
To solve delivery issues and boost the sales of agricultural products, much of rural roads are paved and well-maintained with these investments. And Countryside Inns, privately owned rural hotels, are also being established, boosting rural tourism, helping the generation of employment, as well as improving the earning capacity of locals.
Meanwhile, rural information service centers are also formed, covering 17 towns in Cheng County, where local people can easily learn about supply and demand, job opportunities and national agricultural policies. The center is also helps the elderly and people without an Internet access to buy daily necessities and pay bills.
"Cheng County set a fine example for all rural counties in China. While tapping into market methods and Internet technologies to alleviate poverty, we should still employ traditional circulation systems, explore new business models, and nurture a supportive environment for e-commerce in rural areas," indicated Hong Yong, an assistant researcher at the Research Institute of the Credit and E-commerce School, Ministry of Commerce.
"A booming e-economy in rural China will help us realize the goal of building a moderately prosperous society in all aspects," Hong believes.
