Report: "Taobao Villages" in Rural China Grow Tenfold in 2014

    By | Small Business

    E-commerce continued to surge in rural China in 2014, with the number of “Taobao Villages” growing more than tenfold from 20 at the end of last year to 211 today, according to a new report.

    The report, released by AliResearch, Alibaba Group’s research arm, underscored the potential of e-commerce to fuel economic activity in the country’s poorer, largely agrarian regions, where nearly half of China’s population resides.

    There are now some 70,000 Taobao Village merchants selling products on Alibaba Group-owned Taobao Marketplace, China’s largest shopping website, according to the report. That’s up from 15,000 sellers at the end of 2013. AliResearch estimated that commercial activity surrounding e-commerce provided 280,000 job opportunities in rural China this year, compared with 60,000 jobs in 2013.

    As defined by AliResearch, a Taobao Village is a cluster of rural e-tailers where at least 10% of village households engage in e-commerce or at least 100 online shops have been opened by villagers; and total annual e-commerce transaction volume in the village is at least RMB 10 million ($1.6 million).

    While e-commerce is booming in China’s big cities and wealthy coastal provinces, rural areas remain underpenetrated, hampered by residents’ unfamiliarity with digital technology, lower education and income levels, and a lack of infrastructure and investment capital.

    Alibaba Group Executive Chairman Jack Ma recently said that e-commerce can help to address China’s growing wealth gap as the country continues to urbanize, in part by creating larger, more efficient markets for agricultural products as demand for fresh, safe produce grows in cities.

    At the same time, e-commerce can help unlock the consumption potential of China’s countryside, Ma said in a recent speech that was translated into English by Tech in Asia. “We’re really hoping to bring e-commerce to all of China’s [many] villages, so that rural people can get a taste of the city life and sell their own products in the cities,” Ma said.

    Alibaba Group in October said it would invest RMB 10 billion ($160 million) over the next three to five years to build an e-commerce service system reaching 1,000 counties and 100,000 villages in a bid to encourage online shopping consumption in rural areas.

    Today, Alibaba Group said in a press release it would encourage rural entrepreneurs by providing financing, e-commerce training and marketing support.

    Ant Financial Services Group, an Alibaba affiliate, plans to offer financial solutions to Taobao Village merchants. Meanwhile, Taobao University, Taobao’s educational arm, will start a program of seminars in rural areas and build an online training platform.  Taobao Marketplace will also launch special promotions on items sold by rural Taobao shops.   

    According to the AliResearch report, there are Taobao Villages in 10 provinces. The coastal provinces of Zhejiang, Guangdong, Fujian, Hebei and Jiangsu accounted for more than 90 percent of the total number of Taobao Villages, but the phenomenon is spreading: four villages in the midwestern provinces of Sichuan, Henan and Hubei made the AliResearch list this year.

    In some rural areas, e-commerce is gaining sufficient scale to encourage the formation of support business such as delivery companies and web designers, drawing more local entrepreneurs to the industry. In Zhejiang, Guangdong, Fujian, Jiangsu, Shandong and Hebei, a total number of 19 Taobao Towns have come into being, each of which at least has three Taobao Villages.

    By investing in rural areas, Alibaba is hoping to better integrate farmers into the Chinese economy through Internet technology, allowing them to sell their produce and buy more goods and services online. In addition, some Taobao Villages have become centers for light industrial activity such as furniture production.

    By improving the outlook for employment in rural areas, more migrant workers who have moved to the cities will be encouraged to return to their home villages, bringing with them greater skills and knowledge, which in turn will stimulate local economic activity, according to Alibaba.

    “Let the rural people return to the earth, let the intellectuals return to the farms, and send the products of their agriculture all over the nation,” Ma said.

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