The challenge of rural e-commerce in China and the “Internet Plus Plan” launched by the Government
China is facing new and big challenges at home, especially in the countryside. Chinese rural areas in fact are becoming depopulated and what is not an intensive monoculture consisting of agriculture suffers from underdeveloped distribution channels and a lack of investments, resulting in job losses. The economic imbalance is particularly heavy for a country that aspires to become the world’s leading economy.
In 2014, the average income in the countryside was less than 1500 euros per year; that is less than half the urban area’s average. But the situation will change in the upcoming years. Many believe that the Internet will revolutionize the economic fabric of the countryside. At the end of June, 668 million Chinese were able to connect to the Internet, representing nearly half of the entire Chinese population (this introduction was written by the journalist Cecilia Attanasio Ghezzi for the Italian website “China Files”to the article “Cina, la scommessa dell’e-commerce rurale”).
Last July 4th, the Chinese Government unveiled the “Internet Plus Plan”. The government hopes to boost the growth in rural areas and link them to the more developed coastal areas. Prime Minister Li Keqiang stated that the “plan is aimed to integrate the mobile Internet, cloud computing, big data, and the Internet of Things with modern manufacturing, to encourage the healthy development of e-commerce, industrial networks, Internet banking, and to help Internet companies increase their international presence”.
One of the main goals of the plan consists of launching e-commerce into the countryside, where there is a potential market of 600 million people. The digital divide between rural and urban China has increased over the past few years. For this reason, the Plan launched by Prime Minister Li could do a lot to improve the current disparity between the rural and urban areas. At the same time, the plan would help grow e-commerce and e-commerce apps, a sector that nationally has recently experienced a strong growth. In 2014 the e-commerce value was 2.1 trillion dollars.
There are still difficult and complex challenges . The Internet does not cover all Chinese areas and people in the countryside have little knowledge and experience with technology. For this reason, last October, Alibaba declared it was ready to invest 1.3 billion euros in rural areas. Alibaba’s major competitor, Jd.com, announced a micro-financing program available to those who wanted to open an online shop that operated in the countryside.
Another challenge could be the huge number of central agencies tasked with overseeing and implementing the Plan’s efforts in the agricultural sector. The risks of misallocating state resources, implementing redundant policies, or just increasing corruption at the local level are also present and must be avoided, according to Lincoln E. Davidson, a Research Associate in Asia Studies at the Council on Foreign Relations.
The growth of e-commerce in rural areas could drastically improve the livelihoods of China’s rural residents, the common people. According to an Alibaba report drafted last year, the actual e-commerce companies in the countryside have already created 280,000 jobs, offering economic benefits to the inhabitants of rural areas. The same report stated that the growth of e-commerce in the countryside will increase from 24 billion euros in 2014 to more than 63 billion euros in the next two years. On the other side, the fact that only 30% of the rural population is online could represent an amazing growth opportunity. If China holds the record of most Internet and cell phone users in the world, more can be possible thanks to new mobile technologies that will improve the life of rural Chinese citizens.
Marco Bonaglia per Vivere Liquido