China's rural e-commerce has been enjoying good momentum in recent years, its scale has continued to expand, and the role that e-commerce is able to play in helping farmers increase their incomes is becoming increasingly more apparent. First, in 2021, national rural online retail sales reached RMB2.05 trillion, a year-on-year increase of 11.3% and 2.4% faster growth rate than the previous year, and national online agricultural product retail sales came to RMB422.1 billion, a year-on-year increase of 2.8%.
Second, the number of netizens in rural areas also continues to grow. In recent years, China has vigorously promoted the construction of internet infrastructure, and all of its administrative villages were enjoying broadband internet access by the end of November 2021. A total of 1.032 billion internet users existed in China; 284 million of them, or 27.6% of the total, lived in rural areas; the internet penetration rate in rural areas was 57.6%, or 1.7 percentage points more than in December 2020; and the urban-rural internet penetration rate gap narrowed by 0.2 percentage points as of December 2021, according to the 49th Statistical Report on Internet Development in China.
Third, logistics systems have improved in rural areas as well. A total of 37 billion express parcels were collected from and shipped to rural areas across China in 2021, facilitating rural-urban commodity exchanges totalling RMB1.85 trillion, according to State Post Bureau data. The three-tier logistics systems that cover the county, township, and village levels have been improved by integrating and optimising various logistics resources, and rural e-commerce logistics operation systems featuring public service centres, distribution centres, and village-level courier service stations have been established. A total of 1,212 county-level logistics distribution centres and 148,000 village-level e-commerce parcel stations were renovated in 2021, and 98% of China's townships and villages had direct access to major logistics companies and parcels were able to be delivered directly to more than 80% of the country’s administrative villages as of the end of that year.
Fourth, the application of new forms of business and new business models has also accelerated. Mobile phones have become new agricultural tools, livestreaming has become a new type of agricultural work, and data have become new agricultural materials. More farmers have been engaging in livestreaming in order to market their agricultural products, and the live commerce market has expanded rapidly. Customers throughout China placed more than 420 million orders for agricultural products through stores on short video-oriented social network company Kuaishou’s live commerce platform that are based in rural areas from January to October 2021, according to the 2021 Kuaishou Annual Data Report.
Rural e-commerce has played a notable role in poverty reduction, the digital transformation and upgrade of various industries, and innovation and entrepreneurship in rural areas.
First, rural e-commerce helped make it possible for China to eliminate absolute poverty in its borders. Comprehensive demonstration projects in which e-commerce is introduced to rural areas have been important parts of rural e-commerce work. The Ministry of Commerce and other government departments have provided support to a total of 1,489 counties as of 2021 under these projects. Commerce records indicate that online agricultural product retail sales in national-level poverty-stricken counties amounted to RMB40.66 billion in 2020, an increase of 43.5% year-on-year, which was 14.6 percentage points higher than in 2019, indicating that farmers are continuing to take their agricultural products online. By the end of 2020, 3.065 million e-businesses were operating in counties that had been designated as impoverished by the central government, which was 366,000, or 13.7%, more than in 2019.
Second, rural e-commerce promotes the digital transformation and upgrade of industries and provides new impetus for rural vitalisation. Rural e-commerce promotes the transformation and upgrade of the manufacturing industry in rural areas. Traditional industries such as small commodities in Yiwu City, Zhejiang Province, costumes in Caoxian County, Shandong Province, and small furniture in Suining County, Jiangsu Province, have developed rapidly with the help of rural e-commerce. Caoxian has gone from having a weak industrial foundation and the most impoverished residents of any county in Shandong Province to being the largest performance costume manufacturing base in China and the largest cross-border e-commerce wood product base in the world. Rural e-commerce also advances agricultural supply-side reform. Xiangshan County, Zhejiang Province, has applied digital production, marketing, and promotion to its Red Beauty citrus – a sweet, seedless, juicy mandarin, tangerine, and orange hybrid variety with an appealing orangish-red peel and tender pulp – industry. Greater efforts in areas such as origin endorsement and intellectual property rights protection have enabled Zhejiang to improve product quality, expand the influence of regional public brands, and help its farmers increase their incomes by more than 30%.
Third, e-commerce promotes innovation and entrepreneurship in rural areas. Having become a new stage for innovation and entrepreneurship in the countryside, e-commerce has been attracting the interest of increasing numbers of people who had been working as migrant labourers and university graduates who had been living elsewhere and causing them to return to their hometowns in order to start businesses. In 2021, 11.2 million people returned to or otherwise moved to rural areas in order to start businesses – 1.1 million, or 10.9%, more than in 2020. More than 80% of these entrepreneurship projects integrate primary, secondary, and tertiary industries and promote and involve farm tourism and live commerce. A total of 16.325 million rural online stores existed in China as of 2021.
The government of Ping'an District, Haidong City, Qinghai Province, for example, has introduced e-commerce resources represented by the Alibaba Group, built a site dubbed the Qingxiu Digital Headquarters that produces a style of traditional and colourful folk embroidery passed down among women of all ethnic groups in Qinghai Province known as Qingxiu, and accelerated consumption-powered poverty alleviation with the support of the State Taxation Administration. The Qingxiu Digital Headquarters has provided support with training and in other areas, cultivated 301 Qingxiu cultural inheritors, and advanced the development of 40 Qingxiu workshops. A total of 140 Qingxiu enterprises have been formed or established a presence in the area as of 2021, and the industry’s annual output value came to RMB125 million that year. The Qingxiu industry has promoted Qingxiu culture and played a key role in consolidating and expanding poverty alleviation achievements in coordination with the extensive drive for rural vitalisation by creating numerous jobs and increasing incomes for more than 100,000 villagers.
Author: Hong Yong (associate researcher at the Institute of Electronic Commerce, Chinese Academy of International Trade and Economic Cooperation)
