Alibaba delivers benefits of a new digital economy to remotest China
Villagers embrace e-commerce using Taobao, the online shopping subsidiary of Jack Ma’s internet group
We drive through the mist, down a long country road, to reach Peixie. At first sight this remote village seems to have little connection with the 21st-century economy. But step inside the company started by Hua Yongle, on the main street, and you will soon see why it is one of the 20 Taobao villages selected by internet e-commerce giant Alibaba. The firm launched by Chinese entrepreneur Jack Ma (due to be floated soon on the New York stock exchange) – or more exactly its Taobao subsidiary – has completely changed the face of Peixie.
Over a quick tea Hua, 32, explains how he started his business. Behind him two staff members respond by email to potential buyers, register orders and sort stacks of invoices. The hammer-and-sickle Communist party emblem hangs on the wall. He is a member, but sees nothing odd about devoting all his time to trade. Hua has been particularly successful in growing a retail business, which delivers all over China, selling locally manufactured bamboo mats.
Like many young Chinese, Hua often made purchases on Taobao, the country’s equivalent of eBay. Four years ago he realised the site’s potential for marketing locally sourced bamboo mats. He reckons he owes a great deal to Ma, who started Alibaba about 15 years ago with a group of friends. It launched as a business-to-business venture enabling companies all over the world to find the right supplier in China. Then in 2003 Ma added Taobao, for consumers.
Wall Street brokers probably have little idea how much Alibaba’s various portals have changed the lives of ordinary Chinese. With a smartphone and Alibaba’s online payment service, people can settle their utility bills in just a few seconds. They can call a cab too and pay the fare on arrival, with no need for cash. Even in the remotest areas a huge range of products can be had at competitive prices. Look in any bookshop in China and you will find countless biographies, all claiming to explain the key to success following Ma’s example.
Logistics have developed apace. Mats made in Peixie, Fujian province, are delivered in two or three days, in an area reaching 1,000km to the north and all round Shanghai. Although labour costs have increased in China, they are still low enough for transport to only account for one-10th of the price of the product.
The benefits of the digital economy are not lost on local officials. Quite simply it has saved the mat factories, first established after the economic reforms of 1993. Finding the right distributors used to be a struggle, but Taobao has changed all that.
In the summer of 2013 party leaders in Peixie decreed that e-commerce now counted as one of the pillars of the local economy and must be encouraged. This is consistent with Beijing’s drive to modernise the whole economy. “China is developing this type of service very fast,” says Liu Jianqiong, the deputy village chief. He has been tasked with ensuring that this new form of retailing has access to optimal logistics.
The local authorities have decided to exempt online businesses from paying rent and have provided them with a shared warehouse and canteen. Liu says they simply needed to support a growing trend, fed by the younger generation. “They open their shops here and then they can hire older people, so it’s good for jobs,” he adds.
Peixie is witnessing an unexpected change of fortune. In most rural districts of China the lure of the cities is taking away young people, but here in the south-east corner of the country the trend has been reversed. “Some are only 18 or 19. In other places they would be moving away, leaving only children and old people. But here they can do business,” Liu says.
Hua endorses this view. He is relieved that he will not have to choose between staying close to his ageing parents in the country and the need to earn a living in the city, a wrench all too familiar to most young people. Plenty of his contemporaries started by going off to the big cities in search of work. Some have since returned to their birthplace and set to work on a laptop.
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