18 January 2019

‘Taobao villages’ take wing in China

E-commerce is not only helping Chinese consumers shop more easily and cheaply, it is also providing crucial support to an army of suppliers across the country. Meeting social needs, the sector is injecting vitality back into some villages and townships by supporting small vendors and enabling the regions to slow the migration of local people to the cities. The rural vendor clusters have now become sizable enough in number to prompt observers to refer to them as “Taobao villages”, a play on the Alibaba Group’s renowned online marketplace.

Alibaba revealed at the end of 2013 that the number of Taobao villages and townships — those rural places that have sizable clusters of self-employed Taobao vendors with total annual sales reaching 10 million yuan (US$1.65 million) or more — has increased to 20 last year from 14 in 2012, providing altogether 60,000 jobs in their respective regions. Those villages and townships have seen their combined annual sales surge twofold to almost 10 billion yuan last year.

Taking the crown of the top 20 nationwide was a village called Qingyanliu {青岩劉} in Zhejiang province’s Yiwu {義烏} city, which is known as a magnet for emerging-market buyers who seek affordable “small commodities” like household gadgets.

With slightly over 2,000 Taobao e-shops, Qingyanliu sold 2 billion yuan worth of small commodities last year, meaning one million yuan turnover on average for each Taobao vendor there, according to figures from Alibaba’s research unit AliResearch.

Online vendors in another township named Changhua {昌化} in northwestern Zhejiang reaped more than 130 million yuan per year by selling hickory nuts, dried bamboo shoots and teas.

Indeed, Zhejiang, Alibaba’s home base, took the bulk of the top positions with 6 villages and townships edging into the top 20 elite club, while the rest were carved up by those in Shandong, Jiangsu, Guangdong and Fujian, selling a whole variety of things ranging from furniture, garments and local produce to second-hand laptops and smartphones.

AliResearch data also showed that 2.03 million e-shops on Taobao were based in rural areas as of November last year.

All of these Taobao villages and townships have something in common: the business is still largely tax-free; and transactions through the internet and production and warehousing in rural areas mean low operational costs. The Economic Observer reports that some of the lucrative Taobao shops started as mom-and-pop businesses, but now many of the entrepreneurs have their own villas and cars and even employ dozens of workers — many are relatives or migrant workers from other villages.

Analysts say it’s usually the case that many local natives, including some college graduates, who used to seek job opportunities in cities, have returned to their villages and started running their own e-shops after learning about their relatives’ success.

This trend has boosted demand for logistics, packaging, parcel delivery, banks and telecommunication services in the rural areas, giving an extra push to expedite the “village/township to small city” transformation. Alibaba founder Jack Ma {馬雲} believes the clusters of Taobao vendors in the vast rural areas now offer a new path to the country’s urbanization drive.

That said, the Taobao villages and townships are particularly prone to threats like product homogenization and cut-throat price wars. The problem has prompted some villages to set up self-disciplinary associations to address these issues. “One village, one brand” marketing campaigns are also waged on Alibaba’s business to consumer platform Tmall with villagers’ committee-operated flagship stores selling authentic quality products at fixed prices, as the Zhejiang Daily noted.

– Contact the writer at [email protected]



EJ Insight writer

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