A worker of the Fumin chicken farm packs eggs for sale in Songtao Miao Autonomous County of Tongren, southwest China’s Guizhou Province. Nearly all the sales of Fumin chicken farm’s eggs come through the e-commerce platforms. (XINHUA)

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“Rural vitalization” was one of the major aspects of developing a modernized economy in Xi Jinping’s report to the 19th CPC National Congress. Then in December 2017, the central rural work conference outlined the tasks and targets for the rural vitalization strategy—by 2050, rural areas should have strong agriculture, a beautiful countryside and well-off farmers. A debate has emerged on how to use new media and technology to drive rural transformation and development. In fact, the rise of rural e-commerce has already become an important way to raise farmers’ incomes in China’s many rural communities.

 

Local government support
Issues related to agriculture, rural areas and rural people have always been a priority in China, where half the population lives in the countryside. However, in reality, rural people often face obstacles when engaging in various economic activities: trouble in both selling and buying. They cannot sell their agricultural products at a good price due to various reasons, including information asymmetry. At the same time, they find it hard to purchase satisfactory industrial goods or get reliable after-sales services because the market is full of products tailored to the needs of urban consumers. This dilemma has directly affected farmers’ living standards while shaping their mentalities and behavior.

The State Council has thus called on local governments at all levels, especially the county-level governments, to introduce concrete measures to promote the development of rural e-commerce and give full play to the leading role rural autonomous organizations play in integrating rural resources. Given this, some local governments have considered local conditions and mapped out an “e-commerce dream plan,” which aims to help more and more villagers learn about and access online business, thus actively participating in the “rural e-commerce networking” to eventually realize the full coverage of infrastructure and logistics systems in rural China.

 

Hurdles to cross
By 2017, the e-commerce poverty reduction project had been expanded to cover nearly 500 national poverty-stricken counties. However, in general, the construction of rural e-commerce infrastructure and logistical systems has not yet reached a mature stage. Take Company L in X County, Hebei Province as an example. The company has built offline physical service centers in 297 villages on the basis of transforming the brick-and-mortar facilities, trying to straighten out the circulation channels of industrial goods and agricultural products. At present, it mainly struggles with the following three obstacles.

First, distribution channels in county areas are rather scattered. Many of the county’s distributors have independent warehouses and logistic system and they seldom collaborate with each other. For example, dealers A, B, C all need to deliver their respective goods to retailer D and the current logistic system would encounter two possible scenarios. Scenario one: A, B, C need to arrange separate personnel and vehicles to deliver the goods, wasting resources. Scenario two: When the profits made from selling goods to D are unable to cover the distribution costs, dealers may either suffer a loss to achieve timely delivery and secure long-term cooperation or in other cases, they resort to “share the bill” at the expense of efficiency, which means they would only arrange delivery when the total order is accumulated to a certain amount.

To this end, Company L intends to integrate the overall logistics by persuading dealers to put their products online, and then carry out centralized distribution, so that dealers could focus on sales, whereas Company L would take care of logistics, thereby reducing transportation costs and improving distribution efficiency. However, most dealers have already gotten used to their common practice and are reluctant to invest extra time and energy to build a centralized same-city logistics system.

Second, there are insufficient service hubs in the rural logistic systems. On the one hand, the overall scope of distribution is quite large. In order to realize the full coverage of villages, Company L has set up service hubs in 297 villages, but there are only three vehicles that could be used for long-distance delivery. After receiving the order online, the company determines the shipping route according to the addresses and order quantity, which to a great extent reduce the efficiency of distribution.

On the other hand, efficiency aside, Company L still could not make ends meet under such arrangements of centralized distribution, because a single delivery route is too long. In the service hub networking Company L built, the furthest two hubs need to detour about 100 kilometers, making the distribution cost too high. This shows that it is a thorny issue to resolve the logistical problem of the last mile to the customers’ door and improve its after-sales service in counties. It is worth noting that the solution may not be to set up hubs in each village, but to pick an optimal location for the distribution of goods.

Third, rural e-commerce sometimes shows a false prosperity due to the pressure from all walks of life. For example, rural e-commerce is expected to help promote the sales of featured agricultural products and increase the farmers’ incomes. In the autumn of 2016, Company L went to physical shops to investigate, claiming to rely on their acquisition of chestnuts and help sell the nuts online. However, due to the transportation cost, the online pricing of chestnuts is much higher than the local market price, which leads to an awkward situation: zero online sales. The truth is Company L only did it for sake of doing it. In some ways, Company L is just a microcosm of the rural e-commerce, who began to show abnormal service concept under pressure.

 

Role in rural vitalization
At the bottom, the goal of rural e-commerce is to promote the transformation and development of rural society, so their contribution should not be confined to the material level. Rather, they should also play an active role in building a beautiful countryside and achieving rural vitalization.

First, rural e-commerce could create more employment opportunities for farmers. Their involvement in poverty elimination should not only help enrich the material life of rural residents, but also help them stay in the countryside and become a reliable force to build their own homes.

At present, there is a massive outflow of labor to city industries, an increasing number of rural villages in China have become desolate places with no skilled labor or income, plentiful idle land and loose administrative organization. These “hollow villages” and their fallout have become major factors hampering the economic and social development of rural China.

In this light, rural e-commerce could strive to help increase farmers’ income through selling agricultural products online while providing training and entrepreneurial guidance concerning doing business online.

Second, rural e-commerce could bridge the urban-rural income gap and promote urban-rural integration. It has a two-way track to facilitate the exchange of industrial goods and agricultural products as well as various information, which is conducive to balancing the gap between urban and rural residents in terms of consumption and income. At present, most industrial goods are designed for cities and their prices are relatively higher for rural residents due to logistics cost. Therefore, rural e-commerce needs to better understand the needs of rural residents, promote online centralized ordering and realize offline centralized distribution, thereby reducing the waste of resources.

In addition, rural e-commerce should shoulder the responsibility of quality control, eliminating rural residents’ online shopping distrust and anxiety. At the same time, it could also help monitor the process of products moving from farm to table, so that production standardization and branding are in place to attract more customers and traffic.

Finally, rural e-commerce operators need to actively cooperate with one another to enhance their influence. As a county-centric form of e-commerce, it should not confine its footprint to within counties. It could seek cooperation with other regions from these two aspects: economic development and geographical and cultural promotion. In the economy, it could strive to cooperate with more offline physical enterprises and other online partners to ultimately achieve a mutually beneficial situation. It could also play a role in promoting the cultural geography of rural tourism, which is an important way to raise farmers’ income and increase their awareness of the importance of environment and environmental protection to the sustainability of rural economy.

 

Zhao Xudong is from the Institute of Anthropology at Renmin University of China. Wang Wenxiao is from the Center for Studies of Sociological Theory and Method at Renmin University of China.

(edited by YANG XUE)