Half a billion opportunities for e-commerce in China
CHINA still has plenty of opportunities for e-commerce growth especially in rural and inland areas of the country.
World Bank data shows that over 40 percent of China’s population is still living in rural areas. That’s close to 600 million people and represents a huge opportunity for e-commerce players in the country.
To sell to those half a billion-plus people, China must remove the common bottlenecks within the e-commerce supply chain in rural areas.
Globally, China holds the largest market share in e-commerce, with more than 40 percent of transactions taking place in the country alone. That’s more than the transactions per year handled by France, Germany, Japan, the United Kingdom, and the United States combined, according to a McKinsey report.
In a report by CTGN, Ziyang Fan, Head of Digital Trade of the World Economic Forum (WEF) shared some of the areas of improvement that can help propel the country’s e-commerce sector.
“Typically, rural China faces three infrastructural bottlenecks – access to the internet, payments, and logistics,” Fan explained.
The Chinese government has been working hard to build cell towers in hopes of addressing the issue of connectivity in rural areas.
E-commerce companies have also been creative with their approach to solving the payments issue as not everyone in rural areas has access to a bank account to make online payments.
For example, Alibaba has a rural-focused platform called Rural Taobao. Villagers who are unable to place orders online can purchase items such as clothing and electronic items, in cash, at physical locations known as “Taobao Select Service Stations”.
In terms of logistics, companies like JD.com are building drone ports across the country, for housing drones that will be used to deliver packages to areas that are difficult to access.
Beyond infrastructural improvements, Fan added that China’s rural community can also leverage the online space as digital influencers to boost e-commerce growth.
“Rural influencers could talk about tractors or fertilizer types, to help influence the purchasing decisions of other residents in the countryside,” he suggested.
Additionally, there is great growth potential for digital trading in other industries such as services, education, and telemedicine.
Rural populations have limited access to medical or educational facilities — however, they usually own a mobile phone. This means users can easily connect with medical, education, or other service professionals in the city or even overseas.
China has recently passed an e-commerce law in a move to regulate the e-commerce industry in the country. This has improved transparency in digital trading, as well as protection of consumer rights and intellectual properties on e-commerce platforms.
While these are positive steps for growing the e-commerce market, Fan believes that outdated regulations, policies, and laws remain the biggest challenge for the industry.
“Technology is moving very fast, but our laws are changing really slowly,” said Fan.
Fan also believes that government and public sectors must try to bridge that gap by working with the private sector to co-design policies.