E-commerce, logistics firms to tread rural path

Alipay, the third-party online payment arm of Alibaba Group Holding Ltd, promotes its rural payment services and rural e-commerce at an expo in Beijing on Wednesday. [Photo/China Daily]

The Ministry of Commerce will encourage more e-commerce and logistics companies to expand into rural areas this year as part of its efforts to create more jobs and provide better information access, officials said on Wednesday.

They said that the primary objective of the efforts would be to create a more orderly rural e-commerce market this year. To achieve this, the ministry will integrate resources from telecommunications, transportation, postal services, financial services, supply and distribution sectors to enhance rural areas' ability to upgrade their infrastructure facilities and market access channels.

Kong Lingyu, deputy director-general of the department of market system development, said e-commerce not only offers rural residents convenient access to goods, but is also an important tool to gauge the current market prices.

The rural market has traditionally been dominated by dealers of some brands and retailers with limited stocks. Because of the high commission fees and transportation costs, rural consumers often had to pay relatively higher prices than those in cities to buy products such as flat screen televisions, washing machines, motorcycles and farming tools.

"Building information sharing, financing and credit systems will be priorities to facilitate the development of e-commerce in rural areas, along with cheaper mobile Internet and logistics services," said Kong.

Total shipments to rural areas reached 2 billion parcels in 2014, up 13 percent on a year-on-year basis, data released by the State Post Bureau show.

Express delivery companies such as SF Express (Group) Co, YTO Express Co Ltd and China Postal Express and Logistics Co have built more than 50,000 service centers and depots in rural areas, covering 56.8 percent of the nation's villages and towns.

Nie Linhai, deputy director-general of department of electronic commerce and information at the Ministry of Commerce, said: "The rapid growth in e-commerce will help spur rural consumption and create more jobs for local youngsters, and attract entrepreneurial talent to rural areas."

Instead of painting their brand names on the walls in different villages, giant e-commerce companies such as Alibaba Group Holding Ltd, JD.com Inc and Suning Commerce Group Co Ltd have all begun to deploy more manpower and resources in the countryside to sustain growth and tap the huge potential.

Sun Weimin, vice-president of the Nanjing-based Suning, a major player in the Chinese e-commerce market, said the company plans to open between 1,500 and 2,000 service stations every year in the country's lower-tier cities and rural markets over the next five years. It will also establish 10,000 depots covering 25 percent of rural areas before 2020.

"These service centers will provide retail, logistics, product installation and maintenance services, as well as online shopping training for people in rural areas. Suning will also allow its product suppliers from both city and rural areas to stock their goods in warehouses across the country," said Sun.

Wang Xiaoxing, an e-commerce analyst at Beijing-based Internet consultancy Analysys International, said even though the government has rolled out favorable policies to bolster the development of e-commerce in rural areas, it is not easy for e-commerce companies to succeed in this new niche market within a short period.

"Rural residents have far lower salaries than their counterparts in cities. The government needs to set up more modern logistics infrastructure facilities in the countryside," Wang said. "It takes time to address these hurdles."