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The Power of E-commerce: Lifting Rural Chinese Out of Poverty

Created Jul 15 2020, 10:15 AM by Anastasiia Krasilnikova

Earlier this month, I met Qi Huang and Jiao He in Libei, a rural village about an hour's drive from the capital of Guizhou, one of the poorest provinces in China. Jiao and Qi haven't always lived there. Like many poor young people in China, they both left their homes to seek out a living as migrant workers in a wealthier province. They met and got married while working in a city with high living costs in the southeastern province of Guangdong. The couple's meager income proved insufficient when they had twin boys, so their children had to stay in Guizhou, with their grandparents. When Jiao's father fell seriously ill, the couple had to move back home to care for him.

Their return to Guizhou turned out to be a great opportunity.

Back in Libei, the couple heard about emerging e-commerce opportunities. They received some government-sponsored training and a few years ago opened an e-shop. Jiao and Qi now sell kiwis, for which their region is famous, and other products such as homemade tofu and pepper oil. They purchase their inventory from nearby farmers, and taking advantage of government-subsidized logistics and the online e-commerce platform Taobao.com, they can sell high quality local products well beyond Guizhou—and even outside of China. The platform's big data helps project the amount and location of the sales, which is particularly important for fresh produce.

Jiao and Qi worked hard, turned a profit, and expanded their business. Last year, the couple sold products online worth over 3 million yuan ($440,000). Today, their average monthly income is over 30,000 yuan ($4,400) —10 times what they made as migrant workers in Guangdong.

This income has allowed them to take care of their two sons, now 8 years old, and their parents. When I visited, Jiao proudly asked her boys to greet me in English. The couple now employs Jiao's mother and her two sisters and have created several jobs in their village. Jiao's mother learned to use a computer to support her daughter's business, and Jiao's younger sister became the first person in the family to go to college.

Jiao and Qi even built a new multi-story home, where they run the e-shop's operations and packaging on the first floor and bought a new apartment for Qi's parents in Hunan. Proudly sitting on a shelf in the couple's home is an e-commerce star award given by the Women's Federation of Guiyang City to Jiao in 2017.

A unique government-private sector partnership helps people enter the digital economy

The Huang's family story is one example of how e-commerce, through a balanced mix of public subsidies and private initiatives, is fostering entrepreneurship and creating flexible, inclusive job opportunities—especially for women and young people—across China. This, in turn, allows them to come back to their home towns, work from home, and take care of their children and their elderly parents.

The Chinese government uses subsidies to provide training, ensure access to warehouses, and reduce logistical costs. It also draws on the expertise of companies such as Alibaba to offer villagers hands-on training on how to open an e-shop, develop products that work for the online market, and provide customer service. Initiatives such as Alibaba's Rural Taobao Program uses e-commerce platforms to give farmers a chance to earn more for their products and gives rural residents access to a variety of goods and services.

Libei Village is the only Taobao Village in Guizhou province. Villages are called "Taobao" if they have annual online sales of at least 10 million yuan (about $1.4 million), at least 10 percent of village households actively engage in e-commerce, or there are at least 100 active online shops run by villagers. With e-commerce creating jobs and facilitating access to markets, people in Taobao villages have seen their living standards rise significantly in recent years. Rural poverty in Guizhou dropped from 33 percent to 11 percent between 2011 and 2016, lifting nearly 7.5 million people out of poverty.

Building on lessons from China's experience all over the world

The World Bank and the Alibaba Group are working together to better understand how China harnesses digital technologies to create jobs through e-commerce in rural areas. The joint research team worked with Peking University to survey 1,400 households in 80 Taobao villages. The survey provides profiles of Taobao villages, individuals, and households that participate in e-commerce (e-households), and e-commerce firms (e-shops). The data collected enables rigorous empirical research to explain the impact of e-commerce across China. A new report summarizing the research will be released next year, but the early findings show that Taobao villages are prospering.

The World Bank will broaden this joint research to identify policy levers that can help strengthen the impact of e-commerce. Part of the goal will be to share lessons from these unconventional initiatives with other countries that partner with the private sector to reduce poverty and boost shared prosperity.

There is a lot that we can learn from the experiences of people like Qi Huang and Jiao He. E-commerce has not only empowered them but also other members of their family, and it has helped strengthen family bonds and the community they live in.

Above all, Jiao and Qi have an optimism about the future that they never had before. Their story shows that, with the right support, e-commerce can drive a virtuous cycle, where entrepreneurs create jobs, villages grow, millions of people can lift themselves out of poverty, and everyone has a chance to achieve their highest aspirations. 

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