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It takes a village to play bigger role in e-commerce of nation [China Daily: US Edition]
[July 04, 2014]

It takes a village to play bigger role in e-commerce of nation [China Daily: US Edition]

(China Daily: US Edition Via Acquire Media NewsEdge) Counties and villages have been playing bigger roles in boosting economic development thanks to the country's robust e-commerce wave, which helps residents in less-developed regions to spend more through online shopping and make more money by setting up online stores.

E-commerce growth in counties and villages outpaced that of cities by 13.6 percentage points in 2013, according to Alibaba Group Holding Ltd, China's largest e-commerce group.

The Hangzhou-based company said in its first edition of the County-level Economy and E-commerce Forum on Thursday that less-developed regions have become a new growth point for Internet commerce.

"The overall online shopping market in China recorded growth of 50 percent year-on-year in 2013. But the growth rate of online shopping in counties and villages was much higher," said Ye Peng, vice-president of Alibaba Group.

Ye said e-commerce has developed rapidly in counties and villages. The number of online retailers in those areas jumped from tens of thousands in 2005 to more than 1 million last year.

E-commerce has created many jobs in counties and villages as well, ranging from the logistics sector to customer service.

Counties and villages in East China have an edge in e-commerce, thanks to the advanced manufacturing bases in coastal regions. But that edge is shrinking as other areas develop.

E-commerce transactions in eastern counties and villages have dropped to less than 50 percent of the rural total, while counties and villages in North China, Central China and South China now account for 30 percent of such transactions.

"Since the global financial crisis, China's economic development has been shifting focus from coastal areas to inland areas," said Yao Yang, head of the National School of Development at Peking University.

"Riding the wave of e-commerce, counties and villages have proven themselves to be a new engine for China's domestic consumption," he said.

There were also marked differences between what individual areas spent online and what they earned.

Gaobeidian, a small city in Hebei province, had the largest online retail "surplus" in 2013. The amount its residents sold online was nearly five times the amount they spent online.

Nyima county in the Tibet autonomous region had the largest online retail "deficit" in 2013. The amount its residents spent online was more than 2,000 times what they made online.

Neil Flynn, head equity analyst with financial analysis firm Chinese Investors, which specializes in United States-listed Chinese companies, said that the most impressive aspect of China's online retail boom is the amount of extra consumption that it creates.

"Across the whole country, for every dollar spent online, 61 cents replaces in-store shopping, while 39 cents is new consumption.

"If you look specifically at the third- and fourth-tier cities, only 43 cents of in-store consumption is replaced, and 57 cents of new consumption is created," he said.

The difference exists mainly because in larger cities, it's easy to find a nearby shopping mall with a large array of shops. But in the smaller cities, consumers don't have that option. (China Daily USA 07/04/2014 page17) (c) 2014 China Daily Information Company. All Rights Reserved. Provided by SyndiGate Media Inc. (

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