County-level E-commerce: Next Driver of China’s Online Shopping

On July 3, Alibaba held the “First Summit of China’s County-Level Economy and E-Commerce” in Hangzhou, gathering municipal party secretaries, heads of counties from 176 counties of 26 provinces. The message from Alibaba was, the spring of county-level e-commerce has come, but it is up to you all how to turn the spring to a summer…

The ongoing changes in the e-commerce sector:

A surge in the number of county-level e-commerce merchants.
From 2003 to 2013, for every two to three years, the amount of county-level e-commerce merchants grew from tens of thousands to hundreds of thousands, and to millions, a process akin to the development of Taobao itself.

The expansion of county-level e-commerce

County-level e-commerce is currently penetrating other regions, including Xinjiang, Inner Mongolia, Guizhou, Shaanxi and more, from East China, the core of which is Zhejiang.

The changing mode of development of county-level e-commerce
The initial mode was that farmers ran their business individually. But this mode has changed, as local governments increasingly take a leading role in agricultural e-commerce. Manufacture bases across the country have also begun to lead their manufacturers to sell online, by forming chambers of commerce or trade associations.

Diversified forms of county-level e-commerce

Industrial clusters like small commodity trade in Yiwu, cashmere trade in Qinghe, clothing trade in Changshu, and footwear trade in Jinjiang; online tourism (promoting tourism via e-commerce platforms); and business parks for e-commerce.

Ali Research, also known as Ali-Institute, has published a Micro-Report of China’s County-Level E-Commerce, and released a List of Top 100 E-Commerce Counties. According to Forbes China, the development of e-commerce in 32 provinces, excluding Hong Kong and Macau, can be divided into six echelons. The first echelon has Zhejiang. Shanghai, Jiangsu, Fujian, Beijing and Tianjin are in the second echelon. The first and second echelons have significant advantages, taking over the top five places of the Index of Online Selling, and the top six places of the Index of Online Shopping. The Indexes of County-Level E-Commerce Development of the two are much higher than that of the rest four echelons, showing a comprehensive lead and development in both selling and shopping online.

From the List of Top 100 Counties, it is obvious that while online selling in Jiangsu and Zhejiang was still growing rapidly, the combined share of these two provinces fell below 50% for the first time. Over the same period, however, the growth in the North, South and Central China was significant. The combined share of these three regions in 2013 was near 30%, with Hebei, Guangdong and Henan being the main source of growth. County-level e-commerce has shifted from growing mainly in the eastern China, typically Jiangsu and Zhejiang, to growing in multiple regions including North, South and Central China.

As the chart shows, the biggest online trade surplus was in Gaobeidian of Hebei province, with a total online revenue 4.8 times of its total online expenditure. According to Caixin, the best-sellers in e-shops based in Gaobeidian were luggages and bags, the sales of which made up over 70%. And counties with a surplus were mainly located in coastal East China, thanks to the manufacturing basis there. Interestingly, the county with the biggest online trade deficit was Nyima County in Tibet. What people there spent on Taobao was 2070 times of what they earned on Taobao. What consumers in Nyima bought most were women’s and men’s clothing, and mobile top-ups. County with an online trade deficit were mainly located in Central and West China, implying is a huge potential for online shopping in those regions.

Ye Peng, vice president of Alibaba, said, with more and more local officials in counties realising the importance of e-commerce and promoting the e-commerce in villages and towns, plus the explosive growth in the magnitude of e-shoppers in county-level regions, counties can be the most powerful driver of growth for China’s e-commerce in the next few years.

Source: Huxiu.com