China’s top economic planner inked an agreement with Alibaba Group Holding Ltd on Feb 17 to develop rural e-commerce, as part of its broad plan to alleviate rural poverty and boost employment as the country’s economy slows down.
Under the agreement, the National Development and Reform Commission and Alibaba will make joint efforts to help 300 counties to develop rural e-commerce in the next three years.
The top economic regulator will help boost cooperation between local governments and Alibaba on a wide range of projects such as building rural logistics infrastructure and training local talents.
Wang Xiaotao, deputy head of the NDRC, said: “The Internet is perhaps the best tool to help remote rural residents increase their income and the initiative is likely to help counties across China find new growth models.”
Earlier, the commission, with other nine ministry-level departments, announced that they would offer policy support to 300 counties in the next three years to encourage migrant workers, college graduates and discharged soldiers to return to their rural hometowns and start businesses.
Sun Lijun, vice-president of Alibaba, said to coincide with the plan, the e-commerce giant will build about 300 county-level service stations and 30,000 village-level ones in these counties to help cultivate local talents and generate more jobs.
The partnership came after Alibaba said in 2014 that it would spend at least 10 billion yuan ($1.53 billion) on expanding its presence in rural China.
Wang Xiaoxing, an analyst at Beijing-based Internet consultancy Analysys International, said rural e-commerce in China is still in infancy but is expanding rapidly as urban dwellers have a growing demand for fresh agricultural products and more rural residents are embracing e-commerce.
For instance, during this year’s Ali Spring Festival shopping event, which was held by Alibaba in January, farmers in Luochuan, a county in northwestern China, sold about 90,000 kilograms of apples online within five days.
But Wang warned that many obstacles need to be overcome before rural e-commerce can thrive.
“The rural market is definitely the next big thing in China’s e-commerce sector, but the boom may not come as quickly as expected given that it will take years to address the shortage of talent and the logistical challenge in vast rural areas.”
Ma Qijian, an Internet researcher at Peking University, said the partnership between Alibaba and the government is also aimed at tackling rising employment pressures by encouraging rural entrepreneurship.
In 2016, a record 7.7 million students are expected to graduate from college, which is set to add pressure to employment.
“But starting a business entails risks. The failure rate may be higher in rural areas than in cities,” Ma said.