Alibaba opens ecommerce door for Chinese villagers

February 16, 2014 1:16 pm

Alibaba opens ecommerce door for Chinese villagers

By Ben Marino in Donggaozhuang

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The posters plastered on walls in the isolated village of Donggaozhuang, in China’s northeastern Hebei province, do not extol the usual communist ideals of social harmony or party loyalty.

Instead, they promise to reveal the secret to becoming an ecommerce millionaire and to help the town’s residents “reach your dreams of fortune”.

Donggaozhuang is just one of a dozen of so-called ‘Taobao villages’ across China – rural townships transformed by the possibility of reaching millions of potential customers with the click of a mouse, often on Taobao, the Alibaba-owned site.

“You don’t need to go anywhere, all you need is a computer and a network cable, you can search all the customers in the whole country,” says Liu Yuguo, a resident of the village and the owner of a growing online cashmere store.

Instead of enduring a life of back-breaking work in fields for a meagre monthly income, or choosing to become migrant workers in far away coastal areas, peasants and their families in Donggaozhuang are opening online businesses selling Inner Mongolian cashmere to fashion-conscious internet shoppers.

At the centre of this transformation is Alibaba, the Hangzhou-based company that controls 80 per cent of ecommerce in China and is set to be valued at more than $100bn when it becomes publicly listed later this year.

On Alibaba’s ecommerce sites alone, the number of online stores from rural areas has increased by nearly 50 per cent since 2012, to more than 1m. Seven out of 10 areas in China where online shopping is growing fastest are in rural, less developed parts of the country, according to Alibaba.

In Donggaozhuang, some villagers have taken this opportunity even further, by hosting online masterclasses for others wanting cash in on China’s ecommerce boom.

For Mr Liu, the decision to open an online store in 2007 was an easy one, after various failed attempts to start more traditional businesses.

Sitting in his warehouse where 30 of his young employees are rushing to pack orders and reply to customers, the 35-year-old former farmer describes the advantages of ecommerce.

“There’s basically no expense – no expense in advertising, no expense in employment, the owner can do all of it himself, at most with his wife,” he says.

Mr Liu’s stock was sold out within days of setting up his virtual stall for cashmere yarns on Taobao. His online shop, called “Ku mei jiao” or “Cool, pretty and alluring” has now served 470,000 customers, and the BMW-driving Mr Liu is expanding by buying his own spinning machines, with plans to start making his own range of sweaters.

“I would never have this business offline even if I worked my whole life for it,” he says.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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