A marketing push by China based e-commerce giant, Alibaba, is turning subsistence farmers into online entrepreneurs and opening up new business opportunities for Australian companies, according to researchers at the University of Sydney Business School.
Concerned that internet growth in China’s urban centres may eventually plateau, Alibaba has so far provided internet infrastructure and access to its Taobao portal to people in nearly 800 remote rural villages and has earmarked another 10,000 for development.
“Many of these villages operated at a subsistence level,” says senior lecturer Dr Barney Tan. “Their people have traditionally focused on producing enough to eat and passing their land on to their children when they die.”
With a Taobao portal linking them to the rest of China and the world, Dr Tan says these villages are now able to develop commercial enterprises and purchase consumer products via the internet.
“Alibaba has set up hubs in these villages allowing community members to place orders or market their products without the need to own a computer,” Dr Tan said. “I’ve heard anecdotes of people ordering refrigerators and because the roads are unpaved, they’ve had to have two people carry the refrigerators on their backs.”
Alibaba’s Taobao portal is also “supercharging” the development of village level enterprises in parts of the country where they seemingly have no local competitive advantage.
Dr Tan tells a story of a farmer who visited an IKEA store and realised that he too could manufacture and market flat-pack furniture with the help of the Taobao portal. “This villages now has a reputation for producing flat-pack furniture and it’s in a location with no inherent advantages,” he said.
Dr Tan also talks of a baker in another village who chose to manufacture camping equipment and is now the third ranked outdoor equipment seller on the Taobao platform.
“The bun-seller started his own camping equipment business, people saw that he was successful, his close friends and relatives wanted to sell his products for him, so right now the entire village is centred around outdoor equipment,” Dr Tan said.
Dr Tan says the concept of the Taobao village is driven by concerns over China’s saturated internet market, particularly in urban centres. “This is a challenge that is commonly faced by a lot of other e-commerce giants across the globe including Amazon and EBay,” he said.
“Alibaba recognises that opportunities in developed markets could plateau and become increasingly saturated so they have decided that reaching out to areas that were previously digitally excluded would be a way to continue their business growth.”
Dr Tan believes that Taobao villages will lead to an improved standard of living for village people across China and greater commercial access to suppliers and markets beyond the coast for Australian businesses.
“Right now with the infrastructural developments that are happening, the means to connect to Australian or foreign businesses online, is growing exponentially just because of the links that Alibaba has basically created,” he concluded.