[Hunan Think tank] Liu Siwei: How to Develop Rural E-commerce under the Current Circumstance

2017-01-21

When Chinese economy has developed into the new normal, the market power exploitation has become a prominent problem. Under the sluggish growth of export demands and other serious situations, as the largest developing country, China shall make efforts to build the domestic demand-led economic growth dynamic mechanism. A new path exploration is making use of "Internet+" to energetically develop rural e-commerce and speeding up the rural circulation system innovation. Until now, China has got the sufficient basis for developing the rural e-commerce:

Firstly, the Internet has entered into rural areas and more and more farmers start to surf the internet, therefore, it can be said that rural e-commerce development demand has large potentials. Secondly, the "thousands of villages and townships" market engineering has covered the rural circulating outlets densely to provide the physical store foundation for the rural e-commerce development. Since February 2005, the "thousands of villages and townships" market engineering has been launched by the Ministry of Commerce for more than ten years. On a national scale, many provinces and cities have improved its commodity circulation network and made the countryside stores benefit the rural households. Meanwhile, the large amounts of physical stores can provide convenience and preconditions for developing the rural e-commerce. Thirdly, the rural postal, supply and marketing network advantages have promoted the rural e-commerce development. Such as, China Post has spread its business in all cities, counties and townships (towns) of 31 provinces (autonomous regions and direct-controlled municipalities), and established 118,000 service outlets for the courier service, besides, the operation service outlets of supply and marketing cooperative have also covered 1/3 administrative villages and established 600,000 rural service outlets in China. Fourthly, the great progress of urban & rural transportation and communication infrastructure has provided the technical basis for the rural e-commerce development. Chinese traffic, communication and other infrastructures are significantly invested, developed and changed from the "11th Five-year Plan" to the "12th Five-year Plan" period. China takes the lead in entering into high-speed rail and expressway network times, such as, more and more counties, townships, towns and villages are connected by the high-speed rail, expressway and civil aviation. Fifthly, the special attention and policy supporting preference of governments at all levels have provided policy dividend for the rural e-commerce development. Sixthly, the new rural construction and special agriculture development have provided the material basis for the rural e-commerce development. The changing rural landscape during the new rural construction has provided the circulation object for the e-commerce environment, modern agriculture, special agricultural products, such as, Yanling yellow peach, Anhua dark green tea, Jiangyong henry steudnera tuber, Dongjiang River fish, Linwu duck, Taojiang bambooware, etc. In addition, the rural e-commerce development was also provided with the market power when the domestic market competition was deepened under the new economic normal, the urban e-commerce offered to go to the township, and the blue ocean strategy is implemented to fight for the rural market. Some entrepreneurial companies are also considering the rural purchasing agents as the breakthrough points to build the e-commerce platform, except that Alibaba, Suning E-commerce, Jingdong and other e-commerce giants are making efforts to excavate the rural market.

The rural e-commerce development is also suffering from the non-negligible problems. We shall avoid achievements impulsion and rural e-commerce "great leap forward" in the rural e-commerce development process. The possible difficulties and bottlenecks in the rural e-commerce development process shall be thoroughly estimated:

The rural e-commerce development is short of the infrastructure conditions. In consideration of the wide distribution of Chinese villages, high agricultural investment, long construction period, dispersed villagers and consumption, the rural e-commerce logistics infrastructures and information infrastructures are short of the investment attraction and attention, as a result, the rapid rural e-commerce development is impeded by the lacking complete and high-efficient logistics infrastructures and communication infrastructures.

There are many "stay-at-home children, women and senior citizens" in the villages, and the e-commerce talents are absent. Regardless of the large population in villages, a large proportion of villagers have not been activated by e-commerce. Many literate, enlightened and competent young people and healthy adults are inclined to work in other locality, as a result, the main villagers are the elderly, women and children, namely, the stay-at-home senior citizens, women and children. Very little villagers are able to become the e-commerce users.

The dispersive, small and weak traditional agricultural production mode will reject the modern e-commerce naturally. In general, Chinese agriculture applies the small-scale production which considers family as the production unit because the single peasant household is unable to adapt to the rapid changes of the agricultural product market, therefore, the contradiction between "small farmer and large market" still exists. The agricultural products which are produced by the dispersive farming households have a low standardization degree, and the net citizens are afraid to place an order because it is difficult to distinguish the genuine or fake, good or bad products. Meanwhile, the e-commerce is unprofitable due to the low additional value and little profit of the agricultural products, therefore, their operation enthusiasm will be affected.

Moreover, the logistics distribution is also subject to some difficulties due to the dispersive villagers and life, and the small-scale supply. Almost all express companies are unable to build their outlets in villages, therefore, the logistics distribution has developed into the biggest bottleneck which can restrict the rural e-commerce development.

The rural e-commerce also suffers from online payment difficulty. On the one hand, the rural areas are outdated in the finance and online finance aspects, meanwhile, there is little financial service institution in the rural areas; On the other hand, the popularity rate of online banking and mobile banking is relatively low because the mass peasants are inclined to relay on postal savings, credit cooperatives and other rural financial institutions to make fund settlement.

The peasants hold the traditional consumption consciousness and outdated consumption habits. Due to the traditional and conservative consumption consciousness and habits, the rural peasants are inclined to apply the following traditional transaction behaviors and mode, namely, no pay no goods, therefore, they are short of understanding of the online payment and time-space separation of money and goods, however, it is difficult to change these habits and consciousness in a night.

In addition, many problems need to be noticed under the rural e-commerce development environment:

The rural e-commerce development shall make use of circulation to force and promote the modern agricultural development for radically solving the contradiction between the Sinicism small-scale agricultural products' production and large market. Make use of the e-commerce to quicken the standardization system construction about agricultural products, force the small-scale peasant production mode to march towards modern agriculture, realize the large-scale planting, standard management and brand marketing, promote the classification of agricultural product quality, standardization of packaging, normalization of labels and the branding of products, speed up the quality safety traceability system construction for the fresh agricultural products, as well as lay the solid foundation for the high-quality agricultural products entering in the circulation cycle via the e-commerce platform.

Make use of rural e-commerce to reconstruct the rural circulation innovation. The rural circulation system includes the rural consumer goods circulation system, agricultural products circulation system, agricultural production means circulation system, rural renewable resources circulation system and rural service industry circulation system. The rural e-commerce not only includes industrial products downlink and agricultural products uplink, but also promotes the rural circulation revolution and reconstructs the whole rural circulation system.

In order to develop the rural e-commerce, it is necessary to speed up to cultivate the circulation entity and enhance the rural circulation organizational degree. Promote the agricultural products distributors to realize the demutualization, scale development and branding, and enhance the industrial concentration. Support and cultivate a batch of large-scale agricultural products circulation enterprises, leading enterprises of agricultural industrialization, transport enterprises, professional cooperatives and other agricultural cooperative economic organizations which can integrate the online and offline operation, then, make them bigger and stronger. In order to energetically develop the new-type rural e-commerce platform, seize the rural e-commerce development opportunity to pay attention to develop the rural circulation intermediary organizations and leading enterprises.

Meanwhile, it is also necessary to completely integrate and exploit the advantages of the rural postal network. Besides, enhance the coverage rate of postal service and other public services, give full play to the postal enterprises' advantages, namely, "many points, long lines and wide areas", as well as make it benefit the rural market.

Strengthen the postal e-commerce platform construction, reinforce the postal logistics supporting, enhance the logistics distribution capacity in rural areas, and build the four-level logistics distribution network system, namely, nationwide-prefecture-level cities-counties and townships-villages.

When the rural e-commerce is developed, improve the policy supporting for the rural e-commerce. The governments' policy supporting shall pay attention to solve the short slab and bottleneck of rural e-commerce, and establish the product databases, rural e-commerce agent purchasing and selling outlets which are suitable for the network sales via public service purchasing by government and other ways, in summary, break through the "last one kilometer" in the e-commerce aspect, and provide the preferential policies for the investment e-commerce, cold chain logistics, rural logistics distribution, other infrastructures and platform construction, e-commerce talent training and others.

Author: Liu Siwei

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