New trends that have developed from universal access to e-commerce are affecting the demand in urban cities for products that can be better produced from the countryside and also having a toll on the number of workers leaving rural communities for jobs in large cities.

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.

New online connections between the fast growing urban cities of China and the sprawling countryside are encouraging entrepreneurs to start new businesses. Some are selling local, safe and flavourful produce into the cities while others are producing woollen yarn and selling it to fashion designers in cosmopolitan settings.


Sixteen Chinese villages have generated at least 5 billion yuan in combined online sales last year, creating 40,000 jobs and helping slow the flow of residents moving to cities in search of work. Making it happen is Alibaba Group Holding Ltd., which is considering an initial public offering that may value the nation’s biggest e-commerce operator at as much as $190 billion.

Rural residents are also going online to buy items they can’t easily find in nearby stores. With increased exposure to television and social media, “consumers in remote areas are now very aware of brands,” says Jeff Walters of the Boston Consulting Group’s Beijing office. 

A June 2013 Taobao study found that consumers in China’s small cities spent a greater proportion of income shopping online in 2012 than those in China’s big cities. A March 2013 McKinsey Global Institute Study, China’s E-Tail Revolution, showed that in the smaller cities—essentially country towns—the average online shopper spent 27 percent of her disposable income via e-commerce. It’s “bridging the gap between people’s aspirations and what is locally available offline,” says Yougang Chen, a McKinsey partner in China and co-author of the report.

In Zhejiang province’s Suichang county, the local government has made online shopping easier by establishing drop-off and pickup sites for merchandise. As Barney Tan, a senior lecturer in business at the University of Sydney who’s done research in Suichang, explains: “Farmers can place orders for shampoo and farming supplies in bulk, and there are common established points of delivery.”

While the migration from China’s countryside into its cities shows no sign of reversing, the rise of e-commerce in rural areas does afford more opportunities. “We need to better balance development between the rural and urban areas,” says Ou Ning, an editor who moved to Bishan to study rural growth. He worries about the social cost of seeing rural areas as left behind. But at the same time has to praise the connectivity from Alibaba: “The Internet has liberated millions of entrepreneurs in China.”

You can see the full article from Bloomberg here and an article on the same topic from the FT here.