China’s e-commerce giants have stepped up their online expansion to customers in rural areas, hoping to offset a saturated urban market, the Xinhua News Agency reported on Sunday (Dec. 21).
JD.com said last week that it will set up a county-level operating center in south China’s Guangdong Province. The move followed a decision to open a physical store in a small county in the northern Hebei Province in November to help farmers purchase home appliances via JD.com’s online store.
Alibaba has also established branches in three counties and said it plans to invest 10 billion yuan ($1.6 billion) in three to five years to spread its rural operating centers in a third of China’s total counties and a sixth of rural areas. Rural buyers on Taobao.com, Alibaba’s eCommerce website, made up nearly 10 percent of total sales in Q1 of 2014, up from just over 7 percent two years ago.
Plagued by poor transport and less purchasing power, rural buyers remained mostly untouched by the wave of online shopping that swept across China in recent years. But the situation is changing as the burgeoning market in villages has shown great potential and intrigued the country’s major e-commerce businesses.
A report by an Alibaba research center forecast that the value of the rural Chinese online sales market will grow to 180 billion yuan ($29 billion) this year and 460 billion yuan ($74 billion) in 2016.