Alibaba and the rural capitalists -- a modern Chinese fable
KATHLEEN E. McLAUGHLIN, Contributing Writer
JIEYANG, China -- The village of Junpu was, until very recently, on a slow track to certain demise.
Anyone young and able-bodied would try and get a job in the massive sprawl of shoe and apparel factories elsewhere in Guangdong Province. Junpu, originally a farming village, turned to food processing in modern times, but business had gone to large factories elsewhere. Only retirees and young children remained as the village faced being eaten up by the neighboring Jieyang municipality.
Factory workers would send money home to build new houses but there were few around to live in them. Like so many thousands of other rural villages in China, Junpu was giving way to urbanization and the decline of family farming. It did not have a future.
That was until two years ago, when Junpu's displaced youth began to return home in droves. Thanks to a local government incentive package and the entrepreneurial drive of its residents, this hamlet of 2,700 people has become a successful e-commerce hub.
Swapping the plow for Taobao
Alibaba Group, the Chinese Internet giant, recently named Junpu one of the country's top 10 most profitable "Taobao villages." The owner of Taobao, China's top online marketplace, has identified a growing number of rural townships and villages across China that are turning to e-commerce as an alternative to emptying out. The villages Alibaba recognizes have at least 10% of their households involved in e-commerce.
User-friendly Taobao is by far the most popular platform in China for individual entrepreneurs trying their luck online for the first time. Taobao's largest rival, JD.Com, has just partnered with Tencent. That platform is considered more suitable for established retailers.
Taobao stores came to Junpu when Xu Zhuangbin, now 23, decided to bring his business home in 2012. Xu had started a lucrative Taobao boutique when he was a migrant factory worker in Guangzhou. Business was good, but Xu wanted to move back to his home and family. Since then, the e-commerce revolution has spread like wildfire in Junpu, where Zhen Hongguang, the village chief, says more than half of the residents either own or work for Taobao shops. In December, he told the official Xinhua news agency that Taobao businesses in Junpu were earning around 15 million yuan ($2.41 million) in net profit each month from sales of around 100 million yuan.
Huang Jiexi, a 25-year-old who opened an online denim store with his parents, says e-commerce has made it much easier for young people to stay in their hometown. His family, which operates a small storefront as well as the Taobao shop, is new to the world of e-commerce, but they are convinced it is a much better way to make a living than factory work.
"It's a good long-term business for us," said his mother, Ni Shaoxiang.
The local government has played a major role in developing this particular "Taobao village." It has installed a high-speed broadband network that is free for residents. It offers free space for sellers who are new to the game, and it can help arrange cheap bank loans if required. Village chief Zhen Hongguang said it makes perfect sense for the government to actively support local e-commerce.
"Our young people were all leaving," he said. "This was something that would bring them back, and make the village more prosperous."
Other "Taobao villages" tend to begin with a handful of shops dedicated to selling local crafts and handiwork. But nearly all the online shops in Junpu specialize in apparel produced in nearby factories. The sellers have typically worked in those factories, know the latest trends and where the best deals are.
Village residents have created punctual, tightly run logistics networks to support the 1,300 Taobao shops now based in Junpu. The volume of trade isn't apparent when entering the village by day. Beyond the main street, Junpu village remains relatively intact and quiet, surrounded by former factories.
But after dusk, online shoppers around the country start clicking. The village is suddenly full of light and activity. People run around storerooms, checking and dispatching orders for delivery across China. In total, the village has 13 logistics companies, which carry products from the village to overnight mail service centers.
Junpu is far from alone. Alibaba estimates that more than 1 million Taobao shops now operate out of rural China.
Xu, Junpu's e-commerce pioneer, continues to do well. He has several employees, a huge warehouse and has earned enough to pay off family debt left over from a food processing business. Next, he hopes to start his own clothing label and design company.
The government wants to help other nearby villages produce their own Taobao tycoons. It has set up what may be China's first free training school that teaches eager entrepreneurs the ins and outs of online sales.
"It's getting better here all the time," said Zhen.