Alibaba officebiz3Alibaba Group plans to develop online shopping in China’s countryside. The Chinese e-commerce titan will invest $1.6 billion over the next three to five years to build the foundations to attract more than 600 million potential rural customers.

Rural Internet users are steadily increasing in China. A survey by the China Internet Network Information Center shows there were about 177 million rural users at the end of 2013, up 13.5% on the year and nearly double the figure in 2008. Almost 85% of the rural population use the Internet via smartphones and other mobile phones, compared with nearly 80% of those living in urban areas. Nearly 80% of rural Internet users are under the age of 40. Of them, a leading 32% are between 20 and 29 years old, 25.1% are aged 10 to 19 and 23.3% are 30 to 39.

rural internet usersMore than 30% of people living in rural areas use the Internet for online shopping, compared with 55% of urban dwellers. However, Alibaba says the number of new subscribers to its Alipay online payment service is higher in the countryside than in the cities.

Selling local specialties

Alibaba founder and Chairman Jack Ma Yun has agreed to work with local governments in the Xinjiang Uighur Autonomous Region and Gansu Province in western China. He said he wants to deliver local specialties throughout China.

Xinjiang and Gansu were left behind in China’s economic development. Their per capita gross domestic product is only 25% to 50% of Shanghai’s, but they are rich in natural products, such as fruits and nuts. Alibaba will help the provinces by establishing an online system to sell these local specialties in China’s coastal cities.

That will promote development in rural areas and increase the income and purchasing power of local residents, giving Alibaba the opportunity to set up online retail in isolated areas where department stores and supermarkets offer a narrow range of products.

Alibaba Chief Operating Officer Zhang Yong said the company, which was listed on the New York Stock Exchange in September, will focus its growth strategy on globalization, rural areas and big data.

But Alibaba is not the only one with its sights set on the countryside. Rivals are setting up service bases to fix home appliances and deliver orders, making up for poor logistic networks in rural areas. Major e-commerce company opened a customer service base in Zhao County, Hebei Province, in November. It plans to open 1,000 such bases nationwide in the next three years. Also, a Chinese newspaper reported that leading electronics appliance retailer Suning Commerce Group will set up at least 10,000 bases within five years.