How Does E-commerce Improve the Rural Market System
Developing rural e-commerce is becoming an inevitable choice for China in innovating rural business models and improving the rural market system.
In order to vigorously develop rural e-commerce, recently, the official launch ceremony of the national supply and marketing cooperative e-commerce platform “Gongxiao e-Home” and the first China Supply and Marketing E-commerce Development Summit Forum were held in Beijing. Relevant experts believe that developing rural e-commerce is not only an important lever for transforming the agricultural development model and adjusting the agricultural structure, but also an important measure for increasing farmers' incomes and unleashing the consumption potential of rural areas.
“Internet Plus” Solves the Difficult Problems of Rural Economic Development
Zhang Hecheng, Director of the Market and Economic Information Department of the Ministry of Agriculture, believes that at present, China's agriculture and rural economy are facing five major challenges. First, the price “ceiling”. Second, the cost “floor”. “Costs run faster than prices, and per-mu returns run slower than prices. Now, in the cost structure of agricultural products, the proportion of labor costs is quite large.” Third, subsidy “Amber Box”. According to China's commitment when joining the WTO, agricultural subsidies cannot exceed 8.5 percent of agricultural output value, and as agricultural production costs gradually rise, the current agricultural subsidy policy is approaching the top of the “Amber Box”. Fourth, the “red light” restrictions of ecology and resources. Fifth, enormous import pressure. Zhang Hecheng believes that these five major challenges may persist for a period of time, and “Internet Plus” will bring a new breakthrough for agricultural development.
In terms of “Internet Plus agriculture”, the policies China has continuously introduced to encourage the development of rural e-commerce have provided guidance and support for it. On November 2, the State Council held a national teleconference on advancing the modernization of domestic trade circulation, supporting the development of emerging business forms such as e-commerce and promoting the improvement of quality and efficiency in the circulation industry. From 2014 to 2015, the central government allocated 4.8 billion yuan to support 256 counties in carrying out comprehensive demonstrations of e-commerce entering rural areas.
On October 15, the State Council executive meeting rolled out a combination of measures for developing rural e-commerce. The meeting decided to improve universal broadband and telecommunications services in rural and remote areas, narrow the urban-rural digital divide, and deploy accelerated development of rural e-commerce; it encouraged supply and marketing cooperatives and various other entities to build agriculture-related e-commerce platforms, broaden markets for agricultural products, folk cultural products and rural tourism, and expand greater space for agricultural products to enter cities while promoting industrial goods going to the countryside.
At the end of August, the Ministry of Commerce and 19 other departments jointly issued the Opinions on Accelerating the Development of Rural E-commerce, proposing that accelerating the development of rural e-commerce is an inevitable choice for innovating business models and improving the modern rural market system; on May 15, the Ministry of Commerce studied and formulated the “Internet Plus Circulation” Action Plan, proposing to promote e-commerce entering rural areas and cultivate a rural e-commerce environment; the Decision of the CPC Central Committee and the State Council on Deepening the Comprehensive Reform of Supply and Marketing Cooperatives, released in April this year, proposed that supply and marketing cooperatives should “conform to the new trend of profound changes in business models and consumption patterns, and accelerate the development of e-commerce”.
As early as the beginning of this year, the All China Federation of Supply and Marketing Cooperatives also issued the Opinions on Accelerating the Promotion of E-commerce Development, requiring the active construction of a national e-commerce platform and the creation of an “online supply and marketing cooperative”, making it an important lever and key link in the e-commerce work of the national supply and marketing cooperative system, and so on. According to an incomplete review, since the beginning of this year, China has issued more than 10 documents to promote the development of e-commerce in China.
Rural E-commerce Development Requires the Organic Combination of Various Elements
Zou Tianjing, Vice Director of the All China Federation of Supply and Marketing Cooperatives, believes that developing rural e-commerce concerns rural production, investment and consumption, and concerns agricultural efficiency, farmers' incomes and rural prosperity. Its comprehensive, special and complex nature determines that urban e-commerce development models cannot simply be copied. “Starting from the patterns of agricultural product production, it is very important to design a well-regulated e-commerce platform. We must design it according to the technical characteristics of agricultural products and the production and sales characteristics of agricultural products.”
According to Wang Zhengwei, Chairman of China Supply and Marketing E-commerce Co., Ltd., “Gongxiao e-Home” is the unified comprehensive e-commerce platform of the national supply and marketing cooperatives. It gives play to the unique advantages of combining supply and marketing, two-way circulation and comprehensive operation, not only supplying daily consumer goods and agricultural production materials downward, but also purchasing and selling agricultural and sideline products and renewable resources upward, using internet means to achieve organic matching of supply and demand. At present, the first-phase functions of “Gongxiao e-Home” have been completed, and the first batch of more than 100 supply and marketing cooperative e-commerce enterprises from nearly 30 provinces, municipalities and autonomous regions across the country have smoothly settled in.
Wang Rujing, Executive Deputy Director of the Hefei Institutes of Physical Science of the Chinese Academy of Sciences, said that e-commerce is part of modern agriculture, and without developed e-commerce in agricultural materials, agricultural products and other areas, it cannot be called modern agriculture. However, how to combine big data, cloud computing and the Internet of Things with e-commerce, and how to accurately identify one's own positioning, is the key. E-commerce enterprises should not do e-commerce for the sake of developing e-commerce, but should provide good services, build up users, and lead e-commerce development through high-quality services. In addition, developing e-commerce for agricultural products and agricultural materials cannot be separated from the institutional environment of Innovation 2.0, and also needs to be organically combined with various systems such as industry-university-research.
Li Jianhua, Deputy Secretary-General of the China E-commerce Association, said that rural e-commerce is a major project, and while it develops, its contradictory problems are also becoming increasingly prominent. At present, there are more than 4,000 e-commerce businesses for agricultural products nationwide, but less than 1 percent are profitable, and a clear profit model is still being explored and discussed. Li Jianhua suggested, first, that developing rural e-commerce must be linked as a whole, combine government and enterprises, and involve full participation. Local governments must work hard on setting policies, connecting networks, building platforms, and organizing sellers for sales. Second, new problems related to agricultural products, such as non-standardization, cold chains, logistics, funding and talent, urgently need to be solved. For example, there is demand for talent related to e-commerce platforms in network construction, consulting services, financial services, electronic payments, warehousing and logistics, and information technology.