Rural e-commerce strongly promoted by the State Council: 140 billion yuan invested over 5 years to expand rural broadband
On October 14, Premier Li Keqiang of the State Council presided over an executive meeting of the State Council, deciding to improve the compensation mechanism for universal broadband and telecommunications services in rural and remote areas to narrow the urban-rural digital divide; deploying accelerated development of rural e-commerce to boost consumption and benefit people's livelihoods by expanding new business formats; and determining measures to promote the development of the express delivery industry and cultivate new growth points in modern services.
Recently, the Ministry of Commerce has allocated 3.7 billion yuan in support funds to carry out the 2015 comprehensive demonstration of e-commerce entering rural areas. A research report by Soochow Securities holds that after farmers' incomes grow and consumption upgrades, demand for high-quality goods increases. However, the rural population is scattered, it is difficult for shopping malls to enter, and the gap between supply and demand is huge. As the rural internet penetration rate gradually rises, rural e-commerce can effectively solve this pain point.
The logistics “shortcoming” in rural e-commerce development
According to forecasts by several brokerages, the scale of China's rural online shopping market in 2014 was about 180 billion yuan, and it is expected to rise substantially to 460 billion yuan in 2016, with a compound growth rate of 60%. But in its initial stage, this new business format faces numerous problems such as logistics, capital and infrastructure, and for a time no effective lever could be found.
In response to the prominent problems in rural e-commerce development, the meeting decided to increase central fiscal investment, guide local governments to strengthen policy and funding support, encourage basic telecommunications and broadcasting enterprises and private capital to participate fairly in rural broadband construction and operation and maintenance through competitive bidding and other means, and at the same time explore market-based methods such as PPP and entrusted operation to mobilize the enthusiasm of various entities to participate, striving to achieve broadband access in about 50,000 administrative villages that lack broadband and broadband upgrades for more than 30 million rural households by 2020, so that broadband covers 98% of administrative villages, and gradually achieve wireless broadband coverage, with total investment expected to exceed 140 billion yuan.
In addition, the meeting also determined measures to promote the development of the express delivery industry, among which those involving rural e-commerce include improving the express service network in rural areas and the western region, building a courier delivery system covering both domestic and international destinations, and focusing central budgetary investment on supporting the construction of public-benefit and basic express facilities in rural areas and the western region.
“This meeting can be said to have clarified the priority focus of rural e-commerce development,” said Zhang Li, deputy director of the E-commerce Research Department of the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce. She explained that when Vice Premier Wang Yang of the State Council previously conducted local research on rural e-commerce, the core problem reflected was the logistics “shortcoming,” and specific opinions were fed back to relevant departments after the research.
“In some remote rural areas, one express delivery requires a person to deliver it specially for a whole day, and the cost is at least above 10-15 yuan, while the logistics cost farmers can accept is at most around 5 yuan.” Zhang Li explained.
Clearly driving farmers to start businesses
The above-mentioned executive meeting held that, through mass entrepreneurship and innovation and by giving play to the role of market mechanisms, accelerating rural e-commerce development and organically combining physical stores with e-commerce, so that the real economy and the internet produce a superimposed effect, it is conducive to boosting consumption, expanding domestic demand, promoting agricultural upgrading, rural development and farmers' income growth, and enabling hundreds of millions of farmers to step onto the new stage of “mass entrepreneurship and innovation” by “getting connected.”
To this end, first, expand the application of e-commerce in agriculture and rural areas. Encourage social capital, supply and marketing cooperatives and various other entities to build agricultural e-commerce platforms, broaden markets for agricultural products, folk products and rural tourism, and, while promoting industrial goods going to the countryside, expand greater space for agricultural products entering cities. Give priority to carrying out comprehensive demonstrations of e-commerce entering rural areas in old revolutionary base areas and impoverished areas, increase channels for employment and income growth, and promote poverty alleviation and development. Second, improve the environment for rural e-commerce development. Improve related facilities such as transportation, information, origin collection and distribution, and cold chain, encourage rural commercial enterprises to build distribution centers, develop third-party distribution and so on, and improve circulation efficiency.
Third, create a sound online consumption environment and strictly crack down on illegal acts such as online sales of counterfeit and shoddy goods. Vigorously cultivate rural e-commerce talent and encourage entrepreneurship and employment through the internet. Fourth, increase policy support for rural e-commerce. Provide guaranteed loans and interest subsidies to those who meet the conditions. Encourage financial institutions to innovate products such as online payment and supply chain loans, simplify procedures for small short-term loans, and increase credit support for e-commerce entrepreneurship.
“This will clearly drive our entrepreneurship,” said Song Junwen, founder of Yuanxian Life. For young people returning to their hometowns to start businesses, using rural e-commerce as an entrepreneurial project has a much lower threshold, and “third-party platforms, local government entrepreneurship training, plus special support from impoverished counties” will make the wave of rural e-commerce entrepreneurship increasingly obvious.
Song Junwen is a representative of returning-home entrepreneurs. He once served as a college student village official and then a civil servant, and now runs his own rural e-commerce business.
Letting hundreds of millions of farmers return to their hometowns to be their own bosses not only drives rural specialty products to “go out,” but also enriches rural residents' consumption choices in both directions. More importantly, in 2013, China's rural areas still had 630 million residents, the agricultural labor force was still 240 million, and the agricultural labor force accounted for 31.4% of the total employed population of society.
Zheng Xinli, executive vice chairman of the China Center for International Economic Exchanges, previously said publicly that releasing the consumption potential of these 630 million rural residents is enough to support China's economy in developing at a speed of more than 7.5% until 2030.