Cash Cow, Taobao

One small hamlet in China is teaching people how to sell online

TAOBAO, a large online retail platform, has become increasingly important to rural economies across China. Establishing online stores on Taobao requires little more than decent internet links and a logistics chain (often motorcycle delivery), so millions have been able to start selling goods at low cost. The trend has reversed the fortunes of many rural people.

In the typical narrative of what have become known as “Taobao villages”, a group of locals starts selling handicrafts online and taps into a lucrative consumer market, bringing money and success to the village. Some villages near to factories also sell mass-produced manufactured goods.

Alibaba, the conglomerate that owns the platform, says a Taobao village is any place where 10% of the population is engaged in online retailing. It says such activity is growing fast and that there are already 20 such villages across China, each generating at least 10m yuan ($1.6m) in Taobao-driven revenue. In some rural areas, the ability to set up Taobao shops has meant there is no need to leave home to work in a factory or on a building site in a big city.

One village in the southern province of Guangdong has now taken the concept to the next level, opening a “Taobao university” where people come to learn how to sell online. The local government of Junpu decided early on to support the Taobao concept with free wireless internet for residents, tax credits and an informal plan to give free store space to anyone—even people from outside Junpu—who wants to set up a physical shop for their inventory.

At the same time, local officials went a step further by opening a professional school with dozens of teachers to spread the art of Taobao selling—everything from beginner-level computer skills to mastering customer service. Nearly 300 students are enrolled in the school, which is free to all.

Julie Zhang teaches entry-level computing at the school. She says students are motivated because they have seen the wealth amassed by Taobao sellers in the village. “They need to work on learning basic things, but most students develop their skills very fast,” she says.

Junpu was previously home to a heavily polluting food-processing industry. Its switch to progressive online business has been impressively swift. One reason was the success of a hometown boy, Xu Zhuangbing. Mr Xu, now 27, started a successful shop on Taobao in 2011, when he was living in Guangzhou, the provincial capital 450km (280 miles) away. He soon realised he could just as easily be working from his home village, so the following year he moved back to Junpu, paid off his entire family debt within a year and hired 15 employees. His next plan is to start his own fashion label.

Even Mr Xu was surprised that the local government wanted to support the Taobao village concept. But he agreed to help train people, build up the school and give advice to others wanting to get rich online. Of the 3,000 residents in this tight-knit community, more than half make their living on Taobao, most of them selling clothes made in nearby factories. Last month a group of 20 prospective online retailers came from several African countries to study Junpu for three weeks. The official Xinhua news agency carried an article in April about the international training, noting how the “African friends” had learned tremendous skills. In most villages in China, people leave to find work. In Junpu, the flow is the other way.

Copyright 2014 The Economist

Read the article at The Economist.

Victoria Krisman
Victoria Krisman is Interactive Media Specialist and Communications Manager for the Intelligent Community Forum.

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