Alibaba shows how tech can boost in­clu­siv­ity

China Daily (USA) - - G20 2016 CHINA -

It has been 740 years sinceHangzhou last reigned as the world’s most im­por­tant city. It was then the cap­i­tal of the world’s wealth­i­est and most de­vel­oped na­tion, China, dur­ing the South­ern Song Dy­nasty (1127-1279). This weekHangzhou has again been the cen­ter of the world’s at­ten­tion thanks to the G20 Sum­mit.

The world’s spot­light falls onHangzhou’s most fa­mous his­tor­i­cal land­mark, theWest Lake, as well as its most fa­mous lo­cal com­pany, Alibaba, the world’s largest e-com­merce com­pany. Alibaba’s founder and chair­man JackMa, is aHangzhou na­tive. He has boasted “Hangzhou has be­come the driv­ing force of China’s newe­con­omy,” and sug­gested G20 vis­i­tors rise at 5 amto walk around theWest Lake, to ap­pre­ci­ateHangzhou’s scenery, an­cient and mod­ern.

Alibaba has changedHangzhou and changed China. But, to grasp the full ex­tent of that change, world lead­ers should ven­ture out fromHangzhou and visit some of China’s small­est, poor­est and most re­mote ru­ral vil­lages. Here Alibaba’s im­pact is per­haps the most trans­for­ma­tional. Alibaba has made a spe­cial ef­fort to bring the ben­e­fits and con­ve­nience of on­line shop­ping to China’s ru­ral fam­i­lies, the 45 per­cent of China’s pop­u­la­tion that still live on the land.

Since Alibaba listed its shares on the NewYork Stock Ex­change in 2014, the com­pany has an­nounced plans to spend 10 bil­lion yuan ($1.49 bil­lion) to make it pos­si­ble for peo­ple in over 100,000 Chi­nese vil­lages for the first time to buy and sell on Alibaba’s Taobao mar­ket­place.

It is im­pos­si­ble to over­state the im­por­tance of this ef­fort. E-com­merce now of­fers the fastest and most durable way to im­prove liv­ing stan­dards in China’s coun­try­side. By get­ting on­line, farm­ers can shop more widely and buy more cheaply a vast range of prod­ucts never be­fore avail­able in ru­ral China. In ad­di­tion, they can sell di­rectly their farm prod­ucts, both fresh and pack­aged, to tens of mil­lions of cus­tomers liv­ing in cities across China.

I’mone of those ur­ban dwellers in China who does some of the food shop­ping from tiny ru­ral fam­ily busi­nesses on Taobao. Last week I bought dried chili pep­pers from Sichuan prov­ince, ap­ple vine­gar from Shanxi, goji berries from Qing­hai and dried sweet potato chips from Shan­dong. Every­thing I buy from ru­ral pro­duc­ers is great. But, the real en­joy­ment comes from know­ing that, thanks to Alibaba, my money can go di­rectly to the peo­ple work­ing hard to build a bet­ter life for them­selves and their fam­i­lies in ru­ral China. This, in turn, helps nar­row the in­come gap be­tween ru­ral and ur­ban.

Un­like the two big US e-com­merce com­pa­nies, Ama­zon and eBay, Alibaba takes no com­mis­sion on pur­chases made on Taobao. This is what econ­o­mists call “fric­tion­less trade”, where buy­ers and sell­ers can trans­act without any mid­dle­men tak­ing a cut. It is a dream of farm­ers world­wide, to sell prod­ucts di­rectly to cus­tomers and so earn more for their hard work.

On­line shop­ping in ru­ral China is now grow­ing much faster than in cities. Most ex­cit­ing, we are still in the early days. In the fu­ture, farm­ers should be able to save sig­nif­i­cant amounts of money and im­prove har­vests buy­ing seeds, fer­til­izer and tools on Taobao and other web­sites. Haier and are also quickly ex­pand­ing their ru­ral e-com­merce.

Alibaba is pay­ing for tens of thou­sands of “Vil­lage Taobao” cen­ters across China. Here, farm­ers can get free help to buy and sell on­line. Nowhere else on the planet is e-com­merce be­ing as suc­cess­fully in­tro­duced into the lives of small vil­lage farm­ers. The world should take note, and China should take pride.

This year marks the first time China has hosted a G20 sum­mit. The world lead­ers held de­tailed dis­cus­sions on trade, fos­ter­ing in­no­va­tion and erad­i­cat­ing poverty. We should all wish them well. Mean­time, Alibaba is busy ac­tu­ally putting such talk into ac­tion. Its ef­forts to spread e-com­merce in China’s coun­try­side pro­vide con­crete proof of how tech in­no­va­tion can be both in­clu­sive and help­ful to all of so­ci­ety. The au­thor is chair­man and CEO of China First Cap­i­tal.


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