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How e-commerce giant Alibaba is giving grassroots entrepreneurs the power and drive to succeed in the e-commerce market―and you can, too…

The world’s largest online trading platform, Alibaba has created an astounding model for enterprise and growth in the 21st century. The story behind Alibaba’s incredible success is not only fascinating, it’s truly inspiring―especially if you’re a small business owner or ambitious entrepreneur who wants to increase sales, satisfy customers, and drive innovation in the e-commerce world.

Ali Alibaba Group, Institute of relying on huge amounts of data, deep plowing small enterprises in the forefront cases, build global business acumen, with an open, cooperative, to build and share ways to create influential new business knowledge platform. Ali research, insights and create new knowledge!Official website http://www.aliresearch.com/

Research Report on China’s Taobao Villages (2015)

Key Findings

l  Taobao villages are an important part of Alibaba’s rural strategy, which is in the structure of “dual cores + N”. “Dual cores” refer to rural Taobao and Taobao villages, and “N” refers to a wide range of agriculture-related business on the platforms of Alibaba, such as the characteristics of China, Taobao agriculture, Taobao University, miao.tmall.com, Taobao agricultural materials, mantianxing.taobao.com, ye.1688.com, etc.

l  The scale of Taobao villages in the whole country reached a new level in 2015. 780 Taobao villages up to the standards were found, increasing by 268% from a year earlier. These Taobao villages are widely distributed in 17 provinces, cities and districts, covering more than 200,000 active online shops. Among them, the number of Taobao villages in Zhejiang, Guangdong and Jiangsu ranked the top three in the country. 71 Taobao towns emerged in the country, increasing by 274% from a year earlier.

l  17 Taobao villages were found in central and West China in 2015. Taobao villages were found for the first time in seven provinces, cities and districts including Hunan, Jiangxi, Yunnan, Beijing, Jilin, Liaoning and Ningxia.

l  The number of Taobao villages in national-level poverty-stricken counties increased from 4 in the previous year to 10 in 2015, and the number of Taobao villages in provincial-level poverty-stricken counties reached 166.

l  Items contributing the highest turnover to Taobao villages in 2015 were clothes. Furniture and shoes ranked the second and third respectively. The fourth to the 10th were: automotive supplies, suitcases, bags and leather products, toys, daily homeware, bedding, outdoor supplies and main home decoration materials in turn.

l  The top 10 clusters of Taobao villages in the country in 2015: Yiwu, Zhejiang, Cao County, Shandong, Jinjiang, Fujian, Puning, Guangdong, Shuyang, Jiangsu, Suining, Jiangsu, Baiyun District, Guangzhou, Chaonan District, Shantou, Wenling, Zhejiang and Zhuji, Zhejiang.

l  In 2015, B2B e-commerce villages began to emerge on a large scale. This kind of villages was more closely associated with local industrial clusters and greatly expanded the transaction scale of Taobao villages in the future.

l  Local governments in all places continuously promoted supportive policies for Taobao villages. They are gradually transferring from the stage of completely barbaric development like grass roots into the stage of entry to the market and coordinated development with the government. 

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Research Report on China’s Taobao Villages(2015) 2 Contents Key Findings ............................................................................................................................................. 3 1. The New Era for Taobao Villages ......................................................................................................... 4 1.1 Taobao Villages onto a New Level .............................................................................................. 4 1.2 How Hot Are Taobao Villages?.................................................................................................... 4 1.3 Analysis of Alibaba’s Rural Strategy ............................................................................................ 5 Appendix: Definitions and Criteria of “Taobao Villages” and “Taobao Towns” .................................. 6 2. Interpretation of Taobao Villages with Data .......................................................................................... 7 2.1 Geographical Distribution: Widely Distributed in 17 Provinces and Cities ................................... 7 2.2 Quantity of Online Shops: Guangzhou, Quanzhou and Jinhua Have the Largest Numbers of Village–based Active Online Shops ................................................................................................... 8 2.3 Product Composition: Clothing, Furniture and Shoes Ranked the Top Three............................. 9 Yearly Characteristics of Taobao Villages .............................................................................................. 11 3.1 Clustering................................................................................................................................... 11 3.2 Globalization .............................................................................................................................. 12 3.3 Emergence of B2B E-commerce Villages.................................................................................. 12 3.4 From Natural Development to Explore the Initiative Creation.................................................... 12 4 Five Values of Taobao Villages ......................................................................................................... 13 4.1 The Best Carrier of "Public Entrepreneurship and General Innovation" .................................... 13 4.2 Typical Demonstration of Poverty Elimination by E-business.................................................... 14 4.3 Assistor of "New Entity Economy" ............................................................................................. 15 4.4 Samples of New Urbanization.................................................................................................... 16 4.5 New Value of Globalization........................................................................................................ 17 5. Challenges and Suggestions .............................................................................................................. 17 Appendix 1: 2015 China Taobao Villages List ........................................................................................ 20 Appendix 2: 2015 China Taobao Towns List .......................................................................................... 43 Authors of the Report and Acknowledgement......................................................................................... 45

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#47 event report – Innovative China: Alibaba’s rural strategy and its international implications

think in china
#47 1

October 13th, 2015 Bridge Cafe (Wudaokou)

Speaker:

Ying LOWREY, 刘鹰, Professor of Economics, Tsinghua University; Deputy Director of Tsinghua Research Center for Chinese Entrepreneurs.

Presentation:

Five hundred million and counting. China has more internet users than the entire population of the United States, and recently disclosed government plans are aimed at connecting over one billion users to 3G or 4G mobile networks by 2020. Not surprisingly, with a quickly proliferating internet use came the unprecedented growth of China’s e-commerce: a market which in 2014 reached a net worth of over 440 billion USD. Despite facing innumerable competitors, it comes as no surprise that companies such as Alibaba and JD are making sizable profits, attracting China’s increasingly urban population to their online stores.

Yet, as argued by Tsinghua University Professor Ying Lowrey, focusing on success stories of everyday online retail may not do justice to a much broader phenomenon that is currently taking China by storm.

#47 2

According to Prof. Lowrey, in fact, Alibaba is doing much more than dominating over China’s e-commerce landscape; rather, it is allowing the country’s overall economy to grow by means of a new economic model – one based on “unleashing grassroots entrepreneurship”.

At the very heart of this innovative model lies the expertise of small retailers, manufacturers, artisans, and farmers eager to expand their market by turning locally-sourced goods (or agricultural produce) into commodities available nationwide, if not internationally.

Often times, however, China’s most geographically dispersed peoples pay the price of living away from urban centers by not having access to the technology that would allow their business to grow. Small business owners and entrepreneurs thus find themselves stuck in their local reality, often having to deal with a stagnant market that leaves no room for progress and innovation.

“That’s when Alibaba comes in”, commented Prof. Lowrey. After claiming the record for the world’s largest US-listed initial public offering last year, in fact, Alibaba decided to ensure its further development by investing over 10 billion RMB in what became known as the company’s ‘Rural E-Commerce Strategy’ – an initiative meant to give greater visibility to rural entrepreneurs. At the time, the e-commerce giant invested in 1000 counties across Mainland China, while kick-starting micro financing projects in a total of 100,000 villages for the establishment of so-called “Taobao Village Stations”. Each Taobao Village Station “would then be equipped with the technology and infrastructure necessary to allow each community, however small, to be connected to the internet in a fast and secure way”, Prof. Lowrey explained. Statistics have shown that the establishment of Taobao Villages around China lead to astounding results: by June 2014, the population of China’s rural netizens had grown by 28.2%, 84.6% of whom mainly rely on mobile internet services.

#47 3

Addressing the question of what made Alibaba’s visions of net-preneurship possible in rural China, Prof. Lowrey mentioned Alibaba’s shift to Big Data technology and the establishment of AliCloud. In Lowrey’s view, “the greater a company’s computing power, the greater its possibility to join the e-commerce community in an efficient way”. This is certainly true for the Chinese e-commerce juggernaut; at present, in fact, Alibaba’s servers support the capacity of 17 million website access per minute. Greater computing power thus equips “a country, a business, a school, or even an individual” with competitive advantages that become all the more crucial within the e-commerce realm. Today, after having switched to Big Data and having reaped the benefits of the use of AliCloud, Alibaba hopes for Chinese businesses to move away from IT (information technology) systems to DT (data technology) ones. This much needed structural change, Lowrey argues, would eventually allow Chinese businesses to perform even more complex tasks, such as “implementing systems for the traceability of agricultural products” and improve the overall security of foodstuffs sold across China. At the same time, greater traceability would possibly lead to the emergence of what Lowrey defines ‘the invisible moral standard’, whereby producers and manufacturers feel compelled to provide the best service they can offer and selling the best products, while not allowing counterfeit ones to enter the e-marketplace.

As Big Data helped Alibaba bring the “Rural E-Commerce Strategy” to its full realization, the company now seeks to “employ the same technology to increase its competitiveness on a global scale, alongside promoting cross-border”, Prof. Lowrey said. In fact, Alibaba’s new long term vision consists in “fostering a collaborative e-ecosystem of various international partners that will serve the world’s 2 billion consumers with the most highly efficient logistic services at the company’s disposal”. Seeing this vision fully take shape may require a decade of efforts on Jack Ma’s side; yet, the prospect of giving rise to an economic system that is almost entirely based on the success of smaller-scale entrepreneurs (“mass flourishing”) worldwide is too rewarding for Alibaba not to continue following its development strategies in the foreseeable future.

For the time being, what is certain is that the growing popularity of net-preneurship initiatives will continue fostering China’s “willingness, capability and aspiration to innovate” – the fundamental driving force behind every successful economy.

Q&A:

Responding to a question on what could be identified as Alibaba’s key to success, Lowrey spoke about the ‘Alibaba Way’ by paraphrasing a famous Chinese proverb: “Give people a day’s profits, and they’ll eat for a day. Teach people how to do business, and they’ll thrive for life”. The core of Alibaba’s competitive strategy, therefore, lies in the company’s ability to empower entrepreneurs at across all levels of society. Lowrey calls this “growing by unleashing”, and believes Alibaba has gone to great lengths in its effort to improve China’s contemporary business culture.

Addressing a question on the challenges that the ‘Alibaba-model’ may face in the foreseeable future, Professor Lowrey argued that China’s leading e-commerce firm always seeks new strategies to favor its future development, and it is thus likely to deal with potential with relative ease. Further, when asked to elaborate on what Alibaba’s future might entail, Lowrey argued that the results obtained upon having implemented the ‘Rural E-Commerce Strategy” are indicative of how the company should continue providing support to small businesses and invest in micro-finance projects across China. “Alibaba knows that society needs constant innovation”, Lowrey said, “and I hope it will be able to hold on to that principle”. Yet, if ever there was a concrete obstacle for Alibaba and the realization of its visions, that may come from three parts: one is the State’s pervasive bureaucracy, or its excessively tight regulations; the second one is the severe competition from domestic and international markets; and the third is themselves. As media has noticed that Alibaba has involved in very intensive capital operations in purchasing businesses from all spectumes. I am a little worried about the remaining impact of 20th century Wall Street on Alibaba that might lead to a direction foucing on short-term profit gaining rather than the long term wellbeing.

Written by Carlotta Clivio

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Distinguished scholars Friends:

Thank you for your attention and support Ali Institute! With immediate effect, Ali Institute of Living Water Program Season 6 officially open registration, the current flowing water for young scholars at home and abroad is open, you are welcome to join the ranks of scholars Ali running water!

"Living Water Plan," created in 2009 by Ali Institute, which aims to build a "network operators + researchers' online docking platform to explore the value of the case of Ali platform and data to support the growth of outstanding young researchers, promote Chinese e-commerce enhance the level of research. This issue is scheduled to open flowing water research areas include: agriculture commerce, regional e-commerce, innovation and entrepreneurship, logistics and other electricity providers.

First, the registration requirements

a) flowing water program for scholars in universities at home and abroad, third party research analysts, independent scholars, the media, government researchers, open enrollment, regardless of age and professional background

b) researchers study e-commerce eco-system has a strong interest in research in the field of e-commerce has accumulated achievements and insights, the pursuit of high efficiency, pay attention to the social impact of research results

c) individual research topics Opening and Ali Institute of consistent priorities

Second, Registration

a) To improve the quality of outputs and optimizing the use of resources, the current flowing water no plans to recruit up to more than 15 research topics (each topic corresponds to a scholar or team); issues related to data demands cooperation is limited to three; each researchers declare a limited sub-topics

b) can be used directly for the owner Ali Research Institute released the sub-topics to be submitted since the proposed topics, issues need to be closely associated with the e-commerce eco-system, and the need to review by Ali Institute

c) in the August 10, by e-mail, send the following information to: [e-mail].

Information includes:

• i. the name, position / title, contact information, personal results of previous studies, the appendix related links, documents

• ii. sub-topics hoped claim, or to introduce ourselves of

• iii Study Plan: less than 800 words, including research topics, a brief synopsis, data requirements, research needs, output formats, time rhythm, team members, etc.

d) the final shortlist to Ali Institute Notice shall prevail

Third, the researchers obtained value

a) Case: Ali platform on the large number and diverse types of resources available for research network operators

b) Big data: in conformity with the safety regulations Ali Group data, the use of special data for the study. This year the subject plan involves data flowing water cooperation, we will be limited to three

c) research base: about to be settled Ali Institute in the country and more established research base, in-depth field studies

d) expert guidance: Ali Institute Academic Committee is responsible for review of the subject, flowing water to guide scholars, outstanding achievement award

e) Personal honor:

• i. Season 6 finalists finalists scholars, academics certificates issued by flowing water, and publicity in the Ali Institute official website

• ii. the current flowing water plan will be selected out of the 10 most outstanding research achievements, the author was "Season 6 Ali Living Water Program of outstanding scholar" certificate and bonus incentives, and in the second session of the new economic think tank meeting (tentatively in early 2017 held) receiving the award

f) Impact: After research outputs by Ali Institute and associated partners a full range of publishing, rapid increases in personal influence

g) Virtual Research Circle: Each task set exchange group exchange activities online and offline, brought together the industry's best researchers, and promote exchange and upgrade

Fourth, time plan

1.7 20 - August 10, release issue, open enrollment (registration deadline to August 10)

2.8 15, released the first batch of finalists (including the name of the subject and investigator)

3.8 15 - 30 November, research, data analysis and report writing stage

4.12 May 10, to submit a final version of the research results

5.12 10 - December 30, Ali Institute Academic Committee review score

In early 6.2017, the second session of the Conference of the New Economy think tank, published outstanding research achievements and Awards

Fifth, the outcome requirements

a) the results of the form: the nature of the sub-project, the results of the study can be divided into micro-reports, essays, stories, articles, models and other forms, specific form agreed by the investigator and the person Ali Institute interfaces

b) deadlines: Please submit research results according to schedule, the latest version of the final submission date for December 10, output delay does not participate in the outcome appraised

c) quality requirements: strict logic, writing is smooth, with strong readability, to reflect the latest industry status and trends, answer questions of society and industry closely

Sixth, the results of release

a) General Outcome:

• i. Ali Institute official website

• ii. Ali Institute of social media in the public account synchronous communication

b) the outstanding achievements, the jury determined by the academic accreditation, distribution channels including:

• i. "Ali Business Review" magazine

• ii. Cooperation publicly media

Outstanding issues, welcomed the inquiry. E-mail: [e-mail], or private letter Ali Institute of micro-channel public account (Account ID: aliresearch)

 

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July 2016

(Note: The above is the subject of Ali Institute open solicitation, enrollment scholars are free to choose, or from mentioning the subject)

 

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