Some factors still constrain rural e-commerce, especially involving agricultural products online, said Li Guoxiang, a research fellow with the Rural Development Institute of Chinese Academy of Social Sciences (CASS).
Despite the increase of agricultural products available online, the gap in sales volume with industrial products sold to rural areas has widened annually, expanding from 735.6 billion yuan (US$103.1b) in 2016 to 1.6 trillion yuan (US$224.3b) in 2021.
“Selling agricultural products online goes through complicated links. Because of the lack of a cold chain, losses are big. Economic disadvantages of scale exist in several links from the origin. Production itself is dispersed, so collecting them for online sale is a diseconomy of scale already,” Peng Zhiqiang, CEO of technology company Shengjing Technology, told Yicai, a financial news outlet. He said selling agricultural products online is much more difficult than selling industrial products to rural areas and requires more investment in time and money.
Liu Hui told NewsChina that he seldom sells leafy vegetables that are vulnerable to high temperatures during summer. He sells towel gourds and chili peppers on Taobao and Pinduoduo. But if he adopts cold-chain transportation, overheads go up, making the venture not worth it.
Li told NewsChina that some places lack basic logistics. “Many villages can’t ship express deliveries yet. They have to go to nearby towns,” he said.
Also, product quality is inconsistent, as large-scale farming is not mainstream. Li noted the quality of agricultural products and farming practice varies greatly.
This causes trouble for Chai, who often buys kiwis from other growers to meet demand. Chai told NewsChina that by the end of September, peak season for selling kiwi fruits, he shipped 1,000 fewer packages than the previous year, partly because he failed to source enough fruits that meet their quality standards.
“We guarantee the quality of our fruits because I keep learning new planting methods and technologies from books, the internet and expert lectures. So my standards are high when purchasing from other growers,” Chai said. “However, many growers here are elderly and rather casual about farming. They rely mostly on luck and pay little attention to learning or using new technology to improve quality,” he added. “The products aren’t standardized because of lack of planting on a large scale. We hope to develop large-scale farming too, and adopt new planting ideas and technologies to produce fruits that are consistent in quality. But the arable land in our village is limited.”
Li Guoxiang pointed out that while some villages have made headlines for their success in e-commerce, they remain a small minority. In most villages, particularly those in remote regions, e-commerce is far from a feasible choice.
“The government has provided a lot in training and other support. But up to now, few cases are really viable and replicable,” Li said. “It might not be realistic for every village across the country to develop ecommerce. There are only a few standout villages, while the majority will still miss out on the opportunity.”
Li pointed out the biggest hurdle is the lack of young people, most of whom move to cities for work. “Whatever the business, talent is needed first,” Li said.
He said that many villagers, most of whom are elderly, have difficulty following the government-provided e-commerce courses. “Some villagers are too old to digest the training. Besides, it’s not a one-person operation. It requires partners. Even if a young person is determined to [start an ecommerce business], they still have to find suitable employees in the village. If the scale is not large enough to be profitable, young people couldn’t survive,” Li said.
A survey on rural revitalization by the Rural Development Institute of CASS in May shows that in 2021, 23.99 percent of the permanent rural population are above 60 years old and 16.56 percent are over 65, surpassing the 14 percent benchmark set by the World Health Organization for an “aged society.”
The five-year outlook appears bleak, with an estimated shortage of 3.5 million professionals in agricultural e-commerce in areas from operation and promotion to design, customer services and logistics, according to a report from China Agriculture University’s e-commerce research institute in June 2020.
To better develop e-commerce in rural areas, Li suggested the local government focus on e-commerce in a township or central village that can mobilize surrounding smaller communities and cooperate with e-commerce platforms to foster new businesses and attract young people. “There has to be plans about what to grow too,” Li said.
Developing agricultural products processing and integrating e-commerce with tourism or other tertiary industry will also make the business more sustainable.
“All in all, county and township governments need to proactively make overall plans, provide guidance and cooperate with platforms. It’s important to ensure the development is replicable based on local conditions,” Li added.
Despite these challenges, Chai is hoping to scale up his farm and get certified as organic. “Maybe not too big, like 50 mu (3.3 hectares), but small and artisan. In this orchard, we could adopt standardized management, such as when to spray pesticides and how much to use and detect for pesticide residues, to make sure every fruit we sell is pollution free,” Chai said. He added that while some growers are certified organic, they actually sell fruits sourced from small growers that do not check for pesticide residue.
“We’re not satisfied with just selling products and making money. We are running the orchard like a growing company. There are long-term considerations. We hope to provide genuinely high-quality fruit to consumers,” Chai said.
For some areas, e-commerce may provide the initial spark to activate the overall rural economy for more sustainable development. Many have built processing chains and fostered agritourism like vegetable and fruit picking by improving living environments and developing local natural and cultural resources.
E-commerce also creates new job opportunities in rural areas, such as customer service, storage and processing, and packaging for unskilled and elderly populations. Other businesses are turning to villages too, offering services like training, storage and logistics, videography, financing and legal counsel.
“More and more young people are coming back for future development. It has become the norm in our village,” Chai told NewsChina.