Chinese e-commerce giant, Alibaba, is turning subsistence farmers into online entrepreneurs and creating new business opportunities for Australian companies, according to researchers at the University of Sydney Business School.
Alibaba has provided Internet infrastructure and access to its Taobao portal to people in nearly 800 remote rural villages and has earmarked another 10,000 for development.
“Many of these villages operated at a subsistence level,” said senior lecturer, Dr Barney Tan. “Their people have traditionally focused on producing enough to eat and passing their land on to their children when they die.”
But not enough Australian companies are taking advantage of the portal, Tan told CIO Australia, saying he can name three at the moment including Australia Post, UGG and Swisse.
“These businesses are essentially using Taobao as a means of tapping into the Chinese consumer market, making available Australian products (UGG boots, vitamins, cosmetics, commemorative stamps) to Taobao users, who are predominantly Chinese at this time,” Tan said.
“The main benefits for people in remote villages is that they now have access to a far wider variety of consumer goods (sourced from all over the globe) just by being able to participate on the Taobao platform. Prices tend to be very competitive as well due to the intense price competition that happens on Taobao.
“Also, they have the opportunity to export their own products to the rest of the world. Many Chinese residing in Australia and the rest of the world, are using Taobao. Taobao is essentially connecting the industries/businesses in these remote villages to the rest of the world.”
Tam said the opportunities for Australian businesses are immense, but he’s surprised the portal hasn’t attracted more Australian involvement.
“Personally, I am surprised that there are not more Australian businesses operating on Taobao. China has one of the fastest growing middle class in the world and their appetite for imported products is only going to grow. Alibaba, in fact, recognises this and they are launching a new initiative called Tmall Global to connect foreign businesses with the Chinese consumer market.”
Tan said the focus of Tmall Global, is on what Alibaba terms “cross-border e-commerce”, which essentially seeks to reverse the conventional direction of trade on Alibaba’s platform from exporting Chinese products to the rest of the world, to importing foreign products into China.
With a Taobao portal linking the villages to the rest of China and the world, Tan said these villages are now able to develop commercial enterprises and purchase consumer products via the Internet.
“Alibaba has set up hubs in these villages allowing community members to place orders or market their products without the need to own a computer. I’ve heard anecdotes of people ordering refrigerators and because the roads are unpaved, they’ve had to have two people carry the refrigerators on their backs.”
Alibaba’s Taobao portal is also “supercharging” the development of village level enterprises in parts of the country where they seemingly have no local competitive advantage.
Tan tells a story of a farmer who visited an IKEA store and realised that he too could manufacture and market flat-pack furniture with the help of the Taobao portal. “This village now has a reputation for producing flat-pack furniture and it’s in a location with no inherent advantages,” he said.
Tan said the concept of the Taobao village is driven by concerns over China’s saturated internet market, particularly in urban centres. “This is a challenge that is commonly faced by a lot of other e-commerce giants across the globe including Amazon and EBay,” he said.
“Alibaba recognises that opportunities in developed markets could plateau and become increasingly saturated so they have decided that reaching out to areas that were previously digitally excluded would be a way to continue their business growth.”