Chinese biggest Internet company Alibaba announced another 10 billion yuan investment in rural e-commerce during the second World Internet Conference held last December in China. It showed the decisive ambition of CEO Jack Ma to enter into the rural market after its "Taobao Village" project, which has been expanding fast from three in 2009 to 780 in 2015.

Jingdong, another well-known Internet company, showed the same strong interest in rural e-commerce, and is about to launch a logistics network construction including cold chain, storage and distribution as reported. It is expected that these Internet companies are changing or promoting agriculture development somehow, in terms of providing a way helping farmers to sell agri-products and buy commodities.

The fast development of Internet, especially mobile Internet technology in the past decade, has made China the leading Internet power, given its biggest population and their keenness on smart-phone. It was reported by the CINIC (China Internet Network Information Center) that there were 680 million netizens by mid-2015; 88.9 percent of them use a smart-phone to access the Internet.

Those living in rural areas take up 186 million of the total. In fact, many rural users were counted as urban-based by working as migrant workers and living in cities for much of the year.

The great number of netizens create a big potential of remote selling and buying by means of e-commerce, and this potential market has been proved by a sharp increase of online sales in recent years, especially the November 11 online promotion by Taobao that has become an annual fixture, reaching new highs year by year in terms of sales volume and participants.

Alibaba reported the sales volume of "Taobao village" at 170 million yuan in 2015, almost tripling the previous year’s figure of 60 million yuan. This big consumption market in turn provides incentives for innovations and development of IT, to either traditional Internet companies such as BAT (Baidu, Alibaba, Tencent), or developing companies such as Jingdong and some start-up enterprises. It has also brought prosperity to logistics companies such as ShunFengExpress, etc.

"Taobao village" is a sort of innovation by Alibaba in this sense. It bridges rural and urban markets by selling rural products to urban consumers while buying industrial products for farmers via B2C with direct transactions at a reasonable price. On the other hand, the Internet also promotes "big data," which is very important for family workshops or farms to prepare in advance according to consumers’ preference. Besides the B2C model, there are many "Taobao villages" starting B2B businesses recently.

In comparison with those commercial goods produced in factories close to urban areas and with better transportation and storage access, online selling of agri-products which are mainly raw or fresh products from remote rural areas needs more demanding logistics and storage conditions, while generating higher costs and risks.

A company that sells fresh vegetables and fruits online in southwest China’s Guangxi went bankrupt recently. Most people believe that online sales are not likely to solve the problem of selling fruits or vegetables, because of inevitable losses during long-distance transportation, and the heavy weight that generates higher logistics cost.

Even though there is no detailed information on the sales volume of agri-products by the "Taobao village," it is obvious that the majority of products are not raw and fresh agri-products.

Would the fate of this company have been changed if a better logistics network had existed? In what way could the Internet Plus make a difference in solving the problems of agriculture production and increasing the income of farmers? I would discuss those questions in a future article.

The author is PhD student at the Rural Development Institute of the Chinese Academy of Social Sciences.

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.

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