The promise of the Internet for rural economic development in China: a study of agricultural e-commerce

ABSTRACT This study investigates the potential of e-commerce to enhance rural agricultural businesses by allowing farmers and producers of agricultural products to sell on platforms such as Taobao. Using a survey methodology, we analyze whether Internet sales enhance rural businesses in either of two ways – increasing producers’ profit margins by avoiding monopolistic or collusive local middlemen and reorganizing the supply chain in an efficient manner, and increasing sales volume by reaching a larger market. The study also investigates barriers that rural Internet sellers face. For the purpose of this study, we conducted field interviews with online shop owners and a nation-wide survey of rural agricultural online shops. The survey results confirm our hypothesis, and demonstrate that market forces – the increase of producers’ profit margins and the expansion of market, aided by government initiatives, have driven down barriers to rural e-commerce and created economic stimulus that benefits rural economic development and potentially eliminates poverty. The study also suggests that more can be done by the government in increasing e-commerce training, subsidizing shipping services in rural areas, and establishing local e-commerce associations. Recent research also conforms with our conclusions drawn from the survey results, beyond which, the evolution of platform economy has posed new challenges and further research is required.