“Jack Ma will protect you”

By Bill Lee

I wanna be just like Jack Ma. Who hasn’t dreamed of striking it rich on the Internet by selling what you think are “can’t miss” products? With unemployment among new university graduates a serious problem in China, many young people are opening online virtual shops, hoping to follow in the footsteps of their hero Jack Ma. Indeed, the government is encouraging this online entrepreneurship as a sponge for employment.

In 2013, China overtook the United States as the world’s biggest e-commerce nation. China’s e-tailing has been spurred by the massive diffusion of smartphones and the contours of the Chinese market — few national retail brand names, for example — which make it the perfect fit for e-commerce. Much has been written about the reasons for the success of Alibaba, JD.com, and the other online shopping giants, but certainly a major factor has been Alipay, which, unlike PayPal, puts the buyer’s money in a type of escrow account and only releases the payment to the seller when the buyer indicates his/her satisfaction with the delivered product, thus creating great trust among shoppers in the e-marketplace.

But what is remarkable from a development standpoint is the impact e-commerce seems to be having on relatively isolated rural areas. Unable to shop because there are no shops in villages, rural folk can now utilize online shopping to buy daily life goods that seemed unattainable only a few years ago. Alibaba’s Taobao Marketplace has created the “Taobao villages,” where service centers are set up to facilitate the villagers’ online shopping, throughout rural China. The access to the Taobao Marketplace enables villagers not only to purchase goods but also to sell local specialty products or goods they’ve thought up themselves, such as, one of my favorites, replicas of hats worn by Chinese soldiers during WWII. This all fits in nicely with the Chinese government’s desire to increase domestic consumption and develop China’s hinterlands. There are problems with China’s online commerce, of course — such as buyers extorting sellers to provide cash-backs to ensure good evaluations of their service, a crucial feature of online shopping in China — but China’s ingenious e-commerce system for rural areas can be a good model for developing countries.

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