Chinese New Year, also known as the Lunar New Year, Spring Festival or Chunyun in Chinese, is the most celebrated festival in China and brings Chinese people and e-commerce back to their hometowns. During the festival factories, schools and offices shut down for a full week and most Chinese people make the journey back to their hometown to celebrate with their families. This year China expects 2.91 billion passengers during Chinese New Year on its roads, 19,000 km of high speed rails and 11,700 flights daily; 100 million more than the year before. On average that means more than 2 trips per citizen of the most populous country in the world. The country’s urbanization drive is put into reverse. Baidu, the Chinese internet portal, made an interactive graphic of tracing the trips of individual travelers based on location based data. It’s often called the world’s biggest human migration, but as Baidu spokesman put it: “It’s not just the world’s biggest human migration, it’s the biggest mammalian migration.”

CNY pic

But what does this huge migration of people learn us in terms of e-commerce?

While China’s urban e-commerce market has experienced an explosive growth the last years, the rural e-commerce market is yet to be discovered. To keep up the huge growth in online shopping, e-commerce giants as JD.com, Suning and Alibaba have started looking beyond the urban areas to turn the country’s huge rural areas into new markets. As the e-commerce growth in the cities will not have double digit growth figures forever, the countryside is expected to be the new driver for online growth.

To shape their “going rural” strategy, Alibaba created yet another shopping event. With record-breaking Double 11 (or Single Day) still in mind, further enjoying the huge discounts at the Double 12 shopping day (December 12th), Chinese online shoppers were able to join another shopping festival in January with the launch of Ali Chinese New Year Shopping Festival. But this time not aimed at the developed cities at the East Coast but at China’s largely untapped rural e-commerce market in the Central and Western parts, following the migration from China’s urbanities to their hometowns.

The idea behind the festival is to encourage trade between the urban and rural areas in both ways. Hard-to-reach consumers will have access to products unavailable in their local markets and from abroad. And in return, regional farmers will be able to sell their produce online to a much wider urban market.

For international companies, this interesting development will give you access to 600 million rural consumers. Following the rising disposable incomes and government policies to put an end to poverty by 2020, China’s rural economy is likely to boom. According a recent report the spending of rural consumers will be 55.6 billion USD (around 51.1 billion EUR) at the end of 2016, two times more than it was in 2014. The emerging rural middle class is getting more and more acquainted with quality products, choice and mobile shopping. And like their urban counterparts, they are highly influenced by social media, peer review and bloggers.

China e-commerce

The big Chinese e-commerce players are stepping into this opportunity by improving the infrastructure and logistics hubs by creating regional distribution centers, drop off/delivery stations and third-party alliances. Furthermore service centers are being setup, for example in existing convenience stores, that provides computers and monitors where villagers can buy products and collect items after they bought them.

The products that are sold most online to the rural consumers are household electronic appliances and personal electronic items such as phones, washing machines, televisions, and also apparel. But as the infrastructure is getting more mature and rural consumers more aware of quality and choice, other products are becoming popular such as food and cosmetics. The Chinese New Year Shopping Festival promotes Alaska black cod, Canadian lobster, Australian beefsteak, French wine and British tea to name a few. Although the rural consumers are still very price sensitive this is changing as they want to experience brands and products that improve their quality of life. The rural middle class are expected to trade up influenced by (social) media, travel and returning urbanities.

So, if you were waiting for the perfect time to seize this opportunity, the time is now.
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The Year of the Monkey will be the year of rural e-commerce.

Written by: Maarten Mensonides from TradeChanger