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Chinese Villages Focus on Taobao Online Shops

“Taobao villages” are popping up all over rural China in what might be a model for a new phase of low-impact, big-profit businesses in the region.

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JIEYANG, China — Only two years ago, Junpu village was like so many other thousands of near-abandoned small hamlets across the vast stretches of rural China.

With farming no longer a viable profession for most young people, the vast majority of villagers less than 50 years old left home to find work in factories and larger cities across Guangdong province. The village’s own factories, mostly small workshops making garments and processed food, were foundering under the weight of fewer orders and higher costs.

Among those who left to seek fortune elsewhere was Xu Zhuangbin, now 23. Xu struck out from Junpu for the southern metropolis of Guangzhou, about three hours away. He worked at a few different jobs and quickly found a lucrative niche running an online store on the e-commerce giant Taobao. Xu’s shop specialized in men’s clothes, which he sourced from among the thousands of garment and apparel factories that overwhelm this region of China.

Though he was making big profits with his thriving online shop, Xu never felt quite right in Guangzhou. Inspired by the idea of Internet-driven mobility and taking his job home, Xu moved back to Junpu village and opened his Taobao shop there, bringing with it his clothing factory connections and distribution channels he had worked so hard to accumulate.

“I never felt at home in Guangzhou,” said Xu, sitting in the office of his massive warehouse complex in the village. “I wanted to be with my family.”

Within a few months, it became apparent to other village families that Xu was onto something. His business was a gold mine, drawing tens of thousands of dollars in sales every week. After six months running his Taobao shop from the village, Xu had managed to pay off the deep debt his father accumulated when the family factory failed, and he bought his own car.

The idea took off like lightning, and soon the local government became involved. The government invested in new, village-wide high-speed Internet connections, gave tax breaks to new online retailers starting up and started a preferential loan program.

The result? What might be a model for a new phase of low-impact, big-profit business in rural China: a “Taobao village.”

Junpu is one of more than 20 towns the massive Alibaba Group-owned e-commerce platform has tagged “Taobao villages” across China. To get the label, a village must have more than 10 percent of their residents working in e-commerce, drawing at least 1.65 million yuan, or about $270,000, in sales annually, according to the company.

Taobao says there are now one million online shops operating from rural China, double the number of 2012. The highest-volume villages are located across seven provinces and all vary a bit depending on their products and market. In Junpu, clothing is the item of choice. Junpu Taobao sellers buy products from the nearby factories tailored to their customers’ tastes then ship them throughout China at express speed, cashing in on a fast-growing wave of consumerism.

Shops here specialize in products by category. Along the main road through the village, Taobao shops range from denim stores to clothes for twentysomethings to baby clothes and blankets.

Junpu is not a typical Taobao village, in several respects. Elsewhere in rural China, far away from the country’s factory zones, e-commerce clusters have tended to spring up around selling locally made handicrafts. But because Junpu is a former factory town in China’s textile- and apparel-manufacturing region, it has been a natural fit for its entrepreneurs to sell clothes made in the vast workshops of Guangzhou and Dongguan.

The result of access to big, higher-end inventory has been big-volume sales and a village boom. Today, Junpu government officials estimate that 55 percent of the village’s 2,700 people work with or own Taobao shops.

Xu, who started the trend, has not been surprised by its popularity or that his friends have returned to Junpu to start Taobao shops.

“Most of the young people wanted to come back,” he said. “Now most have come back.”

However, he added, “I was surprised at how the government supported the idea.”

Village chief Zhen Hongguang said government officials were eager to come up with ideas to encourage more people like Xu to open shops at home.

“We were losing our young people, our best people,” said Zhen. “It’s always been the government’s job to help create employment.”

The government support is apparent from the first glimpse of Junpu. A large arch across the entrance to the village heralds the e-commerce economy. The newly paved main road is flanked with banners and signs extolling the benefits of online retailing. Local officials have even funded a school to teach prospective Taobao shop owners about online sales and customer service.

For Xu and others on the cutting edge of rural retail, the next step is moving up the value chain. Xu, who now has 15 employees to process orders and handle logistics, is working on creating his own label.

“We’ve worked really hard and there is still a lot of opportunity here,” he said.

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