MATT KIRSCHNER shares findings of his Senior Research Project on the rise in China’s Rural E-commerce industry.

As gentle rainfall softens the gray morning sky above Luo Village in Hubei, China, a determined businessman, Little Luo (小罗), embarks on his car commute to Majiadu Town (麻家渡镇). Many villages in rural China have residents who all share the same surname due to a shared cultural lineage. Little Luo is the proud owner of a successful e-commerce shop on Taobao, China’s largest online marketplace. He specializes in selling traditional turquoise jewelry. A turquoise charm adorns his high-end car, which traverses winding roads that connect his small village to the bustling town. Little Luo is going to his workplace, a vibrant hub of innovation that houses modern filming equipment, a beautiful gallery of turquoise gems, and a team of young, dynamic employees. Upon arrival, Little Luo goes straight to his state-of-the-art studio to perform a captivating livestream, showcasing alluring turquoise jewelry to tens of thousands of eager customers. In the afternoon, he grabs lunch with his business partner and older brother, Big Luo, and discusses their shop’s financial progress. When the workday ends, Little Luo returns to Luo Village, eager to share the day’s triumphs with his family. 

Little Luo’s success story is ever more common in China’s countryside. Due to rapid technology innovation and substantial government investment in rural infrastructure, e-commerce is penetrating the most remote corners of China’s countryside. In 2013, China’s government began promoting e-commerce in the countryside after launching their Targeted Poverty Alleviation (TPA) program, which hoped to end extreme poverty in China by 2020. Despite China’s rapid economic growth in the late  1900s and early 2000s as a result of foreign direct investment, rural China (who makes up 35% of China’s population) continues to face serious challenges such as limited income mobility, inadequate access to education, disparities in healthcare, underdeveloped infrastructure, and outdated  farming techniques. Additionally, the migration of young workers to big cities in search of better employment further depletes the rural workforce, leaving behind an aging population. The government thus saw e-commerce as a potential means of revitalizing China’s rural economy and eliminating the country’s rural-urban divide. 

This summer I traveled to Hubei Province to observe what progress China’s countryside has made toward adopting e-commerce and alleviating rural poverty. I chose Hubei because I have family in Wuhan, Hubei’s largest city. The trip was made possible by support from the Council on East Asian Studies and Ezra Stiles College to conduct research for my senior thesis on whether e-commerce is a feasible means of sustaining rural economic growth. I began my research by contacting several e-commerce shops on Taobao that were based in rural Hubei. I was pleasantly surprised when the most popular sellers of turquoise jewelry in the province, the Luo Brothers, responded and invited me to their workplace in Zhu Shan County, Majiadu Town to learn about their business. I didn’t expect the rural entrepreneurs to be so welcoming to a foreign student visiting China’s countryside for the first time to survey the local economy. 

After driving for five hours past tall green mountains and picturesque rice fields, I finally arrived at the Luo Brothers’ workplace. Over a kettle of freshly brewed green tea, I introduced myself to the brothers and explained my interest in understanding how rural entrepreneurs like them were adapting to the digital marketplace and competing against urban e-commerce shops. The brothers, excited to share their experience, told me about their upbringing in the impoverished Luo Village. Little Luo and Big Luo only had a high school and middle school education respectively. Due to limited job opportunities in Luo Village, the brothers moved to Shanghai in the mid 2000s in search of employment; however, competition for jobs in Shanghai was fierce. In 2011, having found little success in Shanghai, the brothers returned to Luo Village to work in the local turquoise mining and crafts industry. Around roughly the same time, the e-commerce platform Taobao was burgeoning in China and beginning to enter some rural areas. With a deep understanding of the local turquoise industry and a passion for business, the brothers realized that they could utilize e-commerce to sell traditional turquoise jewelry directly to a national customer base, eliminating the cost of working with intermediate retail companies and accessing a much wider customer base. The Luo Brothers were in business.

The brothers spent countless hours studying Chinese translations of business management books from the Wharton School of the University of Pennsylvania. They further studied Taobao’s platform to identify the most effective marketing strategies for turquoise jewelry. In 2016, Taobao launched a live-streaming feature, allowing for direct interaction between sellers and consumers. The brothers immediately began using livestreams to help foster trust between themselves and urban customers and showcase their finely crafted turquoise jewelry. The brothers also explained that their success would not be possible without the support of the local government, especially the local party secretary (equivalent to a town chief), Mr. Wang Yang. 

I asked if I could meet Mr. Wang Yang, so the brothers drove me to the local party headquarters to meet him. Mr. Wang Yang, a kind and knowledgeable man, was just as enthusiastic as the brothers to welcome me to Majiadu. Eager to assist me with my research, Mr. Wang Yang explained the different mechanisms that the Chinese government uses to support rural entrepreneurship. After identifying villages with the potential for e-commerce, local governments implement support measures by developing essential infrastructure for e-commerce—5G networks and strong highway systems. These villages are then designated as “Taobao Villages” due to their concentration of online businesses. Majiadu (and the Zhushan County government) even built an E-Commerce Center in partnership with ByteDance, another e-commerce company that owns the platforms TikTok and Douyin. The high-tech center trains local workers in selling products online and, more importantly, helps authenticate their turquoise products—to prevent counterfeiting. 

Over the years, Majiadu has seen a tremendous return on the local government’s investment in e-commerce. According to Mr. Wang Yang, more jobs are available in the town than ever before thanks to increased demand for turquoise jewelry from urban customers. These jobs range from turquoise miners to jewelry designers to digital marketers to transportation workers and to many more roles. The majority of Majiadu’s residents work in the turquoise industry, with many of them having returned to the town after leaving. Some residents are even migrants from neighboring provinces, reflecting a potential new trend of reverse urban-to-rural migration. E-commerce has also improved living standards in Majiadu by enabling the local government to invest more back into the town. In the past three years, Majiadu has built a new middle school, three new elementary schools, and one new kindergarten so that young parents can work while their children attend school. The local government has even invested heavily in improving the town’s social life by building karaoke clubs, hosting art fairs, and setting up night markets. When I visited the Zhu Shan County Capital at night, I was amazed by the colorful lights that lit up every building. It was difficult to believe that I was in a remote town in the mountains. 

After several weeks exploring the town and collecting data for my research, I was ready to return to the US. My trip would not have been possible without the generous help of the Luo Brothers, who connected me to important stakeholders and government officials and provided valuable information. In return, I participated in several of their livestreams to give my own perspective on their turquoise jewelry from the point of view of a foreigner. Before I left, the Luo Brothers treated me to one last dinner at their home. There, surrounded by acres of green meadows, I played basketball with Little Luo in his expansive backyard with mountains in the distance that reminded me of an oil painting. When it started raining, I ran inside and was treated to a home-made dinner of frog legs and duck blood—it was truly delicious!

The experience of living and learning in this rural village, along with the kindness and generosity that the Luo Brothers, Mr. Wang Yang, and other locals displayed to me during my travels, completely changed my perspective on rural China. Instead of meeting a class of rural workers struggling to make ends meet, I met bright, proactive, and capable entrepreneurs who were leveraging advanced technology to improve standards of living and give back to their community. Instead of seeing visible poverty, I saw beautiful high-rise apartments, picturesque villages, and bustling towns. Instead of lack of rural access to education, I saw new schools. In an age of limitless information, even those living in the most remote parts of the world are finding the means of equipping themselves with the necessary skills to forge their own success.

Matt Kirschner graduated from Yale College in December, 2023 and is currently residing in Shenzhen, China.