The Promise of the Internet in Rural Economic Development in China: A Study of Agricultural E-Commerce

Abstract

The research question that this thesis addresses is: Does e-commerce offer a promising avenue for improving the businesses of rural producers, and thereby promote economic development in rural China? Through a field study and survey administered to 33 rural agricultural online shops in China, the conclusion is yes. E-commerce increases agricultural producers’ profit margins. This increase comes from selling directly to retail customers online, and not necessarily from avoiding monopolistic or oligopolistic middlemen or inefficient supply chains. E-commerce also expands markets for rural online sellers, allowing them to reach a greater number of customers and increase their unit sales. Government action and market forces driven by the Internet have made the barriers to adoption of rural e-commerce, including lack of infrastructure and human capital, manageable. Although there are still problems that need to be solved, most notably in shipping, conditions are good enough to allow online businesses to run successfully in at least some fairly remote areas. The rural online businesses that I surveyed have been growing rapidly and predict that they will continue to do so. The promise of e-commerce for rural economic development is important given China’s policy focus on decreasing the urban-rural divide and increasing the use of Internet services.