Report: Agricultural E-commerce Grows Rapidly in West China, Disparities Continue to Exist with the East

On April 24, 2022, AliResearch – the research arm of the Alibaba Group, a Chinese multinational company engaged in e-commerce, retail and other areas – and China’s Administration and Management Institute of Ministry of Agriculture and Rural Affairs jointly released a comprehensive report illuminating the pivotal role that e-commerce plays in the country’s agricultural sector.

Based on extensive analysis of data gathered by the Alibaba Group’s e-commerce platforms, the report offers valuable perspectives on the intersection of agriculture and digital commerce and indicates that the five provincial-level administrative areas exhibiting the highest rates of sales growth with regard to their agricultural products on Alibaba’s e-commerce platforms in China in 2021 are Yunnan Province, Gansu Province, Xizang Autonomous Region, Xinjiang Uygur Autonomous Region and Fujian Province. The fact that the first four are located in western China is particularly noteworthy and highlights the burgeoning potential of agricultural e-commerce in the region.

Nestled in the south-western corner of China, Yunnan Province is home to an exceptional climate, diverse landscapes featuring rugged mountains and winding river valleys that can exhibit up to 3,000 meters of divergence in elevation as in the western part of the territory, and abundant natural resources. It has cultivated distinct plateau agriculture that takes advantage of these outstanding characteristics and serves as a particularly good example of the progress that has been made in agricultural e-commerce in western China.

The province has tended to experience developmental hurdles and had a higher concentration of poverty-stricken counties compared to many other provincial-level administrative areas in the country despite the natural endowments it possesses until recently, and logistical challenges and geographical constraints have hindered its progress over the years. Mountainous landscapes causing conventional forms of distribution to be costly, significant losses occurring during transit and storage, and limited commercialisation opportunities for Yunnan’s unique agricultural products resulted in the resources remaining largely untapped and unable to reach their full potential.

Yunnan claimed the top spot in the growth of both consumption and sales of agricultural products on Alibaba’s e-commerce platforms among all of China’s provincial-level administrative areas in the 2022 agricultural e-commerce report, however. Its agricultural product sales volume increased 30% year-on-year in 2021 on the platforms, catapulting Yunnan from the tenth position in the country in this area to the seventh. Its top three agricultural products in terms of sales volume are Pu’er tea (a broad-leaf varietal mostly grown in southern China and India that is fermented microbially after its leaves are dried and has traditionally been produced in Yunnan), succulent plants, and flowers, all of which have experienced significant growth in recent years. In 2020 and 2021, Pu’er tea sales grew 38% and 76.5%, succulent plant sales rose 65.7% and 12.9%, and flower sales increased 49.2% and 87.3% year-on-year, respectively.

The remarkable achievements that Yunnan has made with online sales of agricultural products can be attributed to three key factors. Firstly, the Yunnan Provincial Government has consistently increased its investment in the harnessing of the province’s abundant agricultural resources with the goal of developing a green agricultural sector with distinct characteristics. Yunnan’s agricultural products have experienced robust sales both in China and internationally, and a trend of high-quality development has been emerging in the administrative area.

Secondly, Alibaba established a presence in Yunnan in September 2020 in order to enhance alignment between the production and sales of the province’s agricultural products. Other businesses have subsequently entered or expanded their investments in Yunnan as well, optimising the efficiency of upstream agricultural product supply chains.

Thirdly, local farmers and merchants began focusing on the domestic market in response to the significant obstacles that flowers and other bulk export products faced during the early stages of the COVID-19 pandemic and leveraged live commerce in order to broaden their sales channels.

Yunnan’s Xinping Yi and Dai Autonomous County is a crucial production hub for what is known as the Chu orange – a branded cultivar of the sweet orange (Citrus sinensis Osbeck) that is smaller, juicier, and more flavourful; has a thinner peel and less pulp than the standard version of the species; and is renowned throughout China – for example. In 2019, an upstream distribution centre was built in the county, significantly streamlining rural logistics operations, and an intelligent origin warehouse was built for agricultural products produced in its borders in 2020. Sweet oranges are automatically sorted into different categories at the origin warehouse, thereby enhancing their value by making different price points and marketing approaches possible, and it facilitates direct sales through e-commerce platforms, among other features.

Remarkably, the number of express delivery orders placed by buyers located outside of Xinping received by suppliers in the county surged from a mere 72 per month in 2012 to an astounding 800,000 per month in 2021, and agricultural products made up around two-thirds of the volume. Xinping’s agricultural product origin warehouse received 400,000 orders for Chu oranges alone during peak season in 2021, representing a total of 1,800 tonnes of the fruit. The achievement spurred the employment of more than 200 of Xinping’s farmers and reduced logistics costs by RMB0.3 per order.

The agricultural e-commerce report also enumerated the country’s top-10 agricultural product digitisation counties, and it was found that they were exclusively located in its eastern coastal provinces, underscoring a noticeable disparity between the eastern part of the country and its central and western regions, despite the rapid agricultural e-commerce growth that has occurred in the latter two. Concentrated attempts to use digital commerce and take full advantage of new-generation technologies and innovative business models in order to enhance agriculture and bolster sustainable development in China’s central and western regions thus must continue to be made.

Source:

AliResearch

Administration and Management Institute of Ministry of Agriculture and Rural Affairs