World Bank believes e-commerce brings tangible rewards in China

E-COMMERCE can flourish in developing countries and in rural areas to create employment opportunities, according to research released by the World Bank and the Alibaba Group.

The report, E-Commerce Development: Experience from China, is based on a statistical data for China as a whole and a survey of Taobao Villages, rural Chinese settlements that are heavily engaged in e-commerce.

China Rice FieldIt reviews the patterns and evolution of e-commerce in China and specific government policies and private sector initiatives. The report also identifies the preconditions needed for successful e-commerce development, and examines links with household welfare improvements.

Findings show that e-commerce has the potential to overcome market barriers and connect consumers and businesses. Jobs can be created through logistics services and other parts of the wider e-commerce ecosystem. There is also potential to reduce inequality by bringing to rural areas the convenience, variety, and low prices enjoyed by urban dwellers.

This combines to contribute to economic growth by lowering the asymmetry of information and increasing economic efficiency, the World Bank says.

“China’s experience shows that developing countries can harness digital technology and e-commerce to create jobs and improve people’s lives,” said Victoria Kwakwa, World Bank vice-president for East Asia and the Pacific. “We hope this report will contribute to discussions on ways to support inclusive growth.”

China has one of the largest and fastest-growing e-commerce markets in the world, accounting for more than 40 percent of the total value of global e-commerce transactions. More than five percent of employment in the country is in e-commerce.”

China has proved that innovative business started by grass-roots entrepreneurs in rural areas of developing countries can thrive via the e-commerce platform, believes Wen Jia, partner and president of Public Affairs at Alibaba Group.

In Taobao Villages, households that participate in e-commerce have incomes 80 percent higher than those that don’t. E-shop workers have wage levels equal to, or higher than, workers in urban private industries. Women and younger, better-educated households are also strong beneficiaries.

The report identifies the risks and hurdles of e-commerce. These range from regulatory challenges such as ensuring a level playing field for comparable digital services, consumer protection, and fairness between online and physical vendors. It also considers online risks in terms of cybersecurity, privacy, fraudulent, defective or counterfeit products, electronic payment concerns, and risks stemming from imbalances in competition.

The report highlights the need for investment in training, infrastructure and logistics, and the creation of a conducive business environment.