While the digital economy creates more business opportunities for both rural and urban residents — it narrows the living standard gap between them.
China’s mobile economy today is not defined by the middle class in cosmopolitan cities like Shanghai and Beijing. Instead, the so-called “small-town youths” (xiaozhen qingnian) — the young generation of lower-tier cities and rural areas — are at the front line. In China, ‘Tier 1 Cities’ refers to the four cities of Beijing, Shanghai, Guangzhou and Shenzhen, while ‘Tier 2 Cities’ is loosely defined to include about two dozen other large cities, mostly in the coastal regions. ‘Small town’ essentially means any other residential centers in China.
With the development of China’s broadband infrastructure and mobile payments, small-town youths have adopted the internet lifestyle as much as those in urban areas, where the internet is an integral part of daily life: from watching films and buying brands to hailing a ride and having food delivered to their doorstep. As such, the life-quality gap between cities and less developed areas is narrowed, and the small towns and rural areas are shaping up to become the engine of growth for China.
Take the rise of e-retail startup Pinduoduo for example, which has caught the established e-commerce giants such as Alibaba and JD.com by surprise. Within four years of its inception, Pinduoduo boasts more active users than 15-year veteran JD.com and has beaten JD.com to become the second largest e-commerce platform in China. The key factor behind the success of Pinduoduo is its focus on young customers living in Tier 3 and lower cities. Customers from these cities are more frequent buyers, spend more time at e-commerce platforms than their counterparts in larger cities, and, collectively, have remarkable purchasing power.
The sudden rise of Pinduoduo is in line with equally surprising findings by Alipay, the mobile payment arm of Alibaba. Alipay reported in early 2018 that mobile payment is more popular in China’s underdeveloped western regions than in the coastal cities. Guizhou and Shaanxi led the country in mobile payment adoption, followed by another nine provinces including Tibet, where on average the consumers processed over 90% of the online payments via mobile devices. The reason behind this: a lack of bricks-and-mortar retail infrastructure in those regions, leading people to turn to online shopping.
The same trend is evident in the food delivery market. According to a new report by iMedia Research, the market reached 358 million users in 2018, representing a 17.4% increase compared with the year prior. As delivery order volume in upper-tier cities become more saturated, users from third- and fourth-tier cities contributed to most of the growth. It is expected that the fifth — and lower-tier cities will soon emerge as a new battleground for food delivery players.
Small-town youths are also the driving force behind the market for online novels, videos and movies. In China, online creators write and post in installments, and the mobile payment systems makes it convenient for readers to make small, repeating payments for their serial reading. Users can pay a tiny fee, equivalent to a fraction of USD 0.01, to read each update: this turns many small-town youths into avid readers.
It is also quite easy for the fans to become authors themselves. Before the Internet age, it was almost impossible for young writers in China to emerge, because only a small number of authors have access to publishing houses in major cities. Online, however, anyone can publish his or her story as soon as a few installments are finished and discuss them with readers. Because internet has leveled the playing field for aspiring young writers, even unknown authors from remote areas could pen popular hits.
The same is happening on the video platforms as well. Those sites provide video templates, guidance and examples to ensure users’ interest on creation. Some platforms like Tik Tok and Kuaishou even offer users a wide range of background audio and special effects to make the videos richer, such that even ordinary users could create highly polished videos. Not surprisingly, most of the recent addition of users come from the small-town youths.
Besides online shopping and entertaining, small-town youths are capturing the digital businesses opportunities themselves. For example, when new channels are created to transport farm produce to the cities, villagers can be online merchants, tapping into the growing demand for fresh, safe agricultural products in the cities.
Today a rural entrepreneur only needs to have a 20-square-meter space, a secondhand computer and a basic internet connection to become an online retailer. With social media-messaging-and-payments infrastructure provided by the major platforms like Alibaba and Tencent, they could easily handle large trade volume and even reach global markets. Most recently, they have begun to add videos to their marketing, bringing more products made in rural China to urban dining tables: building up vibrant businesses, while creating new jobs to revitalise local communities.
Finally, it is only natural that the small-town youths are also a main driver for the sharing economy in China. Unlike Airbnb and Uber, which provide a platform that connects users to under-utilised, existing resources like spare rooms and private cars, sharing in China is more like ‘mobile renting’. The online sharing (renting) services involve frequent, small payments from changing locations, and the users can simply complete them with a simple tap.
From cars and bikes, basketballs and refrigerators, to clothes and massage chairs, exercise rooms and phone chargers, these sharing services enable people to simply access the things they once had to buy. This is a faster and more efficient way to give people a better quality of life, especially when considering that the average incomes in China are still very low and the consumers are still very price conscious.
Overall, the digital economy creates more business opportunities for both rural and urban residents, but also narrows the living standard gap between them. When the ‘internet lifestyle’ reaches less developed regions, small-town youths can find a new path to quality livelihood in their hometown. They do not have to give up their cheaper housing, shorter commute time, cleaner air and direct access to fresh foods — all things city dwellers long for.
Therefore, urbanisation does not need to entail people migrating from rural regions and leaving them desolate while overcrowded mega cities are challenged by transportation, environment and social issues. As the urban-rural divide on quality of life is narrowed through digital technology and services, the global urbanisation push can potentially end in more balance than conflict.
This essay originally appeared in Digital Debates — CyFy Journal 2019.
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