When considering the needs of those in poverty, a demographic often lacking consistent access to basic necessities such as food, shelter and clean water, advancements in digital retail may seem an unnecessary luxury. However, in recent years, many have noted the positive impact of the digitization of commercial services on economic growth in China; despite being “the world’s third largest and fastest-growing major economy,” 13% of China’s population (almost 200 million people) still live below the poverty line of $5.50 a day as of 2021.

Advantages of Digital Retail

One of the main advantages of digital retail is its ability to overcome geographical obstacles: rural workers are now able to promote their products and services to a much larger consumer base than previously. They are also now able to contribute to the development of entire industrial chains in e-commerce. Think tank China Watch attributed the creation of over 28 million jobs in rural regions of China to the expansion of online retailing and, in 2019, digital sales reached almost $16 billion in more than 760 impoverished counties. Marginalized groups in particular, such as the elderly and women with children, have benefitted from gaining access to customers and resources that might otherwise lie beyond their reach.

The Barriers

Despite the progress so far, there are still challenges and nuances that need consideration. Many of the above-mentioned developments require a certain level of technological infrastructure to operate, which many rural and impoverished regions have not yet reached. Almost 30% of the Chinese population is still without internet access, rendering these services unattainable to them, according to a 2021 study. The same study noted a “digital divide” in the nation, whereby the expansion of digital inclusive finance significantly alleviated poverty rates in the more developed eastern region of China yet showed “no significant effect” on the “relatively backward in development” western region.

Ongoing Efforts

In 2019, Xubei Luo, senior economist at World Bank, discussed attempts to facilitate e-commerce for marginalized groups: a village agent to assist locals in navigating digital retail platforms, make payments for villagers so that the latter only pay once they are satisfied with their product and bypass the need for villagers to make their own website results in a “lower threshold for the less advantaged to participate.” She equally noted the possibility of government assistance through “strategic subsidies.”

Looking Ahead

In the face of poverty, the expansion of digital retail in China has brought tangible benefits, enabling rural workers to reach a wider consumer base and contribute to local economic growth. The accessibility of digital loans and insurance has provided crucial support to emerging businesses, fostering financial stability. Although challenges remain, efforts are underway to bridge the digital divide and ensure that marginalized groups can participate in and benefit from the opportunities offered by e-commerce.

– Helene Schlichter
Photo: Flickr