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Evergrande in GuizhouOver the course of 40 years, China pulled 700 million people out of poverty. Rural poverty “decreased from 55.75 million to 16.6 million” between 2015 and 2018. China had planned to completely end extreme poverty by 2020. The country’s agenda is one key driver; however, the effort from the rising private sectors has also been pivotal. China’s private companies have demonstrated innovative ways to tackle poverty-related issues. This article will introduce the case of one leading private company, Evergrande in Guizhou.

Private Investment

China has already had success with private companies working to eradicate poverty. E-commerce has been fiercely discussed on different stages both internationally and domestically for its role in poverty eradication. Alibaba has successfully exercised the strategy of promoting small business from remote and impoverished regions on its online platform to stimulate the commodity economy and end their poverty. In fact, Alibaba’s online sales platforms have helped more than 100 poor counties in China reach a sales record of $14 million in 2018.

In 2019, the United Nations Environment Program honored Ant Financial Services Group for its achievement in afforestation of 122 million trees in arid regions in China to improve their overall living conditions. This tech company also works to finance small businesses. Its Alipay platform provides online money transfer services, lending and investment funds.

Evergrande in Guizhou

However, differing from these online giants, Evergrande leads the real estate business in China. In 2018, the head of the company, Jiayin Xu, said the private sector should do more in poverty alleviation. In the same year, Evergrande won the trophy for its donation of $560 million, which also make them the number one organizational donor. That year, 68 percent of the money donated went towards poverty alleviation.

Absolute numbers of donations are not the only hallmark of Evergrande’s approaches in poverty alleviation. Evergrande has an obvious provincial focus on its poverty reduction projects. Evergrande started working in Guizhou, one of China’s more underdeveloped provinces, in 2015. According to the report, Bijie, Guizhou, received 51.9 percent of the total donation, which equals $302 million. In, Bijie, the number of people living in poverty has decreased by 5.94 million, dropping the poverty rate from 56 percent to 8.89 percent in the last 30 years.

Agricultural Reclamation

Besides the massive amount of financial input, the success that Evergrande in Guizhou has had in combating poverty demonstrates another key mark: a detailed and localized strategy. Evergrande’s research corroborates Guizhou’s traditional disadvantage in agricultural reclamation. Therefore, it developed various alternative measures.

Its plans were to develop Dafang County, Bijie City, Guizhou Province. The company had completed 103 projects targeted poverty by 2017. More than 180,000 local residents benefited from these projects. Through supply, production and sale integration, Evergrande helped Dafang county create 16,473 acres planting bases of economic fruits and 317 beef breeding farms. It also built 10,223 greenhouses and 22 cultivation centers.

China’s private companies have had impressive success in combating poverty. As a new player in the field, Evergrande in Guizhou demonstrated how a private company turns poverty alleviation into an economic opportunity for both local communities and companies. Indeed, the company has had a relatively short time in the field, but its role is no less critical than governmental help.

Dingnan Zhang
Photo: Flickr

Ecommerce in India
With Walmart’s recently announced acquisition of Flipkart, India’s largest online retailer, the U.S. retail multinational has placed a substantial bet on the future of ecommerce in India and the country’s economic potential.

Confirmed in recent weeks, Walmart’s purchase of almost 80 percent ownership of Flipkart represents the largest single foreign direct investment transaction in the country’s history. Although ecommerce represents a small portion of total retail sales in India, companies like Walmart are betting that a burgeoning middle class and greater access to technology offer the potential for a sizable market.

Indeed, the more bullish analysts predict an ecommerce boom in the country. U.S. investment bank Morgan Stanley estimates that online retail sales in India could grow by more than 1,200 percent, from $15 billion in 2016 to $200 billion in 2026. These numbers would trail the world leaders in online retail sales such as China ($1.1 trillion in 2017) and the U.S. ($453 billion) but would already put India among the largest ecommerce markets in the world and unmatched in the rest of the world in terms of potential size.

Forecasts include burgeoning internet usage and lower data access costs in the country, which will broaden the accessibility of online retailers. Optimism also stems from size and growth of the Indian economy: its population is 1.3 billion, the second-highest behind China, with a young demographic profile and GDP growth of 7.2 percent in 2017. This represented the fastest rate among all major economies. It is also hoped that Prime Minister Narendra Modi will be successful in implementing economic reforms to ease the cost of doing business, including for foreign investors, in the coming years.

Walmart is not alone in betting on the potential of ecommerce in India. Amazon entered the market in 2013 in an attempt to challenge Flipkart’s success and has steadily gained ground. Alibaba, the Chinese ecommerce giant, first made inroads into the space in 2015 by investing in Paytm, a financial technology startup, and has since continued to expand its investment into other ecommerce groups.

Some observers are more tepid about India’s potential. GDP per capita remains low compared to other major economies; at approximately $1,700 in 2016, it is roughly one-fourth that of China. Moreover, the wealth of 80 percent of the population falls below that number, reflecting the country’s problem with income inequality, with the richest segment of the population holding an outsized share of the wealth.

In fact, despite proclamations heralding the arrival of India’s massive middle class, a 2015 Pew survey found that the country’s progress in poverty alleviation has largely moved its population from poor to low-income earners. This leaves them dangerously close to re-entering poverty with such limited disposable income.

Outlooks vary, but the commitments to the country by some of the world’s major online retailers represent their belief in its likely transformation and growing earning potential. As some experts have noted, the acquisition by Walmart and its competitors represents a long-term bet that India could be on the cusp of the consumption explosion China saw earlier this century. If their bets on ecommerce in India pay off, it will likely be because it coincides with rising prosperity and economic security for Indians as a whole.

– Mark Fitzpatrick
Photo: Flickr