Less than two years ago, Jack Ma (in picture), founder of e-commerce giant Alibaba, waded into China’s anti-poverty campaign. He took the cue from President Xi Jinping. At the 19th Party Congress — the country’s once-in-five-years event where the previous five years’ performance is thoroughly reviewed and fresh policy directions are minted — Mr. Xi had announced a final assault on poverty. By 2020, all extreme poverty had to be eradicated, and a year later, China was to emerge as a “moderately prosperous” nation. In China, an annual income of $450 is the yardstick for gauging poverty.
Jack Ma immediately aligned Alibaba to the fulfillment of Mr. Xi’s dream. “Our company is perhaps the one that’s put the most serious effort into studying the 19th Communist Party Congress documents,” Mr. Ma told a conference of 36 partners at Hangzhou, Alibaba’s home turf. He added: “We studied it in order to find an answer to the question: what can we do to implement the spirit of the 19th Congress?”
It was at this meeting held towards the end of 2017 that Mr. Ma floated the Alibaba Poverty Relief Fund, injecting a hefty $1.5 billion for the mission. The initiative was driven by a simple idea — that rural poverty could be dented if agri-producers were linked with bigger urban markets through Alibaba’s Taobao e-commerce platform.
But Mr. Ma was fully aware that fielding an e-commerce vehicle in the rural terrain was simply not enough. Poor farmers could become richer only if they became tech-savvy farm entrepreneurs. Apart from digital infrastructure, which would connect the rural folk to the cyber-economy, it was equally important that people in the countryside understood the shifting terrain of urban demand, and devise ways to tailor their supply chains to satisfy it.
Following up on the conference, Mr. Ma earmarked company executives from the Alibaba group to journey into the countryside. There, they were assigned work in projects related to education, skills development, and market awareness. Removal of poverty had to be linked with the protection of the environment, and a focus on women-oriented schemes was essential.
Over time, Alibaba’s affiliate Ant Financial Services Group provided the financial feedstock — pitching in with 100 billion yuan in micro-credit, which benefited more than two million users in the countryside. “More than 1,000 Alibaba employees took part in poverty relief projects and visited over 100 poor counties last year,” Shao Xiaofeng, secretary-general of the Alibaba Poverty Relief Fund, was quoted as saying.
Alibaba’s rural surge faintly echoed the back-to-the countryside slogan, popular during the Mao Zedong era. But Mr. Ma has stood out more as an admirer of Deng Xiaoping. “Without Deng Xiaoping, there would be no us,” Mr. Ma has been famously quoted as saying. “He (Deng) called on the people who become rich earlier to help others who are still poor. Now that we are rich today, we should fulfill this commitment and help more people to get rich.” Alibaba’s efforts, in turn, are delivering prosperous Taobao villages. A total of 600-plus villages, Taobao hamlets have become rural e-commerce hubs. Typically, a Taobao village must have more than a 100 online stores, and annual e-commerce transactions should be above $1.5 million.
A larger partnership
Alibaba’s success has been part of a larger national public-private partnership to lift millions out of poverty. A World Bank blog titled, “E-commerce for poverty alleviation in rural China: from grassroots development to public-private partnerships,” points out that in 2014, China’s Ministries of Finance and Commerce had launched a ‘rural e-commerce demonstration programme’. Its purpose was to chart a road map for reducing poverty and modernising the rural economy by using the tools of e-commerce.
It spotlights that governments can help improve the rural business environment by providing “strategic subsidies” that would encourage collaboration of e-platform companies and logistic firms, with households and individuals. It concludes that subsidies can also help develop online branding. Incentivising high-volume online sales itself can trigger e-commerce, even in areas where the initial endowments have been low.