CHINAMacroReporter

C-to-C Internet Commerce- From Taobao Shops to Taobao Villages

One is some of the local government-owned SOEs are the sources for overcapacity. The reason is because the local government also wants to ensure there's some degree of employment locally, and perhaps some source of taxation. The Chinese government is now going to need to start the so-called supply-side economics to try to consolidate overcapacity in a number of sectors. It's going to impinge on the interests of many of these local SOEs as well as the local governments who own them.
by

|

CHINADebate

February 15, 2017
C-to-C Internet Commerce- From Taobao Shops to Taobao Villages

Alibaba is, as you know, the leading or one of the leading tech companies inChina, very successful. Its valuation is very high, but their business model is actually very appealing to the masses, because if you take something like Taobao or Tmall, it's a platform. It allows people to trade on the platform through the Internet. In a way, the people who are involved in this, the supplierson Taobao are usually SMEs. They're small enterprises or even individuals who open up what we call Taobao shops online.

Malcolm Riddell: Can you explain that a little bit, because I don't think that's anything we're familiar with here. How do you open up one of those shops?

Ed Tse: You just go onto Taobao and register, and you say, "I want to create a shop." The shop is a virtual shop. It's a website or a link you create on Taobao, and you tell people the kind of stuff that you sell. You can sell cosmetics. You can sell handbags. You can sell apparel and shoes and so on. There's numerous number of these small shops virtually. In fact,across many parts of China, there's now a phenomenon which is called Taobao villages. There are villages, clusters of people, who created the Taobao shops, and in the process, because you need to deliver physical merchandise, it's not just virtual, it's real stuff, so in a way they also created their own little manufacturing or they sourced manufacturing products from wherever. You have actually these clusters of Taobao villages have become a pretty stable source of employment and actually income for a large number of people. I don't know what the numbers are,but it would be in the millions or tens of millions.

Malcolm Riddell: It's a wonderful story.

Ed Tse: It's a great story.

Malcolm Riddell: A wonderful story.

Ed Tse: Yeah. When we talk about [inaudible 00:35:14], when we talk about the new economy, yeah, the guys who develop the platform, who drive the business model, the smart guys from Alibaba, yeah, they are in the tech business, but the guys who are involved, who benefit from this business model, can be pretty mundane, pretty everyday people. That's okay.That's just life, right?

Malcolm Riddell: Yeah.

Ed Tse: Another dimension, Malcolm, is that you need the competence or some additional competence, that somehow the transition from over capacity to some degree of employment through the entrepreneurship innovation could happen.

Malcolm Riddell: That's why I wanted you to expand a little bit, because when we talk about entrepreneurship, let's say here in the U.S., we think of Silicon Valley, we think of smart people who are out there racing around developing breakthrough products, searching for venture capital, and all of these things. I think that what I've learned from you is that the entrepreneurship model in China is varied and could actually have a huge impact on ways that we never thought of.

Ed Tse: Yeah, that's right. In China we also have similar things what you talkabout, like what happened in Silicon Valley. A lot of entrepreneurs, smartguys, tech guys, VCs, angel investors, they're all around China, very similar. They're actually patterned after what's going on in Silicon Valley.

Yet, at the same time, the additional aspect of the entrepreneurship that we talked about, the impact of the Chinese society in general is significant because many of the business model that we're talking about from the tech entrepreneurs are platforms. They are not like, "Oh, let me create the next, most sophisticated gadget, and I try to sell it," and so on.People like Alibaba, Jack Ma, and also Tencent and Wechat and games and so on, they appeal to a mass market. They appeal to tens of thousands if not hundreds of millions of people. That's how the business model work, and that's why some of these companies can round up the valuation so quickly, is the impact of the massive market.

Malcolm Riddell: That's terrific. Before we leave this, you mentioned the Taobao shops and stores. How is that different from eBay? I can do the same kind of thing on eBay, but it just doesn't seem quite as obvious or in the same direction as, say, an eBay does.

Ed Tse: You know the story, right? When eBay came to China in 2003, China didn't really have that market, that C to C market. Alibaba at that time was only in the B2B, but Jack Ma saw the threat and also the opportunity,and he decided to take on eBay. History taught us that Alibaba has beaten eBay. I think Alibaba or Jack have really taken that on after that point and really spread out the Taobao business model across all of China, and that actually people really like it because it's a very efficient way of buying whatever product that they like to buy, and also as I mentioned, it's also a very effective way of creating employment or helping SMEs or individuals to make some money.

It's a fascinating story because in the past, perhaps some of the ... In the family, especially in China, maybe the male would go and work, maybe the female would stay at home. She may not do a whole lot at home other than housework. Actually, today, given the Taobao, a lot of them others could take care of both the family but at the same time she could also create a Taobao shop along the way, and she could make some money along the way. It's actually much better capacity utilization from a resources standpoint. It's a great, mind-boggling story.

I think it's worth something that in America, the American entrepreneurs can also try to see if it can be replicated. As you also know, that's probably what Jack Ma talked to Donald Trump when they met a couple of weeks ago, or maybe three weeks ago now, when Jack came to Trump Tower and they talk about it, and Jack said, "I can come and help to create a million jobs in the U.S., and particularly in the Rust Belt, with SMEs." That's what he's talking about, really, is to really build a Taobao platform and perhaps in America, in the Rust Belt, one can create a large number of "Taobao villages" in the U.S.

Malcolm Riddell: What a terrific thing. It also supports the Chinese government's efforts to move to a more consumer-led economy, as well. It seems like it does well all the way around. Here, where we already have a consumer economy, and we see the success of Amazon and other platforms, and I mentioned eBay, but this sounds like a completely revolutionary concept. It sounds terrific.

More

CHINAMacroReporter

February 8, 2021
Why the Anglosphere sees eye to eye on China
‘Some of America’s European allies are very wary of what they fear will be a new cold war with China. By contrast, the US is getting more support from the UK, Australia and Canada.’
keep reading
February 7, 2021
' "Longer Telegram" | To Counter China’s Rise, the U.S. Should Focus on Xi'
A strategy that focuses more narrowly on Xi, rather than the CCP as a whole, presents a more achievable objective.'
keep reading
February 7, 2021
'The Sources of Soviet Conduct'
'The main element of any United States policy toward the Soviet Union must be that of a long-term, patient but firm and vigilant containment of Russian expansive tendencies.’
keep reading
May 27, 2021
'Demography + Technology is Destiny'
The census showed that the number of births nationwide fell to the lowest level since 1961, following a nationwide, manmade, famine caused by Mao’s “Great Leap Forward” that killed tens of millions of people, and that China’s total population could peak in the next few years.
keep reading
May 27, 2021
'China: Births Falling'
‘China’s total population could peak in the next few years, spurring profound changes for the world’s second-biggest economy.’
keep reading
May 27, 2021
'Demography + Technology is Destiny'
The census showed that the number of births nationwide fell to the lowest level since 1961, following a nationwide, manmade, famine caused by Mao’s “Great Leap Forward” that killed tens of millions of people, and that China’s total population could peak in the next few years.
keep reading
May 27, 2021
'China: Getting Old Before Getting Rich'
‘Over the past two generations, China has seen a collapse in fertility, exacerbated by Beijing’s ruthless population-control programs.’ ‘With decades of extremely low fertility in its immediate past, decades more of that to come, and no likelihood of mass immigration, China will see its population peak by 2027.’
keep reading
May 27, 2021
'China Bets on Productivity Over Population to Drive Its Economy'
‘Beijing has a two-pronged approach to maintaining economic growth as its population shrinks.’ ‘First, it intends to slow the decline of the urban workforce by raising the retirement age and encouraging migration of more of the country’s 510 million rural residents to cities.’ ‘Second, it plans to raise productivity -- a measure of economic output per worker -- with the latest five-year plan emphasizing better vocational education and more investment in scientific research, automation and digital infrastructure.’ [see second chart above]
keep reading
May 27, 2021
'China: Getting Old Before Getting Rich'
‘Over the past two generations, China has seen a collapse in fertility, exacerbated by Beijing’s ruthless population-control programs.’ ‘With decades of extremely low fertility in its immediate past, decades more of that to come, and no likelihood of mass immigration, China will see its population peak by 2027.’
keep reading
May 27, 2021
'China: Births Falling'
‘China’s total population could peak in the next few years, spurring profound changes for the world’s second-biggest economy.’
keep reading
May 27, 2021
'Why Demographics is (Close to) Destiny'
‘Demographics may not be destiny, but for students of geopolitics, they come close.’
keep reading
May 27, 2021
'Sex and the Chinese Economy'
‘A rise in China’s male-female ratio may have contributed to between one-third and one-half of the increase in its trade surplus with other countries.’ ‘The sex imbalance thus likely underpins an important source of tension between China and the US. Yet bilateral engagement has paid scant attention to this linkage.’
keep reading
May 27, 2021
'Lousy demographics will not stop China’s rise'
‘The old maxim ‘demography is destiny’ no longer holds in the same way that it used to.’ ‘A shrinking and ageing population may not have the same gloomy implications in the 21st century.’
keep reading
May 20, 2021
'Apple in China: No Plan B'
“This business model only really fits and works in China. But then you’re married to China.” ‘The Chinese government was starting to pass laws that gave the country greater leverage over Apple, and Mr. Xi would soon start seeking concessions. Apple had no Plan B.’
keep reading
May 20, 2021
'Tim Cook and Apple Bet Everything on China.'
‘For Apple, a clean break with China is impossible.’
keep reading
May 20, 2021
'Apple held hostage by its Chinese puzzle'
"The massive and complete supply chain ecosystem in China is key to the iPhone maker's success, but it has also created a gigantic organism that would struggle to move somewhere else."
keep reading
May 20, 2021
‘Censorship, Surveillance and Profits: A Hard Bargain for Apple in China’
‘Apple built the world’s most valuable business on top of China. Now it has to answer to the Chinese government.’
keep reading
May 20, 2021
Apple in China
‘But just as Mr. Cook figured out how to make China work for Apple, China is making Apple work for the Chinese government.’ ‘Behind the scenes, Apple has constructed a bureaucracy that has become a powerful tool in China’s vast censorship operation.’
keep reading
May 20, 2021
'Apple Reaches $2 Trillion'
“This business model only really fits and works in China. But then you’re married to China.” ‘The Chinese government was starting to pass laws that gave the country greater leverage over Apple, and Mr. Xi would soon start seeking concessions. Apple had no Plan B.’
keep reading
May 15, 2021
‘Scenario Three: Leadership Challenge or Coup
‘By removing de jure term limits on the office of the presidency — and thus far refusing to nominate his successor for this and his other leadership positions — Xi has solidified his own authority at the expense of the most important political reform of the last four decades: the regular and peaceful transfer of power.’
keep reading
May 15, 2021
Invitation to a Trivium Flash Talk: 'China's Data Environment from a Big-Picture Perspective.’
‘This talk is designed to cut through the tech and legal jargon, and lay out the top-level strategic rationale underpinning China's thinking on data. We'll cover:’
keep reading
May 15, 2021
Invitation to a Trivium Flash Talk: 'China's Data Environment from a Big-Picture Perspective.’
‘This talk is designed to cut through the tech and legal jargon, and lay out the top-level strategic rationale underpinning China's thinking on data. We'll cover:’
keep reading
May 15, 2021
After Xi: A Succession Crisis to Rock the World
A new risk to add to your analyses and strategic planning: A succession crisis in China. By removing term limits on his stay in office and by not naming a successor, Secretary General Xi Jinping ‘has pushed China towards a potential destabilising succession crisis, one with profound implications for the international order and global commerce,’ writes Richard McGregor of the Lowy Institute and Jude Blanchette of the Center for Strategic & International Studies
keep reading
May 15, 2021
‘Scenario Four: Unexpected Death or Incapacitation'
‘Even if the CCP’s claim that Xi Jinping has no designs to remain in office for life is true, his evisceration of succession norms leaves the country ill-prepared for his sudden death or incapacitation.’
keep reading
May 15, 2021
'Regime change in China is not only possible, it is imperative.'
‘We must make regime change in China the highest goal of our strategy towards that country.’ ‘The US and its allies cannot dictate to China the political system by which it is governed. But they can and must engineer conditions which embolden and enable those in China who also want regime change to achieve it.’
keep reading
May 15, 2021
After Xi: A Succession Crisis to Rock the World
A new risk to add to your analyses and strategic planning: A succession crisis in China. By removing term limits on his stay in office and by not naming a successor, Secretary General Xi Jinping ‘has pushed China towards a potential destabilising succession crisis, one with profound implications for the international order and global commerce,’ writes Richard McGregor of the Lowy Institute and Jude Blanchette of the Center for Strategic & International Studies
keep reading
May 15, 2021
'Regime change in China is not only possible, it is imperative.'
‘We must make regime change in China the highest goal of our strategy towards that country.’ ‘The US and its allies cannot dictate to China the political system by which it is governed. But they can and must engineer conditions which embolden and enable those in China who also want regime change to achieve it.’
keep reading
May 15, 2021
'After Xi: China's potentially destabilising succession crisis'
‘By removing de jure term limits on the office of the presidency — and thus far refusing to nominate his successor for this and his other leadership positions — Xi has solidified his own authority at the expense of the most important political reform of the last four decades: the regular and peaceful transfer of power.’ ‘In doing so, he has pushed China towards a potential destabilising succession crisis, one with profound implications for the international order and global commerce.’
keep reading
May 15, 2021
‘Scenario One & Two: Xi Steps Down'
‘In this scenario, Xi thwarts the current consensus by handing over his leadership positions to at least one individual from the current Politburo Standing Committee (as per existing regulations).’
keep reading
May 12, 2021
The Poem that Cost Billions
The billion dollar losses that came from quoting an 1,100-year-old poem, toWhy foreign companies in China have Stockholm Syndrome
keep reading
May 10, 2021
'A 1,100-Year-Old Poem Cost Meituan’s Outspoken CEO US $2.5 Billions'
‘On Monday, because of an 1,100-year old poem about events 2,200 years ago posted by the founder of food delivery giant Meituan, investors panicked, and sank the company’s market cap by $15.6 billion. And Meituan CEO Wang Xing, who posted the poem, lost $2.5 billion of his wealth.’
keep reading
May 9, 2021
'The Housing Bubble That Just Won’t Pop'
‘China’s cities are plagued by a diverging trend: high demand and exorbitant prices for residential properties in tier 1 cities and yet an oversupply in smaller, lower-tiered cities.’
keep reading
May 7, 2021
'Would China really invade Taiwan?'
‘Is Taiwan really "the most dangerous place on earth?" No. Or at least, not right now.’
keep reading
May 7, 2021
'Don't Help China By Hyping Risk Of War Over Taiwan'
‘China is marshaling its full range of capabilities to intensify pressure on Taiwan below the threshold of conflict.’ ‘Beijing's goal is to constantly remind Taiwan's people of its growing power, induce pessimism about Taiwan's future, deepen splits within the island's political system and show that outside powers are impotent to counter its flexes.' ‘Its approach is guided by the Chinese aphorism, "Once ripe, the melon will drop from its stem [瓜熟蒂落]," ’‘This strategy may require more time than war, but it would come at less cost and risk to Beijing.’
keep reading
May 7, 2021
'China Threat: A "perception gap" between the U.S. and Taiwan'
‘While the U.S. talks up the medium-term military threat, the democratic island sees the moves as part of a bigger, more immediate problem: "gray zone" warfare from Beijing that is meant to wear down the morale of not just the Taiwanese military, but also the island's people.’
keep reading
May 7, 2021
'The most dangerous place on Earth'
‘Taiwan is an arena for the rivalry between China and America.’ ‘Although the United States is not treaty-bound to defend Taiwan, a Chinese assault would be a test of America’s military might and its diplomatic and political resolve.’
keep reading
May 7, 2021
'The Most Dangerous Place on Earth'
‘China's top priority now and in the foreseeable future is to deter Taiwan independence rather than compel unification,’ note Richard Bush (Brookings (retired)), Bonnie Glaser (German Marshall Fund in America), and Ryan Hass (Brookings Institution)
keep reading

Heading

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Aenean faucibus nibh et justo cursus id rutrum lorem imperdiet. Nunc ut sem vitae risus tristique posuere.