Economy

Farmers’ market

Retailers hope to ride out the downturn by luring rural shoppers

Tempted by a plasma TV

In a very short time, in China’s central, southern and northern provinces, several hundred million peasants will rise like a mighty storm, like a hurricane, a force so swift and violent that no power, however great, will be able to hold it back.”

So wrote Mao just over 80 years ago, predicting a revolution in the countryside. But the Communist Party of the modern era is hoping that the same force of several hundred million will unleash another revolution – and more of the consumer spending variety.

An article in Southern Weekly asks the pertinent question: can rural China stabilise the economy during the financial crisis? It spoke to He Xuefeng who is undertaking a massive research programme in six provinces for the China Rural Governance Research Centre.

In the course of his group’s 1,200 interviews, He has concluded that the rural areas have not panicked in the downturn and have acted more as a kind of “stabiliser”. He says this is because of China’s “special land system” which gives the country “the capacity to deal with the crisis completely differently to Western countries.”

In particular, unemployed migrant workers can return to their farms – which are tended by elderly relatives. According to He this means that “they don’t go hungry, and have a basic sense of security.”

However, major Chinese companies are hoping that rural areas can go further and become a source of growth. Take the example of Suning, the country’s second biggest retailer of electrical appliances. It has vowed to open 1,000 new stores for rural consumers within five years. The retailer recently conducted its own survey and mapped out its new target market: it reckons one third of rural families have an annual income above Rmb20,000 ($2,920).

According to the National Bureau of Statistics there are 728 million rural residents, and another company that has made a decision to target them is IT firm, Lenovo.

In WiC18 we looked at Lenovo’s changing international strategy, but its change of domestic direction could be just as significant.

Zhai Jianshe, a 48 year-old farmer from Wuji county in Hebei told the China Daily that he had recently bought a Lenovo computer – taking advantage of a government policy that discounted the price by 13%.

But price was not the only motivation. “I sold my corn at 0.64 yuan (per 500g) a few months ago but now the price has risen to 0.7 yuan. Now I can check market information through my PC and choose the best time to sell products.”

To lure rural buyers like Zhai, Lenovo has partnered with the Ministry of Agriculture to let farmers surf commodity price databases for free. It has also partnered with China Telecom to provide a free one year internet connection. Aside from grain prices, the online access offers a suite of complimentary online movies and soap operas. And in another innovative move, it is offering online education to farmers’ children (again free) via a partnership with a domestic online education firm.

Lenovo’s ‘rural desktops’ are also innovative in another sense: they use up to 50% less power and are designed to withstand voltage fluctuations and humidity.

Liu Jie, a vice-president at the firm predicts that rural buyers will constitute 30% of the firm’s desktop computer sales this year.

The PC maker has announced it will open 700 rural stores and 7,800 domestic sales and service outlets over the next three years.

It plans to recruit enough sales staff to cover 320,000 villages.

Even Mao would be impressed by such grassroots organisation.


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