Some of the most profound effects of the internet can be seen in huge countries like China. With a large population spread across a vast expanse of land, China has always been a country where there is a significant difference between urban and rural populations. However as the power of the internet becomes more and more apparent, companies doing business in China finally have a way of connecting with rural customers. For Chinese urbanites e-commerce in China may have changed how they buy, but for those living in rural cities it has had a much bigger impact.

How Chinese cities are classified

China’s cities are grouped in a six tier system. This system was originally used by the Chinese government, and has since been adapted for use by other groups. The tier system is not official nor definitive, and the criteria used for classification often differ slightly depending on the purpose for classifications. Tiers are allocated based upon the city’s GDP, its population, and its political power. Tier 1 cities are often the focus for companies doing business in China as they are the most densely populated and have the highest average incomes. Lower tier cities have much higher populations and income values, however they are spread out across a larger area making it harder to access and engage target markets (source: Nexus Pacific).

E-commerce in China: comparison between rural populations and urban populations

In 2012 online shoppers in rural Chinese cities spent around 1300 yuan per capita more than their urban counterparts. Women in county-level Chinese cities were even more brand obsessed than their Tier 1 and 2 counterparts, spending over 100 yuan more per year on branded products by companies such as Estee Lauder. While urban shoppers spent more money per year on reading, it was county dwellers who bought similar products most frequently. Books bought by rural dwellers were often based around enterprise, suggesting a growing trend for county dwellers to change their lifestyles. The percentage of shoppers in rural areas who made purchases via mobile apps was also higher in rural areas than in Tier 1 and 2 cities (source: HuXiu).

Reasons behind the popularity of e-commerce in China’s rural areas

Shoppers in rural areas of China have long had to put up with limited choice and poor access to goods. A lack of brick and mortar stores and shopping centres, and a poorly developed distribution network, have meant that for a long time shoppers in rural areas and lower tiered cities have been more focused on buying necessities than luxuries. Online shopping has changed this, giving customers in less developed cities and rural areas access to the same goods as their counterparts in urban cities (source: CommerceGate).

It is worth remembering that while the choice of products may be similar, consumer buying habits are still very much influenced by their location. Rural consumers are likely to value quality over fancy designer labels as their generally lower incomes require a more frugal attitude to shopping.

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