Digital resilience: how a rural Chinese community adopted digital social innovation

A research study sheds light on the use of digital technology to address societal challenges and provides advice on how to nurture a self‐sustaining and resilient community

The Chinese e-commerce market is like no other. In 2019, China accounted for 56 per cent of the world’s online sales. The market is made of a complex web of competitors and companions. Still, the sector is dominated by three companies: Alibaba, JD.com, and Pinduoduo, which together control more than 80 per cent of the market.

But the digital transformation that has made China’s online success possible is now also wholly shifting the lives of many rural Chinese residents. The Taobao platform – an online shopping website owned by Alibaba – was created in 2009 to realise one of Alibaba’s core objectives in empowering the growth of small businesses. The platform was made available to individuals to start their businesses at zero cost. Technically, only necessary technology infrastructure such as access to the internet is required for anyone to start an online business on the platform.

Suichang was one of the first Taobao counties in China – a Taobao county that has more than 10 villages with at least 10 per cent of residents operating an e-commerce store and generating annual sales of at least 10 million RMB (A$2 million). Before the emergence of e-commerce, more than 70 per cent of Suichang’s 50,000 residents were working as farmers, and over 18,000 of its residents subsisted on an annual net income of less than 3000 RMB (A$600). Like many other rural regions in China, Suichang faced several challenges: depopulation and rural hollowing, as most of the young people had left the county in search of jobs in the city areas, while the elderly, who stayed behind, made a living by tending the fields.

The growing number of Taobao villages in China

But since venturing into e-commerce, Suichang has achieved remarkable success, which has been used extensively by the local government and Alibaba as an exemplary model of rural e-commerce. Such recognition not only signals an acknowledgment of the effectiveness of Suichang’s model, but it also resulted in plenty of documentation, including online articles and reports, being published by AliResearch, Alibaba’s research arm.

By September 2020, there were 5425 Taobao villages and 1756 Taobao counties comprising more than 10 Taobao villages. For Chinese e-commerce giant Alibaba, more than 70 per cent of the increase in active users in the third quarter of 2018 came from these underdeveloped areas.

Developing digital resilience in rural communities

Being one of the earliest players in rural e-commerce, Suichang also represents a highly relevant case study to further understand how grassroots-driven efforts and top-down strategies come together in enabling technology leapfrogging.

Suichang was one of the first countries visited as part of a longitudinal research study on rural e-commerce in China, conducted by Dr Yenni Tim, Senior Lecturer in the School of Information Systems and Technology Management at UNSW Business School, together with Zhenzhong Sheng, Senior Researcher formerly at AliResearch, and Lili Cui, Deputy Director of the Alibaba Research Center for Rural Dynamics and Associate Professor at the Shanghai University of Finance and Economics.

In their study, Digital Resilience: How Rural Communities Leapfrogged into Sustainable Development through Digital Social Innovation, they investigate how less-privileged communities in rural regions of China have developed digital resilience through an unprecedented entrepreneurial journey enabled by e-commerce. They discuss some recommendations for decision-makers and rural communities looking for technology leapfrogging opportunities.

Overcoming barriers to digital adoption

The success of e-commerce in rural China was an unexpected development, according to the study's authors. Like most other remote areas, the technological and infrastructure developments in rural China had been lacking, and communities had limited exposure to digital technologies. There was also a lack of knowledge and experience in business management – a crucial skill-set to sustain a profitable e-commerce venture. Indeed, lack of digital literacy was a key hurdle in introducing e-commerce to the residents in the Suichang county.

These initial roadblocks, however, did not stop the grassroots adoption of e-commerce, as the availability of the Taobao platform and a growing community-based support system established a promising outlook for this transformational journey.

“There have been lots of efforts around the world to use digital technologies for societal advancement and sustainable development. But it is not uncommon to find some resistance to these initiatives, or that they may only create short-term impact,” said Dr Tim.

The research identified several ways to promote a productive uptake of digital social innovation among communities and bring forth leapfrogging developments that are also sustainable. Dr Tim defines digital resilience as the capacity for individuals, organisations and society to make effective use of digital technology to prevent, anticipate, absorb, or adapt to significant challenges, and to evolve and transform productively and sustainably.

“So, to me, achieving digital resilience is not only about being able to respond to major exogenous shocks but also about being able to meet new expectations and priorities consistently. In this study specifically, we see that an effective grafting of bottom-up initiatives with top-down strategic supports can integrate digital capabilities into the DNA of a community. That creates a more sustainable pathway for digital innovation to continue to flourish and be adaptive to the evolving environment,” she said.

“During the early stages of e-commerce adoption, limited access to critical supporting services such as logistics, warehousing, and training were the main bottlenecks. And as the competition increases, services such as digital marketing, visual design, and data analysis have become critical for survival and scalability,” added Mr Sheng.

“Creating a positive, entrepreneurial atmosphere, especially in the early stages of adoption, in addition to providing financial support, is one of the best ways for policymakers to lower the barriers to entry,” explained A/Prof. Cui. “The government can also promote role models – highlighting successful local exemplars can help the wider community to embrace the change.”

Three key recommendations

The authors conclude that the successful adoption of e-commerce in rural China has demonstrated the potential for underserved communities to benefit from technological development, however, having access to digital social innovation alone does not guarantee successful leapfrogging and social changes.

Instead, a successful leapfrogging process requires more than just access to technology – it requires effective integration of both bottom-up and top-down efforts. The authors provide three recommendations for decision-makers, including local governments in underdeveloped regions, public sector practitioners, and technology providers to better support a community-driven leapfrogging initiative.

1. Provide professional support in the form of upskilling opportunities and financial resources: this will help to instill further confidence amongst the community and nurture digital resilience. Seed funding is also essential to promote initial uptake and reach critical mass, which is an important catalyst that can stimulate further organic growth.

2. Allocate resources to establish an institutional structure to govern the often less-coordinated community-driven development better. One example of this is Alibaba’s “Uniquely China” initiative that brings together the isolated ventures of rural e-merchants and nurtures a collective effort to revitalise the agricultural industry. The initiative has empowered a more consolidated step in bringing together local agricultural products to build a branding that is attractive to global consumers.

3. Finally, decision-makers should cultivate an inclusive ecosystem. For top-down initiatives to be positively received and effectively integrated at the community level, building deep ties with grassroots-based initiatives is essential. Effective top-down interventions should serve as catalysts that stimulate more governed developments of grassroots initiatives, instead of being forceful implementations of change.

For more information, please read Digital Resilience: How Rural Communities Leapfrogged into Sustainable Development through Digital Social Innovation or contact Dr Yenni Tim, Senior Lecturer School of Information Systems and Technology Management at UNSW Business School, directly.