THESIS PROPOSAL
by PEARL YIP
MASTER OF ARTS IN EAST ASIAN STUDIES
I. Title
Taobao Villages: Expectations versus Reality. A Case Study of Xiniujiao Village.
II. Introduction
In China, rural development is a top priority, because it has led to social issues such as the rural-urban migration, urban villages, and education problems of millions of “left-behind” children. Despite remarkable progress, often stimulated by programs initiated by central and local governments, these issues persist. The reliance of China on macroeconomic growth to raise rural income is moreover difficult to sustain because of its vulnerability to financial crises (Sicular, 2013).
In this context, the Chinese government announced the expansion of e-commerce to the countryside as a national policy priority to foster rural economic development and reduce the rural-urban economic divide. Since January 2014, the expansion of e-commerce access to the countryside has been featured in the “No.1 Central Document”, a policy statement that sets out the annual strategic priorities for the country. In 2016, Xinhua reported that the National Development and Reform Commission (NDRC) signed a cooperation agreement with Alibaba to set up 100,000 village e-commerce service stations by 2019. While the rationale for Alibaba is to tap into the growing rural e-commerce market, the government sees this cooperation as a way to encourage people to go back to their hometown to start businesses and also develop and modernize agriculture.
Among the various e-commerce platforms in Mainland China, the Taobao marketplace is the undisputed market leader. Founded by Alibaba Group in 2003, Taobao facilitates consumer-to-consumer (C2C) retail by providing a platform for small businesses and individual entrepreneurs to open online stores that mainly cater to consumers in Chinese-speaking regions (Mainland China, Hong Kong, Macau and Taiwan) and also abroad.
The increasing wave of people setting up shop and selling on Taobao has led AliResearch, the research arm of Alibaba Group, to identify certain parts of China as having a concentrated number of Taobao sellers. Following the administrative divisions in China, if a village has an annual turnover of more than RMB10 million (≈USD1.6 million), and more than 100 active online shops marketed on Taobao or where the total number of active shops exceeds 10% of village households, then it qualifies as a Taobao Village. The rise of Taobao Villages has been exponential. In 2009, there were only 3 Taobao Villages. This number grew to 2,188 by the end of 2017, as recorded by AliResearch (2017).
AliResearch has long extolled the positive socio-economic implications of Taobao Villages. For example, this was reported in its 2016 Research Report on China’s Taobao Village. These include Taobao village as an incubator for grass-roots startups, creation of direct and indirect job opportunities, and fulfilling the goal of poverty elimination and wealth creation through e-commerce.
Taobao Villages
Taobao Villages are far from homogenous. They differ in geographical size, demographic, product mix, and are scattered across China – concentrating mainly in Zhejiang, Guangzhou and Jiangsu provinces. Each village came to be a Taobao Village due to its own unique socioeconomic trajectory, and endures as an agglomeration of Taobao sellers for context-specific reasons.
The reason for choosing Xiniujiao is that it is one of the first few Taobao Villages identified by AliResearch, and currently one of the most active. The age of the village lends itself well to the purposes of my research, as I may be able to track changes in trends across time.
Xiniujiao Village and in-migrants
According to a 2016 article by China News, there are approximately 4,000 Taobao sellers in Xiniujiao village and around 80% of these sellers are migrants from Hubei. 2007-2010 was celebrated as the ‘golden years’ of Xiniujiao. This was when the earliest settlers from Hubei made their first ‘pot of gold’, and soon became celebrated figures back in their hometown. Since then, Xiniujiao absorbed many migrants who had hopes of striking it rich.
One of the commonly stated factors that led to Xiniujiao’s success as a Taobao Village include the availability of migrants from Hubei . However, this goes beyond simply increasing human capital for production purposes. The influx of Hubei migrants into Xiniujiao created a sense of social solidarity and belonging. Hubei dialect is commonly spoken in the village and there are many Hubei restaurants and roadside food stalls. This enables the Xiniujiao locality to easily embed new Hubei migrants, which carries several positive spillover effects in the management and production process. For example, new migrants would find it easier to gather business capital, management skills and other resources from their fellow Hubei migrant peers. Existing Taobao sellers can easily recruit experienced workers and look for potential customers and suppliers through personal social networks based on kinship and their common place of origin. They can make profit by receiving production orders from garment distributors and other producers owned by their relatives or fellow Hubei peers. The dynamics between migrants and their success as an e-commerce do-er thus makes for a meaningful area of study.
Urban Villages
Xiniujiao is essentially an urban village, or ‘village in the city’ (ViC). This is a form of urban development, which first emerged in the Pearl River delta region of China, especially in Guangzhou city. Due to its unique position as the provincial capital and its designation as one of the 14 coastal open cities back in 1984, Guangzhou attracted a considerable share of foreign investment and has stimulated mass migration to its newly established labour-intensive industries. The urban area has expanded markedly in the past 30 years and, consequently, a great number of villages at the fringes of the city have been swallowed up by urban developments. The city government often requisitions farmland, while leaving the existing residential areas of villages, as the latter demand much higher levels of compensation. In this way, many villages do not become fully-fledged urban areas, but are nevertheless swallowed up by urban sprawl. It is at this point that they become recognisable as urban villages, characterised by their dual urban–rural structure. Deprived of their traditional agricultural resources, the villagers, out of necessity, become ‘builders’. The ‘illegal’ constructions they erect then serve as housing for mass migrants, who are institutionally and economically excluded by the urban system. Consequently, urban villages become migrant enclaves, characterised by high density and overcrowding. That being said, urban villages do supply affordable housing and job opportunities for migrants.
III. Research Question
This paper explores e-commerce as a lever for rural development, as well as the socio-economic problems faced by migrants in Taobao Villages. Much of the discussion on e-commerce is positive and independent from the socio-economic problems of rural-urban migration and/or urban villages. Many scholars, for instance, do not even mention that Taobao sellers are migrants. It could be that it is because the villages that those scholars selected were not urban villages and are thus excluded from problems associated with rural-urban migration. Hence, I use the case study of Xiniujiao Village, one of the most active Taobao Villages, to illustrate these relationships in greater detail. I note that by virtue of specialising in one particular village, I am not attempting to quantify, much less generalize, whether locating in a Taobao Village yields a net positive or negative impact on sellers or the village at large. Rather, I seek to investigate and question two prevailing opinions of Taobao Villages: (1) e-commerce as a tool for rural development, (2) the socio-economic situation of migrants in a Taobao Village that is also an urban village.
That e-commerce is a tool for rural economic development abounds in the popular imagination. However, Chinese news reports and my own observations from a field trip to Xiniujiao village confirm that many of the sellers are Hubei migrants. If e-commerce were truly as accessible as described by AliResearch and the central government, rural dwellers would not have felt the need to migrate to a city like Guangzhou in first place, but rather, simply set up shop in Hubei. Hence, I wish to investigate if there are benefits to agglomerating in the city from the perspective of e-commerce do-ers; if so, this could weaken the argument that e-commerce is an enabler of economic integration for rural dwellers.
Building on this point, I wish to further explore the plight of migrants in the Xiniujiao Taobao Village. Positive accounts of sellers dominate much of the e-commerce literature, but far and few between focus on the socio-economic struggles of the sellers, much less as a migrant. For a start, these issues include moving to the village, settling in, setting up shop, housing conditions, access to public amenities, emotional well-being and so on.
Based on my findings surrounding these two questions, I will highlight policy implications from the relationships between the issues surrounding Taobao Villages, rural-urban migration and urban villages. Policy prescriptions tend to look at these issues in silo, and not take into account all these relationships collectively. In light of the fact that my paper focuses on Xiniujiao village, it will also serve as a reminder to readers that policies aimed at encouraging e-commerce need to be tailored to the unique socio-economic conditions of that particular village.
IV. Methodology and Feasibility
First, I will briefly highlight the opinions of Taobao Villages from the official AliResearch reports and secondary academic or media sources – which are mainly positive in nature. Many of the Chinese media reports are constantly surveilled by CCP authorities and thus are not expected to yield authentic or critical reviews of Taobao Villages. Thus, to paint a better picture of what is ‘reality’, I will draw on multiple secondary academic sources to reveal the social and economic realities of migrants. These refer to academic papers that are not linked to e-commerce, but focus on broadly on the ills of rural-urban migration and/or urban villages. These two issues have traditionally been portrayed as socio-economic developmental challenges of China, but have never been analysed in conjunction with the trends of migration into Taobao Villages. In essence, I am reconciling the literature in the domains of rural-urban migration and urban villages, with that of Taobao villages.
To minimize errors of representativeness in the comparison between disparate domains of literature, I will mainly refer to migration or urban village papers that use Guangzhou as a case study.
As a supplement to my use of secondary data, I will also tap on field observations I collected from my trip to three different Taobao urban villages in Guangzhou, one of which includes Xiniujiao Village. I took this trip in late-March 2018, so my observations are likely to accord well with the current situation of Xiniujiao village. Before going to Guangzhou, I had a basic theoretical understanding of Taobao Villages based on the prevailing literature. While I was at the site, I looked out for instances where behaviours matched or deviated from my pre-conceived understanding of Taobao Villages. It was through this trip that I realized Xiniujiao Village had many migrants – many a times I heard the Hubei dialect being spoken and chanced upon roadside food stalls selling Hubei dishes. I hardly heard people speak Cantonese – the dialect of Guangzhou city. This experience laid the foundations for my research question.
In Guangzhou, I was a complete observer – in plain sight in a public setting, yet the public being studied was unaware of being observed. This type of observation is unobtrusive and unknown to participants. Naturally, it carries several limitations: I was not able to probe into behaviours by way of surveying or interviewing. With no key informants, I was not able to gain a first-hand account by these migrants or other relevant stakeholders, such as community leaders or local government officials. However, for the purposes of my research question, and in consideration of my time and resource constraints, surveys or interviews might not have been a suitable research method. Community leaders or government officials might want to display a positive side of the Taobao village, while migrants themselves, who would have been introduced to me by the earlier informants, have no incentive to disagree with their leaders.
V. Provisional Thesis Outline
• Introduction
• Methodology
• Literature Review
• Economic implications of e-commerce in China
• Social implications of e-commerce in China
• Social and economic problems faced by migrants in China
• Social and economic problems of urban villages
• Main analysis
• Background to Xiniujiao Village and the Hubei migrants
• Process of forming Hubei migrant enclaves in Xiniujiao
• Benefits of migrant enclaves to the e-commerce doer
• Social integration
• Management and business
• Migrant problems
• Economic losses
• Housing and spatial issues
• Migrant children and education
• Social integration into the urban city
• Issues surrounding e-commerce as a tool for rural development
• Conclusion
• Future for migrants in Taobao Villages
• Policy implications
• Bibliography
VI. Literature Review
The intersection between e-commerce, rural-urban migration, and urban villages has received little formal analysis by scholars. To my knowledge, no academic paper has been written about these topics collectively. Nonetheless, a few good papers exist within each realm.
E-commerce
Some scholars have looked at the enablers of e-commerce activity in China. One such paper is by Leong, Pan, Newell and Cui (2016), which focuses on how ICT has allowed various actors in the eco-system to self-organise rural development. Specifically, Leong et al. identified these critical actors as: grassroots leaders, sellers, supply chain partners, third-party e-commerce service providers and institutional supporters. While this paper was more descriptive than analytical, and the focus of my study is not on ICT, Leong et al.’s work serves as a good reminder that actors within the Taobao village transcend mere sellers. For this reason, I refer to migrants who move to Xiniujiao village to participate in the e-commerce ecosystem as “e-commerce do-ers”, a broad term that includes those engaging in ancillary services such as logistics, packaging, designing and so on.
A paper that seems to follow-up on Leong et al.’s (2016) study is one by Cui, Pan, Newell and Cui (2017). Social entrepreneurs addressed the weakness that resources were scattered across individual villagers by linking internal resources. For example, in their case study, a villager (i.e. the social entrepreneur) set up an e-commerce association to band together small sellers so that they could collectively obtain economies of scale in terms of pricing from wholesalers. Cui et al.’s study thus analysed how it was individual social entrepreneurs who drove e-commerce in China. These individuals played a significant role in stimulating the conditions and organizing the processes that allow local businesses to thrive and so help to lift a region out of poverty. Another focus of Cui et al.’s paper is that of social innovation. E-commerce, in their context, is motivated by local and not simply individual prosperity. This insight is useful in analysing the social dynamics within the Hubei migrant enclaves, and whether this has a group effect on individual participation in the e-commerce ecosystem.
Regarding the implications of e-commerce activity in China, most papers focus on the social and economic domains.
Lin, Xie and Lv (2016) investigate the social implications of e-commerce – how everyday life in rural villages was reconstructed after the expansion of Taobao. They note that Taobao has gradually expanded because of the mutualism of China’s traditional acquaintance society. In the context of their case study, Junpu Village, interested sellers were able to rapidly set up shop because they were mainly from the Chaoshan region (eastern Guangdong) and could tap on the goodwill of fellow Chaoshan migrants who were existing sellers. Within each family unit, Taobao has helped young people reintegrate themselves with ‘a feeling [of being] at home’ and belonging, and have also heralded a return to traditional family relations through the reinforced division of gender roles. However, despite the presence of Taobao in daily life, there is not concurrent promotion of harmonious community relationships among neighbours in the village, as evinced by the culture of undercutting and steep price competition among sellers. Lin et al.’s paper thus reveals the limits of social relationships when economic survival is put to the test. I note that Lin et al.’s (2016) paper, while interesting in understanding the social dynamics of a post-Taobao rurality, may not be generalizable to other Taobao villages. Much of their discussion is grounded in the Chaoshan tradition, which may be unique to Junpu village. Nonetheless, Lin et al.’s paper is a keen reminder that the social implications for e-commerce are culturally intertwined with the unique traditions of each village. The framework for analysing a post-Taobao rurality may also prove useful when I attempt to examine the social dynamics among e-commerce do-ers in Xiniujiao village.
Fan, Tang, Zhu and Zou (2016) adopt an economic approach to analyse the implications of e-commerce in China. Using data on e-commerce sales on the Taobao platform across 315 prefectures in China for the year 2013, they document a decreasing relationship between prefecture population and online expenditure shares in the cross-section. The theory underlying their observation is that since consumers in smaller cities had been more constrained in their consumption choices, they benefit disproportionately more from the improved access to varieties of goods. Fan et al. find that e-commerce can reduce the inequality across Chinese cities, although the reduction is small. While Fan et al.’s paper is instructive in offering a glimpse into the economic implications of e-commerce, they used relatively old data that may now be considered dated. Moreover, they did not study within-city or within-village inequality, the latter being more relevant for the purposes of my research question.
A paper that serves as a good follow-up to Fan et al.’s study is that by Couture, Faber, Gu and Liu (2018). Couture et al. analyzed economic welfare changes after the introduction of e-commerce. To set this up, they made use of two initiatives that were aimed at removing the transactional and logistical barriers to rural e-commerce. First is a program by Alibaba to roll out village terminals (help desks), in addressing transactional barriers to e-commerce (navigating online platforms, accessing online payment methods, trust in online purchases or sales). Second is partnership between Alibaba and the Chinese government to build warehouses as logistical hubs for village deliveries and pickups. The latter fully subsidizes transport costs between the county’s city center and the villages. This program aims to offer e-commerce in rural villages at the same price, convenience and service quality that buyers and producers face in their county’s main city center.
Overall, Couture et al. find that the gains from e-commerce are driven by a significant reduction in household cost of living due to access to the new e-commerce shopping option that provides greater product variety, cheaper prices and a reduction in travel costs. They find no evidence of significant pro-competitive effects on local retail prices. On the production side, they find no evidence of significant effects on the local economy: online selling activity, purchases of production inputs, household incomes and entrepreneurship are not significantly affected by the arrival of e-commerce.
In terms of the channels, Couture et al. find significantly stronger gains among villages that were not previously serviced by commercial parcel delivery, suggesting that the program’s effects are mainly due to overcoming the logistical barrier, rather than the transactional one. With respect to the issue of within-city inequality, Couture et al. find that the welfare gains for the average rural household are more muted, suggesting strong heterogeneity in the benefits of e-commerce. The beneficiaries are on average richer and younger, live in closer proximity to the e-commerce terminals, and in villages that are farther away from the nearest township center. Couture et al.’s paper thus prompts several qualitative questions that may be nuance my study of migrants in Xiniujiao village: whether there certain types of migrants that stand to benefit from e-commerce more so than others, and why so.
In a nutshell, the prevailing literature about e-commerce in China is either neutral or enthusiastic about its socio-economic impact on the sellers. Far and few between examine negative implications of any sort.
Urban Villages and the Rural-Urban dichotomy
Coverage of urban villages in the literature typically focuses on Beijing, Shanghai, Guangzhou and Shenzhen. This is advantageous for my research question as papers using Guangzhou as a case study would allow me to draw more specific insights towards Xiniujiao village.
Zhang, Zhao and Tian’s (2003) paper is one of the earliest seminal works on urban villages. They expound the underlying rationale of self-help in housing and the important role urban villages have played in the housing of rural migrants in the context of China's rural-urban dichotomy, using the cases of Guangzhou and Dongguan cities. They theorize that urban villages in Chinese cities occurs as a result of the rapid growth of rural-to-urban migration, and the systemic closure of the urban housing market to non-urban people. In Zhang et al.’s paper, most of these rural migrants were clustered in several major manual occupations and only a very small group is in non-manual categories (Solinger, 1999). Because of their lack of a legitimate urban hukou, and their employment mostly in low-paid occupations, rural migrants as an urban underprivileged group have been socially excluded from the state-created urban housing system. However, I note that the occupational composition of rural migrant workers has changed vastly since, and Zhang et al.’s paper, being written in 2003, taps on data that is currently outdated. Nonetheless, Zhang et al.’s paper is important in understanding the theoretical foundations of China’s urban village problem, and provokes thought on whether and how occupational standing interacts with a migrant’s experience in the village.
Wu’s (2002) empirical studies of Beijing and Shanghai, although not focusing on urbanising villages per se, examine the housing decisions of rural migrant labourers. She concludes that disadvantages experienced by migrants in the urban housing market mainly come from institutional restrictions associated with the urban hukou system that outweigh the effects of migrants’ socioeconomic factors. This paper prompts me to think about the extent to which systemic and institutional constraints will hinder a migrant from reaping the socio-economic benefits of a locating in a Taobao village.
Focusing on the experiences of the migrants in the urban village, Wu’s (2016) paper delves into the composition of dwellers, housing conditions and rental contracts, drawing on surveys of urban villages in Beijing, Shanghai and Guangzhou. Wu’s paper is useful in elucidating the disadvantaged housing conditions of rural migrants in the city – dilapidated physical conditions, and the insecurity of residential tenure.
Liu, Li, Liu, and Chen’s paper (2015) is perhaps most relevant to my village of study, Xiniujiao, as their paper focuses on Hubei migrant enclaves in Guangzhou. Moreover, Liu et al. examine Hubei migrant enclaves with a high concentration of small-scale garment producers – garments being the product specialty of Xiniujiao. Liu et al. argue that rural migrants are active agents who develop a vibrant garment manufacturing cluster by establishing a flexible garment production system, embedding their business within the enclave and maintaining a nationwide trans-local network. They also contend that the enclave provides a feasible path through which migrants can achieve social mobility and adapt themselves to the urban environment. Whether this is true remains an open question for further discussion in my paper. Nonetheless, while Liu et al.’s paper made no explicit mention to e-commerce, their work is the closest to the intersections between commerce, rural-urban migration and urban villages.