In the heart of Hunan province, a small village hummed with activity as China’s General Secretary Xi Jinping made his way through the streets, meeting with residents living in poverty. Little did they know, this visit would be the catalyst for a revolutionary approach to poverty alleviation in China: The China Philanthropy e-commerce platform. Professors Qinqin Zheng and Jieyou Zhang, School of Management Fudan University, explore the promises and impacts of the platform.
Targeted Poverty Alleviation and the China Philanthropy E-commerce platform by CoBS Editor Muskan Chourey. Related research: The effects of an innovative e-commerce poverty alleviation platform on Chinese rural laborer skills development and family well-being, Children and Youth Services Review, Chien-Chung Huanga, Huiying Jina, Jieyou Zhang, Qinqin Zheng, Yafan Chena, Shannon Cheunga, Chuwei Liua, Elsevier.
Empowering Rural China: The impact of the China Philanthropy E-commerce platform
In November 2013, China’s General Secretary Xi Jinping visited a small village in Hunan province where he met with residents living in poverty. During his visit, he noticed that despite the 1978 economic reforms, rapid economic development, and social welfare policies implemented in previous years, poverty alleviation efforts were not reaching the most vulnerable and remote areas of the country.
The economic miracle of China is well recognised. In 2018, there was a massive x 167 increase in GDP per capita from 385 RMB in 1978 to 64,644 RMB but this growth was experienced unevenly. The evidence can be clearly seen in the increase in the country’s Gini coefficient – a measure of income inequality within a population. This ranges from 0 to 1, with 0 indicating perfect equality (everyone has the same income) and 1 indicating perfect inequality (one person owning all income).
After witnessing this uneven distribution, a proposal for the concept of “targeted poverty alleviation” was advanced which focuses on devising effective poverty reduction programs based on the specific needs of poverty-stricken areas. The idea was to make poverty alleviation efforts more realistic and appropriate by tailoring them to the local conditions of struggling counties.
2 years later saw the publication of the “Decision of the Central Committee of the Communist Party of China and the State Council on Winning the Fight against Poverty”, setting goals for all rural residents to have access to sufficient food and clothing, education, medical care, and housing by the end of 2020. This strategy involves the participation of enterprises in the poverty alleviation effort and one such innovative effort is the China Philanthropy platform.
This is a successful e-commerce platform that has been able to positively impact the skills, income, and resource allocation of workers and their families. Moreover, the platform has a strong potential to improve the professional skills of the participants and increase their family incomes, leading to more resources to be allocated to the education of their children, indicating human capital accumulation.
The story of the China Philanthropy e-commerce platform
To understand the significance of this platform, let’s consider the example of farmers residing in rural China and struggling to make a living wage. They had little access to markets and resources to sell their agricultural products. Subsequently, a new e-commerce platform – China Philanthropy (CP) – was introduced, designed to help alleviate poverty by allocating resources through the collective efforts of its stakeholders, including platform operators, assistant enterprises, poor farmers, and registered users.
The 150-person CP team invested in building up the platform, focusing on technology development, platform management, and product promotion. Assistant enterprises, a new concept, used their professional expertise and provided technical support to farmers, helping them to promote their products and negotiate prices, as well as employing rural labourers. On their side, farmers were able to use their own knowledge and skills to invest in growing agricultural products.
Moreover, farmers were able to list their products on the CP platform for sale and receive income through the assistant enterprises. They also received training and workshops, which increased their work capacity and improved their professional skillsets. The registered users, who were able to purchase products directly from the platform with low intermediary costs, benefited too.
Thanks to the innovative model of the CP e-commerce platform, the farmers were able to increase their income and improve their livelihoods – as a result opening the path to investing more resources in their families and children’s education, and thereby leading to better opportunities for future generations. Indeed, it can reasonably be claimed that the CP platform empowered these rural farmers and changed their lives for the better.
Impact of the CP platform on rural families’ livelihoods
Profs. Zheng, Zhang and their fellow researchers examined the effectiveness of this platform by monitoring the work skills, income, and expenditure of a sample of 41 families. Their study found that work skills – specifically agricultural expertise, computer skills, customer service skills, Mandarin proficiency, cell phone skills, and online sales skills – significantly improved after the CP platform was established.
Additionally, family income increased by 50% between 2016 and 2019, mainly due to earned income from the CP platform, and rural collective economic organizations and government support. Moreover, family expenditures also increased by 21% due to production materials related to the CP platform, daily living expenses, and education expenses. On a down note, expenses exceeded family incomes in both 2016 and 2019. Finally, the study also highlighted the effects of drought in 2016 leading to frost damage to apple trees in the two following years and consequently reducing both farmers’ income and enterprises’ profits.
The success of the CP platform in poverty alleviation, run by the Bank of China, highlights the importance of targeted strategies and the role of large businesses in promoting and improving the well-being of impoverished farmers and their families. Through utilizing their own capital advantages and innovative models, such as incorporating assistant enterprises, the CP platform has been able to improve the technical skills and income of farmers.
Limitations of the CP platform
There are still some limits and challenges that pose barriers to further success. ZYSY, the company that operates the platform, for example, charges a maintenance fee of 4% on each transaction, but this fee only covers a small portion of the platform’s operating expenses. As a result, the company has experienced an annual loss of around 30 million yuan over the past three years.
However, despite these limitations, the study confirms the theories of household production, resource allocation, and human capital accumulation and supports the use of social innovation to replace traditional methods of meeting social needs. The CP e-commerce platform provides a creative and effective solution for poverty alleviation in China by bringing together different sectors of society to address a grand challenge.
Useful links:
- Discover Prof. Qinqin Zheng’s academic profile and publications
- Visit the School of Management Fudan website to learn more about the school
- Apply for the Fudan-MIT Sloan IMBA
- Read a related article: Digital Technologies: A key to post-pandemic inclusive and sustainable education.
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