Chinese e-commerce giant Pinduoduo is accelerating its plans of penetrating further into the country's rural areas. The company revealed plans this week of investing at least 50 billion yuan, or around $7.1 billion, over the next five years to achieve its goals.
The investment will be going towards establishing online retail programs specifically targeting China's rural areas. This will include the establishment of a "new infrastructure" that will support the online trade of items such as agricultural products.
Over the next five years, the Shanghai-based e-commerce services provider stated that it plans to help support the development of at least 1 million rural online shops on its platform. According to the company's announcement on Tuesday, it is aiming for each online shop to generate more than 1 million yuan in revenue each year.
The company's initiative will work hand in hand with the Chinese government's own efforts to revitalize economic activity after months of travel restrictions and lockdowns. Pinduoduo's strategy is also in line with the country's push to alleviate poverty in rural areas by providing local businesses with more opportunities, while at the same time giving consumers access to fresh produce and other goods.
Pinduoduo co-founder Sun Qin mentioned in an interview on Wednesday that the company remains optimistic about the prospects of China's agricultural modernization and the penetration of agricultural goods in the online space. Sun projects that the online transactions of agricultural goods in mainland China could reach up to 800 billion yuan within the next five years.
The company, which is China's third-largest e-commerce provider based on gross merchandise volume, is currently leading the way in helping traders in rural areas to get their goods online. Through its continued efforts, Pinduoduo has become China's biggest e-commerce platform for agricultural goods.
As China continues to push for the adoption of new technologies in its far-flung regions, e-commerce use in the country's rural areas and lower-tier cities has grown exponentially. Pinduoduo has aggressively pushed its business into these areas, intensifying its rivalry with companies such as Alibaba Group Holding and JD.com.
Major Chinese e-commerce firms are accelerating their efforts to tap into the country's rural areas given the massive opportunities. According to China's Qianzhan Industry Research Institute, the country's rural e-commerce market is now worth more than 1.7 trillion yuan. Data from the Ministry of Commerce has revealed that the demand for agricultural products has also increased. Between 2014 and 2017, e-commerce in rural areas had grown from just 180 billion yuan to 1.2 trillion yuan.
