AN INTRODUCTION TO TAOBAO VILLAGES

In 2009, clusters of rural online entrepreneurs who have opened shops on

Taobao Marketplace, which are referred to as “Taobao Villages,” began to
emerge in China. The first farming village to take up e-commerce on a
large scale was Dongfeng Village in Shaji Town, Jiangsu Province, where
more than 1,000 households had joined the digital economy by getting
involved in furniture production and selling their finished goods online. Two
other Taobao Villages also emerged in Hebei Province and Zhejiang
Province, respectively, in the same year. Since then, the number of Taobao
Villages has been on the rise, and those villages have become a significant
force behind the development of rural e-commerce in China.

Definition of a “Taobao Village (淘宝村)”:

As defined by AliResearch, Alibaba Group’s research arm, a Taobao

Village is a cluster of rural e-tailers within an administrative village where:

1. Residents got started in e-commerce spontaneously primarily with the

use of Taobao Marketplace;
2. Total annual e-commerce transaction volume is at least RMB10
million ($1.6 million);
3. At least 10% of village households actively engage in e-commerce or
at least 100 active online shops have been opened by villagers.

Emergence of “Taobao Towns (淘宝镇)”:

In some rural areas, e-commerce is gaining sufficient scale to lead to the

formation of bigger clusters of rural e-tailers. These bigger clusters are
referred to as “Taobao Towns” and a “Taobao Town” is defined as a town,
township or street that comprises at least three Taobao Villages. The first
batch of 19 “Taobao Towns” came into being in 2014.

NEW DEVELOPMENTS IN 2015

The following facts and figures are extracted from the 2015 China Taobao
Villages Research Report (2015年中国淘宝村研究报告) developed by
AliResearch:

Statistics at a glance:

780 Taobao Villages

200,000+ active online shops
17 provinces and municipalities
71 Taobao Towns
25 Taobao Village Clusters

 The number of Taobao Villages and Taobao Towns has grown

rapidly. As of the end of 2015, the number of Taobao Villages
identified in China grew 268% year-on-year to 780, compared with
212 as of the end of 2014 and 20 as of the end of 2013. Those 780
villages, where there are more than 200,000 active online shops,
span 17 provinces and municipalities. The coastal provinces of
Zhejiang, Guangdong and Jiangsu accounted for the biggest number
of Taobao Villages. Meanwhile, seven provinces and municipalities
made the list of Taobao Villages for the first time in 2015.

Geographic distribution of Taobao Villages

No. of No. of
Province/ Province/
No. Taobao No. Taobao
Municipality Municipality
Villages Villages
1 Zhejiang 280 10 Tianjin 3
2 Guangdong 157 11 Sichuan 2
3 Jiangsu 127 12 Yunnan 2
4 Fujian 71 13 Beijing 1
5 Shandong 64 14 Hubei 1
6 Hebei 59 15 Jilin 1
7 Henan 4 16 Liaoning 1
8 Hunan 3 17 Ningxia 1
9 Jiangxi 3
* Italics highlight provinces/municipalities that made the list for the first time.

Meanwhile, the number of Taobao Towns grew 274% to 71 as of the end of

2015, compared with 19 as of the end of 2014.

Geographic distribution of Taobao Towns

No. of No. of
No. Province Taobao No. Province Taobao
Villages Villages
1 Guangdong 22 4 Fujian 7
2 Zhejiang 20 5 Shandong 6
3 Jiangsu 11 6 Hebei 5

 Taobao Villages differ greatly in terms of transaction

scale. Among the 780 Taobao Villages identified in 2015, some have
just surpassed RMB10 million in annual sales while others have
already reached an annual transaction scale of several billion yuan.
More than 30 Taobao Villages, most of them located in Guangzhou
and Yiwu, are estimated to have achieved annual sales of more than
RMB100 million. 60% of all Taobao Villages achieved RMB10 million
to RMB30 million in annual sales.
 Apparel, furniture and shoes remained the best-selling products
for Taobao Village merchants. Apparel, furniture and shoes
continued to be the best-selling product categories. The full list of top
10 product categories in terms of 2015 sales were:

Ranking Product category Ranking Product category

1 Apparel 6 Toys
2 Furniture 7 Home products
3 Shoes 8 Bedding products
4 Automobile accessories 9 Outdoor products
 Bags, luggage and Home improvement
5 10
leather products materials

Products sold by Taobao Villages are becoming increasingly diversified.

Many villages specialize in unique products such as honey, musical
instruments, ceramics, purple clay teapots and silverware.

 The first group of “Taobao Village Clusters (淘宝村集群)” came

into existence. In some places, Taobao Villages began to form in
groups to become “Taobao Village Clusters.” In Xinhe Town,
Shuyang County of Jiangsu Province, for example, all the 10
administrative villages there have fulfilled the criteria of Taobao
Villages. A “Taobao Village Cluster” is officially defined as:
1. A cluster of more than 10 neighboring Taobao Villages that develop
together
2. where e-commerce entrepreneurs, service providers, the regional
government and industry associations work closely together and
3. whose annual e-commerce transaction volume reaches or exceeds
RMB100 million.

Taobao Village Clusters formed by 30 or more neighboring Taobao Villages

are referred to as “Mega Taobao Village Clusters (大型淘宝村集群).”
Among the 25 Taobao Village Clusters that emerged in 2015, Yiwu and
Cao County were considered Mega Taobao Village Clusters.

Top 10 Taobao Village Clusters

No. of Taobao
No. District / County City
Villages
1 Yiwu Jinhua 37
2 Cao County Heze 34
3 Jinjiang Quanzhou 25
4 Puning Jieyang 25
5 Shuyang Suqian 22
6 Suining Xuzhou 22
7 Baiyun Guangzhou 21
8 Chaonan Shantou 21
9 Wenling Taizhou 21
10 Zhuji Shaoxing 20

* Italics signify Mega Taobao Village Clusters.

The reasons behind this development include:

1. Villagers have naturally spread e-commerce to neighboring villages

through their connections.
2. In some cases, the neighboring villages are involved in similar
industries and they are naturally attracted by the success of the
Taobao Villages to join the wave of e-commerce.
3. The government policy in some regions is conducive to the
development and expansion of e-commerce.

 An increasing number of Taobao Villages participate in cross-

border trade. As some Taobao Villages mature and their products
become more high-end, and Alibaba Group’s retail platforms become
more globalized, an increasing number of Taobao Villages have
engaged in cross-border trade. For example, the Taobao Villages in
Cao County of Shandong Province, which started online trade with
children’s stage costumes and later expanded their product range to
adult stage costumes, dance shoes, corporate uniforms, etc, have
recently moved beyond their home market to produce Halloween and
Christmas costumes for overseas customers as well.
 B2B e-commerce villages started to emerge. Taobao Villages are
no longer only involved in online retail. AliResearch data shows that
B2B e-commerce villages began to emerge on a large scale in 2015,
thanks to factors such as rising Internet penetration, the low entry
barrier offered by e-commerce platforms, and examples from others
in the rural community. As an example, Zhuji in Zhejing Province is
 the world’s biggest manufacturing base of socks, accounting for 70%
of all socks produced in China and 30% of the world’s total in 2014. In
recently years, e-tailers in Zhuji began to engage in both wholesale
and retail, supplying socks to Taobao sellers in other regions and
offline retailers, while also selling their products to consumers through
their online shops.
 More impoverished regions have joined the wave of e-
commerce.Taobao Villages first started to emerge in certain country-
level impoverished counties in 2014, and the number grew from four
to 10 in the course of 2015. The number of Taobao Villages located
in province-level impoverished countries has even reached 166 as of
the end of 2015.

Editor’s note: This information is current as of January 2016.