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Alibaba Invests $716 Million in Rural E-Commerce

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Apr. 28 2018, Updated 10:30 a.m. ET

Huitongda helps village retailers come online

Alibaba (BABA) is investing $716 million in Huitongda Network, a Chinese e-commerce company focused on serving people living in rural areas, according to Beijing-based business news publication Caixin. Founded in 2010, Huitongda helps small village retailers set up a web presence to allow them to source supplies online and sell to online shoppers. It boasts ~80,000 member stores across 18 provinces. The investment is expected to open opportunities for Alibaba to cooperate with Huitongda in areas such as e-commerce technology and logistics.

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JD.com also making a rural push

The partnership with Huitongda could expand Alibaba’s initiatives to build a customer base in rural regions of China, where there exist greater growth opportunities because markets are underpenetrated. Back in 2014, Alibaba launched a rural-focused initiative known as Rural Taobao, which makes it easier for rural businesses to sell online and rural consumers to shop online.

JD.com (JD), backed by Walmart (WMT) and Tencent (TCEHY), is also making a big push in rural China, saying last year that ~50% of the million convenience stores it intends to open in five years will be located in the countryside.

China’s rural online retail sales grow 39%

Alibaba and JD.com are looking to expand into rural markets just as rural e-commerce is booming in China. In 2017, online retail sales in China’s rural areas rose 39.1% to $194.1 billion according to Xinhua, citing data from China’s ministry of commerce. E-commerce providers, ranging from Amazon (AMZN) to Alibaba, are looking to develop markets to drive growth. Amazon is investing $5.0 billion in growing its business in India.

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