Business

Tiny village becomes hub

By Xu Junqian
Updated: 2010-11-01 16:52

An employee delivers commodities at a warehouse of a Taobao.com store in Qingyanliu village, Zhejiang province. Li Zhenyu / For China Daily

Taobao changed residents' lives to a focus on online business and getting rich. Xu Junqian found out how they run stores in Qingyanliu, Zhejiang province.

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It is a few minutes to 4:00 pm at Qingyanliu, a small village tucked away in Yiwu, Zhejiang province, and it is so quiet you can almost hear a pin drop. Few people can be seen walking around. Rooms on the first floor of every building are tightly shuttered. The entire village is so quiet and empty, it appears to have been evacuated. The one innocuous sight is the number of luxury cars parked in the streets.

However, behind the iron gates of almost every residence in the village, narrow staircases lead to a totally different world consisting of thousands of 300 square meter underground warehouses.

This is "Taobao village", as it has become known, and it is famous for its billion yuan annual sales volume on taobao.com, China's largest online shopping bazaar.

Illuminated brightly by hundreds of fluorescent lights, the underground space is a world buzzing with activity. Lines of shelves groaning with boxes of goods take up more than half of the basement.

Workers busily shuttle through, picking up goods according to the printed orders in their hands and passing them to other workers who sit on stools immersed in packing.

The floor is piled with so many paper boxes of different sizes that one can barely set foot in. The sound of tape being ripped mingles with shouted demands. The stuffy air is ripe with the smell of perspiration. Lunch box leftovers litter what little space remains.

At the stroke of 4:00 pm, the whole village seems to wake up and spring into action, as if by order of an invisible magic hand.

The small gates that separate the underground world from the outside are all opened. Wrapped boxes come pouring out.

Trucks and vans crowd into the village one after another and park by the gates, waiting to be filled up. The underground workers emerge and begin bustling about with the freight.

"This is the everyday routine of the village. People's lives here are centered around the business schedule of Taobao," said Liu Wengao, secretary-general of the local e-commerce association, which was voluntarily founded by some online business dealers in the village in April.

"They get up at noon, begin taking orders from all around the country, then express deliveries come to pick up the goods at dusk. Dealers continue their business late into the night," Liu added.

It all started in 2005, said Liu, who was born and bred in the village. Before that, just 1,500 people lived a largely carefree life of leisure like most countryside people in East China. They did little work and would gather together and play mahjong during the day, living mostly on the proceeds of renting out their family property.

But 2005 witnessed a facelift for the century-old village. More than 200 five-floor buildings were constructed, creating an abundance of cheap rooms.

Given its strategic location next to Yiwu's biggest shipping market, the village became an ideal base for young entrepreneurs, who flock there from all over the country. Yiwu is home to the world's largest wholesale market.

In 2009, there were around 120 stores in the village whose owners bought goods from the market and sold them online. The annual sales volume reached 4 billion yuan ($600 million), five times that in 2008.

This year the total number of online stores rose to 1,800 and the sales volume is expected to be 10 billion yuan.

Home to more than 8,000 people now, Qingyanliu village has become a "lucky base" for hundreds of millionaires who are making their fortunes there.

Tales of rags to riches are in plentiful supply here. Having worked as a salesman in Handan, Southwest China, on a salary of less than 2,000 yuan every month, 28-year-old Wang Shibing left for the village in 2005 and now has more than 40 employees, a factory that produces items such as key rings, folding baskets and nylon bags for both his own store and other online sales platforms - and piles of cash.

"Qingyanliu is a 'dangerous' place," said Wang. "One may come to the village to try one's luck but end up spending the rest of one's life here." Wang has bought apartments, got married, had a son here and brought both his parents from their hometown to the village.

The businessman was unwilling to reveal details of his annual income, but he told China Daily that the sales volume of his store used to account for 3 percent of the entire grocery market on Taobao, which had more than 100,000 stores of this kind, before it was blocked and forced to "readjust" by the website administrators over fears of price manipulation. The business steadily increased by 300 to 400 percent year-on-year at the beginning but has slowed down to 50 to 60 percent in recent years.

Tempted by the large profits, locals put away their mahjong and started their own online stores as well.

Zhang Feng, a 25-year-old college graduate, is one of them. After a few frustrating experiences in the job market, he opened his online grocery shop in 2008 with an investment of 40,000 yuan, taken out on his credit card. Today, he has a brand new black BMW in his crowded garage, has broken away from Taobao, established an independent online sales platform and sells products manufactured by his own factory.

Despite the high-speed development of online shopping, businessmen in the village including Wang Shibing and Zhang Feng are far from satisfied with the current situation.

According to statistics from iResearch, there were around 400 million netizens in China in 2009. Twenty-eight percent of them have shopped online at least once. The proportion is expected to rise to 30 percent in 2010. In the United States, 94 percent of netizens regularly shop online. In South Korea, the number is 99 percent.

The overall sales volume of online shopping reached 247.35 billion yuan in China last year, accounting for 1.97 percent of the Chinese retail industry. It is expected to increase to 4.83 percent in 2013.

The flourishing online business in the village has also boosted many other industries.

Manufacturers of paper boxes and tape have soared. The number of restaurants that serve midnight snacks has risen exponentially.

There are also more than 20 express delivery companies in the village. Picked by the e-commerce association from hundreds of candidates, these companies agreed to lower their price from an original 5 yuan for each article to 3.5 yuan.

That saves the village's dealers a total of 30 million yuan every year and increased the number of articles handled by about 1.5 million.

With the ever-expanding scale of online business in the village, many sellers have had to relocate elsewhere to bigger warehouses.

"As much as we are attached to this second hometown, our growing business left us no choice but to leave for a more spacious area," said Wang, the grocery magnate, who has bought a new 8,000 square meter warehouse in an industrial district miles away from Qingyanliu.

"We have built an efficient network for newcomers and old timers to together enjoy the privilege of doing business here," said Liu, of the e-commerce association. "It is called a supermarket of online goods. "Maybe one day, our village will also become a shopping destination for tourists."