INTERNET BUSINESS FOR CHINA’S RURAL ECONOMIC DEVELOPMENT IN THE CONTEXT OF DIGITAL TRANSFOERMATION: OPPORTUNITIES AND CHALLENGES
Yang Yang，Ph. D. Candidates of the Department of Management, Southern Federal University,E-mail: 393567991@ qq.com
Abstract. The COVID-19 accelerates the digital transformation and development of China’s economy, and the scale of Internet business continues to expand, promoting the deep integration of the digital economy and the real economy, especially with a huge impact on the rural economy. Internet business has reconfigured the factor input structure for rural economic development and continuously promoted the formation of new competitive advantages in rural areas. However, hindering factors such as geographical location restrictions, backward consumption concepts of farmers, unsound logistics and distribution system in rural areas, and lack of technical talents in e-commerce in rural areas become challenges for the Internet to promote rural economic development. The article mainly analyzes the opportunities and challenges faced in the development of rural Internet business. Targeted solution suggestions are proposed for these development dilemmas in order to promote the high-quality development of rural Internet business.
Keywords：Internet Business, China’s Rural Economic, Development, Opportunities, Challenges
Ministry of Commerce statistics show that China’s rural Internet business retail sales reached $1.79 trillion in 2021, compared to $1.37 trillion in 2019. In two years, the retail sales of rural Internet business increased by 420 billion yuan, which is a very rapid growth rate. Rural Internet business ushers in a new period of development.
Internet business as a new way of value creation and business model, using the Internet as a medium to conduct transactions with customers, It can reduce buyers and transaction costs.“e-commerce” and “Internet business” are similar concepts in that both of them mean the business that actively utilizes the Internet as a business medium. Internet business has become the main way to optimize the rural industrial pattern, promote the transformation and upgrading of traditional agriculture, expand rural employment, increase farmers’ income and solve rural development problems.
2.Materials and Methods
This paper uses literature research method Internet business and rural economic issues for theoretical analysis and quantitative analysis of data related to rural Internet penetration and 7th censuses of rural population loss.
2.1 Literature research method
By analyzing the literature on the connotation of Internet business and rural economy, reading the current situation of Internet business and rural economy development in various literature and making relevant summary exposition, analyzing the dynamics and shortcomings of existing research, and providing theoretical support for this study.
2.2 Case Analysis Method
This paper selects the rural Internet business case of Internet enterprises as the research object of this paper, and through a detailed combing of the Internet business of Internet enterprises and the actual situation of rural Internet business, it intuitively illustrates the actual situation of rural Internet business and rural economic development, summarizes the impact of Internet business on rural industrial structure and regional factors, and also puts forward the opportunities and challenges of Internet business on rural economic development.
3.1 The impact of Internet business on rural regional economy
3.1.1 Internet business promotes the gathering of special product industries
Local governments should establish more construction of Internet business parks, encourage the agglomeration of Internet business , promote the integration of local agricultural products with the Internet, tap local advantageous agricultural products, and create brands of agricultural products. 
For example, the people’s government of Yongshun County has formed a competitive aggregation by establishing a strawberry e-commerce park, improving local digital infrastructure, running not preferential policies, giving financial support to entrepreneurs, arranging postal subsidies, training e-commerce talents and a series of other measures to facilitate the cooperation and information exchange of strawberry enterprises in the region. So far, the county has built 1 provincial-level e-commerce demonstration village, 3 e-commerce professional towns, 15 e-commerce professional villages, creating 9 e-commerce clusters and driving employment of 15,600 people.
Anqing City, Anhui Province, Yixiu District, invested 122.7 million yuan in soybean products production base gathered 36 households soybean products processing production, this production base introduced the most advanced domestic automated production line of soybean products, completely solve the traditional manual work, to achieve the quantification of soybean products production, through the Internet platform sales to all over the country.
3.1.2 Internet business promotes the flow of factors in rural areas
Internet business has become a new engine of agricultural and rural development, which drives the flow of technology, capital and materials to rural areas with the flow of information, promoting the optimization of resource allocation and the improvement of total factor productivity in rural areas. Direct broadcasting of electricity accelerates the sinking of agriculture, and new technologies, new business models and new employment groups continue to emerge in the field of agriculture.
Performance costumes is the traditional industry of Dinglou Village, Daji Town, Cao County. at the end of 2010, some villagers tried to sell on Taobao, then a large number of orders came one after another, and the products expanded from photography clothing to performance clothing, children’s performance clothing, etc. In just a few years, Dinglou village villagers believe that the Internet business is the best opportunity to start a business, more and more young people return to the road to start a business. At present, more than 280 of the 300 families in Dinglou Village have Taobao online stores, accounting for more than 95% of the village. In 2017, the village Taobao performance clothing sales exceeded 300 million yuan. So far, Cao County has 9 Taobao towns, 74 Taobao villages, 3,650 Internet business, 50,000 active online stores, driving 200,000 people to work, attracting 50,000 people to return home to start their own businesses, driving 50,000 people out of poverty, driving 12 upgraded poor villages out of poverty as a whole. And, in 2021, Dinglou village was selected by Alibaba as China Taobao demonstration village, the village’s infrastructure, villagers’ living standards have improved greatly.
3.1.3 Internet business adjusts the industrial structure of rural characteristics
Under the influence of Internet technology, the express service industry, transportation service industry, and small agricultural enterprises continue to emerge. The after-sales service industry mediated by the Internet has also emerged with the development of Internet business, which has a great impact on traditional regional characteristic industries. From transaction methods to transportation process to after-sales service, e-commerce has promoted the comprehensive development of rural regional characteristic industries. 
3.1.4 Internet business adjusts the industrial structure of rural characteristics
The rapid development and popularization of Internet business has promoted the structural reconstruction of the production, transportation, sales, management, and after-sales of characteristic industries in rural areas, and promoted farmers’ entrepreneurship and employment. (Fag.1)For example, relying on the development of Internet business, Mei County, Xi’an City, Shanxi Province has formed a well-known brand demonstration area in Shanxi Province, creating a group company economy with kiwifruit industry as the main agricultural product, an agricultural product Internet business demonstration park economy, and a park agricultural product storage, transaction and processing economy. It has developed from farmers’ own planting and sales to an industrialized kiwifruit logistics distribution center, realizing the transformation of the kiwifruit industry and expanding the development of kiwifruit juice, wine and other fresh fruit deep-processing industries. Taobao, Tmall, Jingdong and other online sales platforms have official Stores have promoted the formation of the kiwifruit e-commerce industry chain in Meixian County . At the same time, it will drive the employment of personnel who are not directly involved in Internet business sales in industries such as planting, logistics, packaging, express delivery, etc., to form a characteristic agricultural product industry chain, increase farmers’ income, and promote local rural economic growth.
3.2.1 Promote rural Internet business to help revitalize the countryside
With the full implementation of the “rural revitalization strategy” in rural China, it promotes the transfer of capital factors to rural areas, explores the advantageous products of rural areas, promotes the coordinated development of rural and urban areas in China, and accelerates the realization of common prosperity.In particular, the application and popularization of Internet technology in rural areas, the deep integration of Internet and traditional agriculture promote the transformation of agricultural products industrialization and discover new economic growth points for traditional agriculture. Internet business in the context of digital economy is an important means to promote the integrated development of rural primary, secondary and tertiary industries, realize agricultural modernization and promote farmers’ income, and is an important way to get rid of poverty and get rich in rural areas.
3.2.2 Big data accelerates the digital transformation of rural areas
Modern society has moved into the era of digital economy, with emerging technologies represented by artificial intelligence, big data, cloud computing, etc. promoting the digital transformation of all walks of life in society and bringing new opportunities for agricultural and rural development. Digital technology is rapidly integrating with modern agriculture to form a big data agriculture industry, digital transformation and upgrading for traditional agriculture and solving the actual sales problems of agricultural and rural development. Digital technology has changed the way of supplying public services and provided low-cost sales channels for rural areas. 
3.2.3 Rapid development of Internet finance
Internet finance refers to a new financial business model in which traditional financial institutions and Internet enterprises use Internet technology and information and communication technology to realize fund financing, payment, investment and information intermediary services.The traditional payment method is commercial settlement through face-to-face transactions or through bank transfers. Mobile payment makes online transactions of Internet business more convenient. Farmers use Internet technology and mobile payment function to form industrial chains of various rural production factors, transform traditional farmers into new-age Internet users, and promote the development of new types of growers, farmers and farms.
3.2.4 Rural Internet penetration rate and the number of Internet users are increasing
With the development of Internet information technology, the number of rural Internet users and Internet penetration rate have gradually increased, which has created conditions for the development of rural e-commerce.According to the 49th Statistical Report on the Development Status of the Internet in China released by the Internet Information Center, as of February 2022, rural Internet users in China accounted for 27.9% (see figure 2).
3.3.1 Rural electric business quality and after-sales service system still needs to be improved
Rural electric business generally has small and scattered production sites, low standardization of agricultural products, regional brand influence is weak, deep processing development lags behind the obvious problems, product form mostly primary agricultural products, and farmers weak quality control ability, no formation of agricultural standards, the quality of agricultural products is not guaranteed. In addition, many young people returning to their hometown for rural Internet business understanding is not deep enough, in the actual operation process due to product quality, after-sales service and a series of problems brought about by the current development of rural Internet business has gradually become a prominent problem, due to poor service awareness of farmers, insufficient knowledge, after-sales service is difficult to ensure, so that once the product problems, can not be dealt with in a timely manner, it will affect the reputation.
3.3.2 Backward digital infrastructure in rural areas
Due to the vast and sparse rural areas in western China, the inconvenient transportation causes weak infrastructure, especially the rural digital infrastructure is not perfect. During the epidemic, the process of finding the Internet for Internet access classes was arduous, and many rural children climbed mountains to find signals and went to village committees to rub WIFI.  In addition, the overall level of agricultural mechanization needs to be improved and there is a lack of effective irrigation facilities; Finally, certain rural agricultural products logistics facilities are relatively backward. Although some rural Internet business has had certain conditions, but has not begun to use to work, many farmers will not use the Internet platform, rural areas lack of Internet business talent this problem is most common.
3.3.3 Rural Population Loss and Lack of Internet Talent
According to the data of National Bureau of Statistics, as of May 11, 2021, the main data of the seventh national census was released, the population living in the countryside was 509.79 million, accounting for 36.11%.
From Figure. 2, we can see that the number of rural population is declining and a large number of rural people are moving to the cities, and most of those who stay in the countryside are old people and people with low knowledge level. Most of the college graduates are willing to stay in the cities and work hard rather than return to the rural areas. It can be seen that the loss of rural population and the lack of technical talents in Internet business are the difficulties in developing Internet business in rural areas.(Figure.3)
3.3.4 Rural Internet business supervision is difficult
The quality of agricultural products is also one of the important issues in the development of rural Internet business, rural areas is a gap in food safety supervision, operators are mostly left behind, rudimentary equipment, management chaos, poor hygiene conditions, mostly in the form of family workshops, small factories, some small workshops are mobile vendors, no fixed location, no corresponding health permits. In addition, the rural area is wide, fewer supervisors, insufficient funds, even the township government departments do not even have testing equipment, supervisors only by intuitive detection, no instrumentation of food content and food additives, seriously affecting the issue of food safety of agricultural products.
- Conclusion and strategies
Digital transformation has become a strategic direction for rural development, Internet penetration and popularity in rural areas are steadily increasing, and Internet business re-optimizes rural economic factors and promotes rural economic transformation and upgrading. While seizing the development opportunities, the rural economy also needs to timely solve the problems in the transformation and upgrading of the rural economy.
Therefore, the government should accelerate the construction of rural infrastructure and improve the rural logistics system to ensure that agricultural products are delivered to consumers quickly. In addition, relevant government staff should strengthen the quality supervision of rural Internet business, adopt a reward and punishment incentive system, guide the rural Internet business industry to operate in compliance, guarantee the quality of agricultural products, and encourage farmers to create brands. Furthermore, relevant government departments should encourage college students to return to their hometowns to start their own businesses, increase subsidies for the introduction of talents, address the concerns and needs of children’s education and medical coverage, and retain professionals in the Internet business.Finally, the local government should organize rural Internet business and Internet business training to improve local farmers’ e-commerce and financial knowledge, effectively touching their interest and enriching their Internet knowledge.
- Andi Faisal Bahari, Jafar Basalamah*, Muhammad Ashoer, and Muh. Haerdiansyah Syahnur.Internet business ：how perception of benefits ,Risk ,and Ease in decision making .journal manajeman bisnis202112(2)177-186
- Li Su Nuan, Yin Chunying. The development path of rural e-commerce. Guangdong Sericulture,2020, 54(7) , р. 105～106
- Develop e-commerce to boost rural revitalization [ EB/OL ] [2021-08-30]. htps://www.chinanews.com.cn/
- Hu Yibo,Wang Tieshan,Niu Wenbo. Study on the development status of rural e-commerce in China in the era of digital economy. Wealth Today (China Intellectual Property),2020(9), р.22-23.
- Wang Yu. Research on the Development Opportunities and Challenges of Jiangsu Rural E-commerce under Supply-side Reform. Public Investment Guide, 2019, (24), р.50-51.
- Guo Zhengya.Analysis of the sustainable development ecosystem of rural e-commerce from the perspective of industrial chain.Business Economics Research,2017,31(24), р.73-75.
- Yao Yuehua. Investigation and thinking on financial support for the development of rural e-commerce—Taking Taojiang County, Hunan Province as an example. Wuhan Finance, 2017,23(10), р.144-145.
- Wang Junwen. The development trend and path selection of rural e-commerce in my country: Taking Gannan city of Jiangxi as an example . Qiu Suo, 2016, 14(10), р. 85-89
- JAEMIN HAN，DOOHEUM HAN.A framework for analyzing customer value of internet business.Jjournal of information technology theory and application，2011（03），p:27-37.
- Fu Zhongxian, Yi Jiangying, Wang Eixiang, Cheng Zibiao. Research on the development of e-commerce logistics in the old revolutionary areas of Sichuan and Shaanxi in the context of rural revitalization—Tongchuan District, Dazhou City, Sichuan Province as an example . Journal of Hunan Provincial Socialist College, 2020(4) р.361-376
- Wang Xiaodong. Promoting the development of “Internet + social services” with five innovative initiatives [EB/OL]. (2020-01-0) [2020-08-30].http://www.xinhuanet.com/info/2020-01/07/c_138684381.htm.
- Liang Shih-Fu, Peng Xiong-Qian. The current situation of rural e-commerce development and countermeasures . China Logistics and Purchasing, 2020, 19, р.45-46
- Hu Yibo,Wang Tieshan,Niu Wenbo. Study on the development status of rural e-commerce in China in the era of digital economy. Wealth Today (China Intellectual Property),2020(9), р.22-23.
- National Bureau of Statistics [ EB/OL ] [2021-08-30]. http://www.stats.gov.cn/
- Liu Yuzhi, Duan Shengxian. The differentiated development of rural e-commerce logistics based on rural revitalization.Logistics Science and Technology,2019,42(10), р.53-56
- National health commission of the Peopl’s Republic of China http://www.nhc.gov.cn/
- Tan Baokui, Yu Yu, Wang Yanan, Zhang Qin. Opportunities and challenges for rural e-commerce development in Hubei Province under the background of “Internet +” . Value Engineering, 2019, 38(16), р. 55-58.
Для цитирования: Yang Yang. Internet business for Сhina’s rural economic development in the context of digital transfoermation: opportunities and challenges // Московский экономический журнал. 2022. № 5. URL: https://qje.su/otraslevaya-i-regionalnaya-ekonomika/moskovskij-ekonomicheskij-zhurnal-5-2022-47/
© Yang Yang, 2022. Московский экономический журнал, 2022, № 5.