Alibaba invests 4.5 billion yuan in online services firm to boost rural strategy in China

Alibaba Group, China’s largest e-commerce company, has invested 4.5 billion yuan (US$717 million) in a Chinese rural online services platform as part of its continued push to expand business in the country’s rural areas.

The investment in Huitongda Network Co, a subsidiary of Jiangsu Five Star Appliances Co, will see both companies work together on supply chain logistics, warehousing and technology to improve e-commerce infrastructure in rural areas.

Huitongda, which provides online merchandising and marketing to retail outlets, currently covers over 15,000 towns in 18 provinces, with a network of more than 80,000 stores. It helps offline stores sell goods via e-commerce and also provides infrastructure for e-commerce retailers to sell to rural residents.

The investment comes as Alibaba looks to make its rural strategy one of its three core strategic development plans over the next two decades, according to the company’s chief executive Daniel Zhang Yong. As part of its Huitongda partnership, Alibaba also wants to test out its New Retail strategy of integrating online and offline commerce in rural areas.

Rural areas have become a battlefield for China’s e-commerce giants as online sales growth slows in urban centres where the market has become saturated.