China’s urban e-commerce market is nearing saturation after years of explosive growth, a trend leading China’s online retailers to address the untapped markets in rural areas.

Nearly 50% of the country’s 1.36 billion population lives in rural areas; however, less than 30% of rural residents are online and only 10% have bought things online, according to iResearch. AliResearch, the research arm of Alibaba, has estimated that China’s rural e-commerce market will reach RMB180 billion (around US$29 billion) by 2014 and exceed RMB460 billion by 2016.

After its landmark IPO this year, Alibaba has rural e-commerce in its sights, with cross-border online shopping and data analysis the other two of its three strategic focuses. Over the next three to five years, Alibaba expects to invest RMB10 billion (around US$1.6 billion) in constructing infrastructure and logistics systems in rural China. The plan targets the building of 1,000 county-level operation centers, which will provide services for 100,000 villages countrywide.

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Emma Lee

Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at lixin@technode.com.