Markets in China’s largest cities are slowing and increasingly saturated. Many tech entrepreneurs are now pushing out into third- and fourth-tier cities and rural areas for future growth. As they do, enter a world where the texture and tempo of life can be quite different. Companies that want to thrive in small-town China must adapt to local logic. Those that do succeed are worth watching: they’re pioneering the strategies that are most likely to work in the emerging online markets of rural Asia and Africa.
Interest in this “other China” has grown in recent years with the rise of budget e-commerce platform Pinduoduo. Over 65% of its users come from third-tier cities and beyond, where incomes of less than RMB 3,500 (about $522) per month are the norm. Many are recent arrivals to e-commerce, buoyed by growing incomes, smartphone penetration, and 4G coverage.
Business media have dubbed this the “market outside the fifth ring road” (wuhuanwai shichang), referring to a Beijing orbital highway that draws a mental line between metropolitan China and the land beyond. In many ways, they are a world apart from the urban middle class that drove the first wave of e-commerce in China. The average spend on Pinduoduo is $6, compared to $60 on Jingdong.
As Pinduoduo CEO Colin Huang put it last year: “The new consumer economy isn’t about giving Shanghainese the life of Parisians. It’s about providing paper towels and good fruit to people in Anhui,” referring to a largely rural inland province. Alibaba has also got in on the act, launching a low-price shopping platform called Taobao Tejia.
Aside from shopping, a range of other apps have emerged catering to the needs and price points of small town and rural China. Short video app Kuaishou has become a channel for rural China, featuring family feasts on plastic stools and skits performed in farmyards. Compared to the more airbrushed, luxury aesthetic of rival Douyin, Kuaishou’s earthy (tuwei) feel is more relatable to its users, over 70% of whom earn less than RMB 3,000 a month.
Where there’s more time than money
The drop-off in income and education levels beyond the Fifth Ring is widely recognized. Less appreciated is a variable that slopes the opposite direction: free time.
Research by the Chinese Academy of Social Sciences (CASS) estimates that daily leisure time for residents of Guangzhou and Shenzhen has now fallen to around two hours, less than half that in the UK and US. Shanghainese and Beijingers fare little better.
Moving outside the Fifth Ring, a separate study by Professor Sun Jinyun at Fudan University found that working adults in lower-tier cities in Anhui, Jiangxi, and Zhejiang had an average of 5.8 hours leisure time each day. The typical lunch naptime was 55 minutes and over 20% of those surveyed played on their phones for over six hours a day.
Much of small-town China has a dearth of options for work or play, leaving residents underemployed, bored, or both. Across China, millions sit day and night in little corner stores (xiaomaibu) waiting for customers. It is little wonder then that apps aiming beyond the Fifth Ring are often designed to fill time, or even better, to monetize it.
News apps such as Qutoutiao and Huitoutiao that pay users through games that reward reading and sharing content. Pinduoduo entices budget-savvy consumers by incentivizing (and socializing) time spent shopping through group discounts. Damas (“big mamas”) in small-town China spend hours searching out bargains and rallying friends to save a few yuan on washing powder.
Younger peers in first-tier cities probably wouldn’t bother. Indeed, most apps for metropolitan China come with the underlying promise to help you save time (or at least feel like it); apps for chores, errands, getting around and planning your life. This efficiency imperative has also fueled demand for apps such as Dedao, which offers busy urbanites relief from “knowledge anxiety” (zhishi jiaolü) by squeezing the latest must-read book into a 15-minute audio summary.
Fed by disparities in free time and wealth, the emergence of a distinct constellation of apps for small town China reflects deep divides in Chinese society.
It seems natural that real-life inequalities are reproduced and refracted online. What is notable in China is that this virtual stratification is playing out vertically, through the emergence of distinct platforms, in addition to the horizontal sorting process that occurs between interest groups on the same platforms. This latter dynamic is more familiar in the US, where filter bubbles on social media have become a much-discussed topic.
Apps like Pinduoduo and Kuaishou may also give a glimpse of the future of the global internet. The International Telecommunication Union estimates that half the world will be online by the end of 2019. People in rural Asia and Africa make up most of the remaining 50%. As they come online—there are 16 million new connections a month in India alone—Chinese firms are already chasing them. Many of these new arrivals may relate more to the world outside the Fifth Ring than to global metropoles like Shenzhen or San Francisco.