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HUITONGDA Focuses on the Rural Market to Realize Digital Transformation
COVID-19 and China
Electronics. Image Credit: Austin Distel / Unsplash

► Against the background of IIoT development and rural revitalization, HUITONGDA is forming a new way to provide rural citizens with digital services, an innovation termed the ‘S2B2C mode.’

► The digital service platform customizes its services based on rural markets’ features, changing from a supply chain service provider to an ecological e-commerce and digital service platform.

During the Internet’s development, it has changed from being a consumer-oriented network to one with complex and deep connections to industry and infrastructure – the latest is IIoT. IIoT has become a pervasive trend these days, particularly in China. Moreover, the shock of COVID-19 has also promoted digital transformation in all walks of life, providing firms with more room to develop. With the growth of cloud computation, big data, AI, and IoT the ‘new industrial revolution’ wave has been carrying almost everyone along with it.

HUITONGDA is a tier-one digital service platform for the rural commerce, which puts China’s strategy for rural revitalization into practice, providing digital services to rural retail stores and clients in their upstream and downstream phases. After setting up, the firm innovated a new business model called S2B2C – a two-wheeled engine incorporating IIoT and intelligent retail, based on the demand and supply side.

Based on its unique S2B2C digital service platform, HUITONGDA’s rural e-commerce network has coverage for 20 provinces, 17800 towns and 0.1 million privately held shops. Additionally, its specific development mode attracted Alibaba’s strategic financing from April 2008, about CNY 4.5 billion. To be more precise, HUITONGDA has raised a total of CNY 6.3 billion over five rounds, and other investors include China Merchants Bank, Coastal Capital and Huaxia Life Insurance.

HUITONGDA’s development benefits from the promotion of new infrastructure and a rising rural market. The new infrastructure is a suitable strategy for China to catch the full power of the fourth technological revolution, fighting against the economic downturn caused by the COVID-19. During the COVID-19 crisis, export, consumption and investment decreased by about 4.6%, 9.68% and 12.06% respectively. To cope with this situation, new infrastructure should be able to stimulate domestic demand, helping corporations conduct digital transformation. As the epidemic situation led people to cultivate their daily digital habits, online services become the primary consumption way for the public, offering a good environment for HUITONGDA to develop. For instance, online retail has risen about 1100% this February compared with last year.

When it comes to the rural market, we can see massive opportunities, with a population around 0.6 to 0.7 billion and the consumption level of CNY ten trillion. Moreover, the retail power of the rural Internet also presented an increasing trend, from CNY 180 billion in 2014 to CNY 1690 billion in 2018. Differing from the urbanization development, the rural market is more like an original ecology, as people tend to consume based on a fixed set of familiar portals and people. Hence, HUITONGDA focuses on husband-and-wife shops, attracting more consumers in rural areas and expanding its businesses.

Except for the above exogenous forces, this digital service platform's success mainly comes from its change in the way of thinking. After recognizing rural dealers' features and needs, HUITONGDA started from the husband-and-wife shops and the appliance industry in 2012, helping these privately owned shops handle buying issues. For example, it allowed the husband-and-wife shops to buy qualified products at better prices and eventually selling to rural consumers. Three years later, the biggest problem became hard to sell. Hence, HUITONGDA came up with a 'Five Plus Energizations' solution – plus commodity, plus toll, plus finance, plus activity and plus community to these privately owned shops. Regarding the husband-and-wife shops as the center, the digital service platform created a new mode – platform plus e-commerce from 2015, serving over 0.1 million shops so far.

HUITONGDA also pays much attention to its R&D, forming a leading advantage in bid data exploration and application. Up to now, the firm has owned over 200 technical staff, over ten patents and 20 software copyrights. Additionally, it has constructed a completed big data asset system in rural areas, driven by mass data processing. Its core area of expertise set up three platforms – HUITONGDA Shopping Mall, SUPER Boss and Huizhanggui. HUITONGDA Shopping Mall is a B2B platform that offers the husband-and-wife shops convenient order management and transaction services. While for the Super Boss, it emphasizes on intelligent retail, a one-stop system. Lastly, Huizhanggui, a B2C platform, supporting the transaction both online and offline.

In a word, the development of HUITONGDA results from a beneficiary environment and its far-sighted strategies. With the coming of intelligence times, digitalization is an inevitable trend, online sales are also gradually penetrating the rural areas. Furthermore, the increasing market size in rural areas also offers the digital service platform a chance to grow. Combining digitalization and rural areas’ consumption, HUITONGDA enriches its services based on the husband-and-wife shop, and successfully builds an e-commerce service platform.

Editor: Luke Sheehan
ANALYST
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