China's low-tier cities have become one of the key drivers in the country’s economy, the vital increment for Internet players and the super target of investors.
JD Digits (京东数科), a Chinese fintech and technology company under the e-commerce giant JD.Com, announced a strategic investment in a community-based lifestyle app Shenghuoquan (生活圈) developed by Jianwang (简网). The two parties will cooperate closely in serving rural area customers to improve online-offline operation efficiency, the construction of smart cities and some business related to JD MO Media.
"Jianwang's operation ability in low-tier cities is absolutely amazing, and the abundant new users are what we valued," said Xuling, the vice president of JD Digits. "The cooperation will assist JD Digits in its service expansion to expand our digital technology downward and to build a multi-scenario marketing ecosystem in our platform."
According to QuestMobile's report on China's 2018 Mobile Internet, the active users in tier-three cities and below reached 618 million last year, making 54.6% of the total online population. Moreover, of the top 10 App with the most monthly active users (MAU), nine of them are driven by low-tier cities more than tier-one and tier-two ones.
For rural areas consumers, their needs of product diversity, low cost and market vitality have been ignored for long. As the Internet premium in metropolis faded, more attention is turned to the once-forgotten place, Jianwang is one of the early movers.
The company has set the concept to let one app serve all local needs. By developing the Shenghuoquan app, it provides community, transaction and other local services online, which greatly improved efficiency and reduced costs of rural area users. The six-month retention rate was over 30% with a low customer acquiring cost very close to that of Tencent.
Jianwang has been focused on the low-tier city from its inception. Its current business spans on Hebei, Shandong, Henan, Jiangsu, Inner Mongolia and so on. In average, the Shenghuoquan's daily active user represents 10% of local populations, the MAU amounts to 50% of local adults population.
Internet penetration and consumption upgrading have brought customers from low tier cities from offline to online. Both users increase rate and penetration has been showing a promising market.
E-commerce platforms such as JD.com, Alibaba and Pinduoduo have all participated in business expansion in rural areas. However, they are still only at the stage of doing sales promotion. No one has yet to move down the rural area's value chain of the industry where the truth growth and potential lie.