Luohan Academy

Furniture-producing town’s brand-new journey started by embracing technology

Ten years ago, Shaji was just another impoverished town in China’s eastern Jiangsu province. Today, it is the country’s largest producer of furniture sold over the internet.

Shaji’s journey to the top of the e-commerce charts started by embracing technology. Entrepreneurs there found their online Taobao stores were far more lucrative than any selling they could do locally.

The town is living proof of how going digital presents an opportunity to pull the poor out of poverty and make an economy more inclusive.

That said, whether digital technology introduces more unwelcome consequences than benefits or widens, not narrows, the gap between winners and losers is a constant debate.

In Shaji’s case, digital technology had a low threshold for adoption: The skills to sell handmade furniture online were learned quickly and easily.

Shaji embraced technology at virtually no cost and found success by leveraging the power of digital platforms that facilitate economic and social integration.

Tying into a decentralised digital platform reduced the friction of finding and engaging new customers – and at very low cost and higher efficiency and volume than could be achieved through centralised planning and bricks-and-mortar operations.

China’s widespread adoption and application of digital technology validates the notion that a technology revolution doesn’t depend on any particular stage of economic development in a country.

For example, in less than 10 years, China’s e-commerce market has become the world’s largest, and mobile payments in the country have hit US$22 billion, over 100 times more than the US.

Wherever it has been adopted in the world, digital technology has enabled consumers not previously served well by commerce, to hop on-board and realise all the accompanying benefits.

E-commerce and the complementary industries it spawns – mobile payments, cloud services, logistics – allow for the rapid spread of knowledge and wealth. What we see universally is that the more technology penetrates a society, the more inclusive that society becomes.

How inclusive hinges on how well governments create a benign or nurturing macro environment for the private sector to prosper.

Policies that facilitate the public’s access to digital information and technology will be indispensable to full and effective digital penetration.

For all its boundary-busting benefits, we know digital technology also brings consequences.

While technology has so far created millions of jobs, there’s a fear that rapid development of artificial intelligence and shifts in skill requirements will lead to mass unemployment. Access to digital information can also be a double-edged sword, raising privacy concerns.

We are now at a pivot point, and it’s vital to regularly and honestly weigh and discuss benefits versus consequences.

Rather than letting fear hinder progress, the collective brainpower at Alibaba’s Luohan Academy has been attempting to define genuine threats and separate facts from science fiction. 

During the recently concluded World Economic Forum, we released a report titled, “Digital Technology and Inclusive Growth,” to do that.

AI will, in time, simplify redundant or complicated machine work or basic tasks performed by people and make businesses more efficient. As of today, it is far from technological maturity.

Every technological revolution has brought anxiety about job losses or replacement of humans by machines. And yet, global unemployment rates have remained relatively stable since 1991, when statistics became available.

This, despite nearly 1.6 billion people being added to the working-age population, an increase of 50 per cent.

Easy access to personal data and information required by service and product suppliers can raise privacy concerns.

But the dual dynamic of technology means it also brings with it the solutions – encryption technology and better and more-secure user-permission processes, for example – to address those concerns.

It is perhaps time to step back and examine a new paradigm for development. What we have seen in China over the past two decades, since the internet and e-commerce have taken hold, is that countries can find distinct growth paths, not just follow the lead and model of already-developed economies.

And that the path they take makes development more inclusive and sustainable. Time will tell, but the early results we have witnessed thus far are promising.

We don’t have all the answers at Luohan. But if you ever visit Shaji and survey its burgeoning furniture factories and the delivery companies, accessory shops and online store services that have mushroomed as e-commerce has taken off, you’ll have a hard time finding anyone who would argue the consequences of technology outweigh its benefits.

We fully expect to see the day when the success of Shaji is repeated over and over again, both across China and the rest of the developing world, lifting billions out of poverty and creating a truly borderless, global economy.


Long Chen  

Director of the Luohan Academy


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