Research on the Developing Trend and Realizing Ways of Grain E-commerce in Hubei Province under the New Situation

School of Economics, Yangtze University, Jingzhou 434023, China

Abstract Hubei Province is one of the bases of commodity grain production in China and the major province of grain transfer, which has made an important contribution to the protection of national food security. According to the development demand of grain industry in Hubei Province and the national development plan of grain e-commerce, this paper analyzes the development trend of grain e-commerce in Hubei Province, and expounds the main factors restricting the transformation and upgrading of grain circulation mode in Hubei Province: lack of e-commerce talents; risks for food enterprises to conduct transactions in the platform-type e-commerce; risks in the security of third-party payment. Finally, this paper points out the effective ways of further development of grain e-commerce in Hubei Province.

Key words Hubei Province, Grain e-commerce, E-commerce platform, Precision marketing

1 Introduction

Hubei Province firmly seizes the opportunity of the explosive growth of rural e-commerce, gives full play to its own advantages, and formulates theThree-yearActionPlanforAcceleratingtheDevelopmentofRuralElectronicCommerce(2016-2018). According to this, Grain Bureau of Hubei Province puts forward the work target of "vigorously developing grain e-commerce, bringing all policy-oriented grain into the electronic trading platform while building the electronic trading platform into an important channel of grain trading". The connotation of this goal is to popularize and apply the "Internet+ grain" model, improve the trading platform, expand the scope of services, and form a new form of buying and selling grain on the Internet. It provides new platform support for reducing grain transaction costs, improving grain trading efficiency and benefits, promoting the structural reform of grain supply side, promoting the transformation and upgrading of grain industry, and protecting the interests of food growers.

In this new form, we can get the opportunities brought by technologies such as cloud computing, big data and social media to improve the level of Internet infrastructure. It will also face the shortage of professionals in grain e-commerce, platform construction difficulties and the existence of a series of security risks in the operation of e-commerce and other issues. Therefore, on the basis of in-depth analysis of the grain e-commerce development laws, technological progress trends and the corresponding infrastructure, human capital basis, we must find out the deep-seated causes of the problem, and put forward some effective ways to promote the rapid and healthy development of grain e-commerce industry, which is the purpose of this article.

2 Basic analysis on the development of grain e-commerce in Hubei Province

2.1Brandforgraine-commercedevelopmentIn the era of e-commerce, grain trading must focus on the brand marketing to enhance consumer awareness of the brand of food enterprises, as well as recognition and loyalty, so that products get closer, faster and shorter to reach the hands of consumers. Therefore, it is necessary to develop green grain industry, create grain brands with regional characteristics, expand the capacity of deep processing, increase the added value of grain products, and continuously promote new consumption[1].

In recent years, through the policy guidance, Hubei Province forms the superposition effect, realizes the optimized resources disposition, and causes the grain product to present the good situation in which the traditional product and the characteristic product advance side by side, and the markets complement each other. There are not only traditional staple grains and food products such as "Guobao", "Fuwa" and "Honghulang", but also characteristic grain and oil products such as nutrient-enriched rice, ecological organic rice, prawn and rice in the region of rivers and lakes, selenium-rich rice, high-quality coarse cereals and so on. As a result, the diversification needs of the food market have been met. So far, the processing industry of grain and oil in Hubei Province has created 23 well-known trademarks in China, 100 famous brands in Hubei Province and 144 famous trademarks in Hubei Province, and successfully cultivated a number of grain and oil brands with relatively high reputation and market share. In particular, the "Guobao Qiaomi rice" produced in Jingshan County, Hubei Province, was named "the most competitive brand in the market" by the Ministry of Commerce, and "China’s Famous Brand Agricultural Product" by the Ministry of Agriculture in 2006. In 2007, it was awarded as "China Famous Brand" by the General Administration of Quality Supervision of the People’s Republic of China. In 2009, the "Guobao" trademark was named as "China’s Well-known Trademark". These brands have laid an important foundation for the development of grain e-commerce in Hubei Province.

2.2Factorsforgraine-commercedevelopmentThe grain electronic commerce process mainly involves three big essential factors, namely the information flow, the capital flow and the material flow. Information flow is the first factor in the operation and development of grain e-commerce, which is of great value. First, as a carrier of information flow, the information platform itself contains valuable information. Second, it can promote the capital flow and material flow platform to achieve good operation. In view of this, Hubei Province attaches great importance to the construction of grain e-commerce information flow factors, and has made good progress and results. In 2016, the construction of grain informatization platform at the provincial level was the first in the national grain industry to pass the expert acceptance and approval, and it was also rated as one of the six advanced units for information security grade protection in the province. Capital flow is the link among food production enterprises, commercial enterprises and consumers, and banks are its core institutions. Hubei Province has made fruitful achievements in this regard. In 2015, Hubei Branch of the Agricultural Bank of China (ABC) innovated and launched the e-commerce platform for agriculture, farmers and countryside——"E Nong Guan Jia". Taking the field of rural commodity circulation, including grain, as the starting point, the platform serves the county’s four levels of customers——"producers+wholesalers+countryside stores+farmers". It builds up the county Internet financial ecosphere which integrates electricity merchants, finance, consumption and settlement.

At the end of 2016, "E Nong Guan Jia" achieved full coverage of 69 counties in the province[2]. Logistics is one of the important elements of grain e-commerce construction and development, and Hubei Province has done a lot of work. Since 2014, especially the cooperation parties ofRuralLogisticsDevelopmentStrategicCooperationAgreement, have given full play to the advantages of transportation, commerce, supply and marketing, media and other industries in the province, as well as the main role of EMS, S.F. Express and other leading enterprises, to build a rural logistics service system. At present, the "last kilometer" bottleneck on the development of rural e-business, including grain e-commerce, has been cleared, and the "last kilometer" of rural logistics has been unblocked.

3 Trend analysis of grain e-commerce development in Hubei Province

3.1Foode-commercetoenterthemobilee-commercephase

Mobile e-commerce is engaged in business activities through handheld mobile terminals such as mobile phones and palmtop computers. It has the characteristics of "safe, free from time and space restrictions, large potential users, easy to promote and use quickly and flexibly" and so on. It enables businesses to use the mobile Internet and social networks, through the provision of information users need to promote products, so as to achieve point-to-point precision marketing, mainly in the form of "WeChat" marketing and "Weibo" marketing.

With the arrival of the 4G era and the increasing attention of users to the use of fragmented time, the penetration of mobile e-commerce in the grain industry is on the rise. One reason is that the popularity of smart phones and the laying of mobile networks provide the necessary support for mobile end online shopping. In early 2017, Hubei Province opened 16 000 4 G base stations in rural areas, achieving 4G signal coverage in 25 000 administrative villages. At the end of June 2017, more than 250 000 farmers in 942 remote administrative villages across the province were connected to the mobile optical fiber network, with the highest broadband rate reaching more than 100 M[3]. Second, the large-scale promotional activities of network attract consumers to choose to use mobile shopping to fill the fragmented time. In 2017, Hubei Branch of China Mobile introduced a series of preferential services, such as "rural sound card", "50% discount on data plan", "dual SIM homesickness card". This laid a solid foundation for mobile e-commerce to enter the grain industry and carry out grain precision marketing. Third, "tri-networks integration" new business flourishes in rural areas. Hubei Telecom Co., Ltd. and Hubei Radio & TV Co., Ltd. jointly developed the "Happy New Countryside" IPTV program. Farmers can use computers, televisions and mobile phones to share information on three screens and share information with each other. They can also release information on the supply and demand of agricultural products, such as grain, through a management platform.

3.2Themarketingmodelofgraine-commercetobeplatform-orientedThe development of grain e-commerce platform provides a new opportunity to solve the problems of high transportation cost and farmers’ difficulty in selling grain in grain circulation. Since 2004, China has increasingly formed the grain electronic commerce mode, which is mainly based on the national policy grain electronic transaction and supplemented by personalized grain electronic commerce[4]. As an important member of the national grain electronic trading platform, the Hubei Grain Trading Center is responsible for the management and operation of the Hubei grain electronic trading platform, and gradually extends the service system to cities and counties and enterprises, to build a safe and efficient, standard, convenient and fast online grain purchase and marketing system. Through the national grain electronic trading platform, in 2016, the Hubei Grain Trading Center traded 1 906 600 t of national policy grain, 953 000 t of local policy grain and oil, and 3 600 t of grain for trade. It has played a major role in adjusting the structure of stock, ensuring the effective supply of the market, implementing the national grain purchase and sale policy, and implementing the macro-control of grain.

3.3Third-partypaymentstobeincreasinglyimportantforfoode-commercePayment problem has always been one of the bottlenecks in the development of food e-commerce, because in the grain electronic transactions, the buyer will consider whether the goods can be received and whether the quality of the goods is guaranteed, while the seller will consider whether the payment can be received. The result of the game is that neither party is willing to take risks first, which makes the transaction difficult or even impossible to carry out. In order to solve this problem and meet the market demand of synchronous exchange, the third-party payment emerges as the times require.

The so-called third-party payment is an independent organization with certain strength and credit guarantee. It adopts the way of signing contracts with major banks to provide the network payment mode of the transaction payment platform linked to the bank payment and settlement system. There are two types of third-party payment: one is the Internet-based payment enterprise headed by Alipay, which is to mainly pay online and join with large e-commerce websites; the other is the financial payment enterprise headed by UnionPay electronic payment.

At this stage, the third-party payment platform, which cooperates with Hubei grain enterprises smoothly, is mainly the second type. In 2015, the first pilot areas providing the agricultural products acquisition and payment services with UnionPay card included more than 10 provinces and cities such as Hubei. The grain purchase payment services with UnionPay card uses UnionPay card and a POS machine, to complete the transaction of 200 billion yuan, to help farmers easily solve the problem of receiving and paying grain. In 2016, the Hubei Provincial Branch of the Agricultural Development Bank raised 15 billion yuan in advance to ensure that farmers can sell their grain and will not reduce their income in the year of great disasters. At the same time, the Hubei Provincial Branch of the Agricultural Development Bank also insisted on providing high quality services for the farmers selling grain and offered loans immediately after grain is to be acquired. As soon as it is verified that the purchase enterprises have committed such acts as lowering prices, exceeding the standard, and defaulting on the sale of grain, and other acts of harming farmers, their loans will be cancelled.

4 Analysis of the problems in the development of grain e-commerce in Hubei Province

4.1LackoftalentsE-commerce market is a field with high demand for operability and practicality, having a need for a large number of skilled e-commerce talents who are adept at operation management. This kind of talented person needs to pass through the training and the electronic commerce practice to be able to form. In particular, mobile e-commerce needs to use high-tech for industry transformation, such as the use of big data, cloud computing to achieve precision marketing, operational planning and real-time monitoring of the project.

At present, there is a serious shortage of operational personnel and business leaders of grain e-commerce business in Hubei Province. The first reason is that there are a lot of left-behind women and the elderly in Hubei Province, the education level is relatively low, and there is lack of e-commerce awareness and operational skills. Many people’s concept of e-commerce is still at the primitive stage of "you can open an online store if you can surf the Internet", and they do not have a clear understanding of e-commerce business links. The second reason is that young people who really understand e-commerce and are active in thinking are not willing to go deep into the countryside and engage in the work of "grain e-commerce". With the economic development of Hubei Province, more and more jobs are created, and more people return home for local employment. At present, about 60% of the labor forces in Hubei Province remain in the province of employment, but the preferred place of employment is still Wuhan[5]. The third is the training of rural e-commerce talents scattered in a number of departments, part of the training institutions are not standard, so that the knowledge farmers learn can not adapt to the e-commerce development requirements, or they are even cheated.

4.2ProblemofsuccessfultransformationGrain e-commerce is not simply to move the grain sold below the line to the Internet for sale, but to build with the idea of e-commerce operation, architecture, design and promotion. During the whole building period, we should integrate, plan and design the business from the perspective of e-commerce strategy and management[6]. In other words, if we continue to use traditional marketing ideas to operate the new business model, there is a risk that e-commerce platform can not be continuously developed, or is even shut down. The reality shows that when building e-commerce platform, enterprises need to use the special line of stand-alone server platform to access the network, pay the independent server information fees and maintain the independent platform, so it is very expensive. Therefore, SMEs generally do not have the ability to build their own e-commerce platform[7]. Even if the enterprise borrows or draws on "http://www.cngrain.com/", "http://www.liangdawang.com/" and other mature, large-scale third-party e-commerce platforms, due to the serious phenomenon of competition homogenization, the brand grain quality and recognition is not high, which makes the bargaining power very weak. Finally, they can only fight on the price, resulting in low prices, thus losing the significance of the development of grain e-commerce business. In view of the above problems, Hubei Province is still taking the provincial grain trading center as the leading role, guiding the multi-market players to enter the market to trade[8].

4.3ProblemsofpotentialsafetyhazardGrain trading volume is often relatively large, and the requirements on security of funds and the speed of payment are higher than that of the general commodity trade, so solving the problem of large payment is the problem that Hubei’s grain e-commerce will inevitably face. Although the state has formulatedPaymentOrganization’sPrepaidCardServiceManagementMethod,PaymentOrganization’sInternetPaymentServiceManagementMethodand so on regarding the third-party payment and the on-line payment legal regulation, at present it does not have a law which is aimed at the mobile e-commerce.

Third-party payment has the characteristics of "loose market, virtual main body, network trading, electronic currency, instantaneous settlement", and there are some other problems, such as unclear regulatory bodies, and lack of industry management institutions. These make the relevant information of customers easy to be illegally stolen or divulged, and then lead to network fraud, so that the main body of food trading suffers economic losses. In addition, the third-party payment platform suffers from network attacks or failures, resulting in a decline in system efficiency or even paralysis, so that customers lose confidence in this new economic form of grain e-commerce. In 2017, the National Internet Emergency Center predicted that the number of network attacks using Internet smart devices will continue to increase, the security threats caused by the integration of the Internet and traditional industries will become more complex, and personal information and important data protection will receive more attention. The information sharing of network security threats has attracted much attention. These problems may cause greater security risks to the grain e-commerce in Hubei Province, especially to the third-party payment.

5 Ways to realize the further development of grain e-commerce in Hubei Province

5.1Usingvariouswaystotraine-commerceprofessionalsinthegrainindustryFirst, through extensive publicity, it is necessary to popularize e-commerce knowledge in the grain industry, strengthen the concept of e-commerce development, and raise the level of e-commerce awareness. Second, it is necessary to make full use of the existing education and training resources in Hubei Province, focusing on colleges and universities, professional training institutions, e-commerce enterprises, and association organizations to determine a number of training institutions and practice bases, to carry out grain e-commerce personnel training at various levels in different categories. Third, we should encourage university graduates to return to the hometown to start business, employment, and establish e-commerce industry reserve talent team. Fourth, as a bridge between farmers and the market, grain enterprises should actively introduce and train e-commerce professionals, promote the technological innovation of the information platform and the system innovation of e-commerce, and promote the development of grain e-commerce, to achieve a win-win situation between grain enterprises and farmers.

5.2Promotinggrainenterprisestoentere-commerceplatformmarketingmodesuccessfullyinallaspectsFirst, it is necessary to focus on cultivating and fostering large grain enterprises that have already begun to take shape in terms of scale and characteristics and have good prospects for development, to establish an e-commerce platform, and use it as a guiding and demonstration unit to gradually promote the formation of a unified grain e-commerce trading platform throughout the province. At the same time, by means of marketization, we should encourage grain wholesale markets, chain supermarkets, and grain stores to carry out e-commerce activities, and strengthen the construction of e-commerce platforms that integrate "above-the-line and below-the-line" grain management enterprises, to effectively broaden the grain marketing channels, and improve the efficiency of grain supply.

Second, for the Hubei Grain Trading Center to participate in the construction of the national grain electronic trading platform, we should integrate the resources of all parties, take advantage of the public network and platform, and make full use of the existing hardware and software. It is necessary to reduce investment in the development and purchase of hardware and software as far as possible, improve the efficiency of investment and the effect of use, and prevent low-level duplicate construction. It is also necessary to further improve the trading function and reduce the expenses incurred in grain circulation.

Third, it is necessary to guide small and medium-sized grain enterprises to select a third-party platform with the advantages of low input costs, deep value creation, and strong integration functions to conduct electronic transactions, to accept its "supply and demand information release and search, transaction establishment, payment and logistics" and other services.

Fourth, it is necessary to improve the brand effect, and enhance the quality of the core competitiveness. From the demand side, there is a need to develop special brand grain, and formulate special brand grain production procedures in accordance with the demand of brand on grain variety, quality, origin and so on. At the same time, it is necessary to establish and improve the grain quality safety credit system, speed up the realization of grain production and processing traceability, to ensure food quality and safety.

5.3Avoidingsecurityrisksinthird-partypaymentsFirst, the relevant government departments should strengthen the construction of grain mobile e-commerce laws and regulations, and formulate relevant policies and management system conducive to the development of grain mobile e-commerce. It is necessary to strengthen the supervision of grain markets under the Internet environment, standardize grain network trading behavior, and ensure the safety of users’ information and funds. The second is to select the grain growers with relatively high cultural literacy, and use the network to conduct e-commerce knowledge and technical training, so that they master the skills of online operations and implement online trading, and have the knowledge and skills to prevent network fraud. Third, the construction of the third-party payment information system should follow the relevant security standards, strengthen risk assessment and security protection, prevent illegal intrusion in various forms and ways, and ensure the stable operation of the grain e-commerce trading system and data security.