OUR first stop is Qingyanliu, known as China’s No. 1 online village. It’s in Zhejiang Province’s Yiwu, a small city known worldwide for its small commodities.

The Yiwu International Trade Center is the largest small commodity wholesale market in the world and boasts more than 200,000 visitors every day.

From mostly farmland to a village of rising buildings, Qingyanliu is a microcosm of the country’s rapid economic development in recent decades. Only in 2008 did it become known as a place for Internet entrepreneurs who operate their online stores on China’s e-commerce giant Alibaba.

Alibaba’s initial public offering in the past September at New York Stock Exchange set a record for being the biggest IPO in the world at US$25 billion. On November 11, also known as Chinese Singles Day, Taobao posted revenue of US$9.3 billion. Alibaba founder Jack Ma was listed as one of the 10 most influential people in the world in 2014 by AFP.

About 1,700 locals live in the village although another 2,000 hailing from across the country now call it home. Most of them are Taobao store owners. This year total annual sales in the village is expected to reach 3 billion yuan (US$480 million).

Over a month ago, Premier Li Keqiang visited Qingyanliu and was impressed by the entrepreneurs.

“I am inspired by you,” Li said. “You explore a huge market, a virtual one, yet make real money.”

Unlike other villages which few villagers stay and work on the farms because of the nation’s on-going urbanization rush, instead there are warehouses, logistics companies, advertising agencies, packing companies, schools teaching Photoshop and fast-food restaurants in Qingyanliu.

Mornings are quiet. But activity picks up speed in the afternoon, when workers are packing commodities, trucks are being loaded and customer service representatives are answering questions from online shoppers. Tapes hiss, computers beep and vehicles roar — these are the sounds of Qingyanliu.

In 2008 the village was nearly empty.

The story begins in 2005, when farmers there were getting rich by making and selling small commodities. About 200 five-story houses were built in the village and they rented rooms or floors to vendors working at the nearby wholesale market. However, the market was moved in 2008 and the tenants left along with it.

Villager Liu Wengao encouraged everyone to rent their houses to people who want to run “Taobao stores.”

“The village is only a few kilometers from the city center and Yiwu International Trade Center,” Liu says. “It is right next to a large freight market, and there are many empty houses. It is the perfect place for online store operators.”

Liu has been instrumental in the development of e-commerce in both Qingyanliu and Yiwu.

The 45-year-old is from a farmer’s family and says he works 15 hours a day and seldom takes a vacation.

He has many titles including managing director of the China Electronic Commerce Association and chief of the Qingyanliu Village E-commerce Development Office.

After calling upon villagers to “offer cheap rents to Taobao store owners, Liu says he started organizing weekly brainstorming meetings for small Internet entrepreneurs.

Li Lai, who rented an apartment from Liu to start an online store, remembers how easy it was to start an online store.

“You just need to rent a 20-square meter room, buy a second-hand computer and connect to the Internet to start,” Li says. “Most of us are college graduates.”

Li now owns several houses and warehouses in Qingyanliu and gives Liu a great deal of credit for the village’s success.

“Liu gathered us to brainstorm many things like how to attract more clicks, what commodities sell best and how to design webpages,” Li adds.

Within a few months Liu says he realized the village’s online retailers sold so few goods, meaning they couldn’t get lower prices from wholesalers.

He says he organized the online store owners to buy wholesale goods together, yet sell them separately. He says he also asked everyone to contribute in their area of expertise whether it was webpage design, writing or photography.

This in effect formed a “supermarket” in the center of Qingyanliu in which online store owners in the village could copy a product’s digital information (proposals, photos, webpage designs) for free, he says. Once the goods have been ordered online, all they have to do is pop over to the “supermarket” to pick them up, Liu says.

This essentially shifted them from a consumer-to-consumer business model to B2B.

Reaching a limit

He says using the exact same proposals and designs has made them stronger and gives a 2009 example. He says that summer there was a solar eclipse and one entrepreneur proposed selling special glasses so people could watch without damaging their eyes. Each store, Liu says, sold thousands of glasses every day during the peak.

In 2010, the village had 2,000 plus online stores and turnover was over 2 billion yuan, up from 800 million the previous year. Revenue is expected to hit 3 billion yuan this year, but Liu cautions, “There is a limit as the village’s size is fixed.”

Some online store operators have already moved out. According to a report by Taobao.com, more than 10,000 online stores have moved out of Qingyanliu because they had outgrown it. The report also says over 90 percent of Yiwu’s Internet entrepreneurs started their business in Qingyanliu.

For his part, Liu keeps moving from one task to the next.

“At first I just wanted to help fellow villagers rent their houses, later on I wanted to help these small entrepreneurs succeed,” Liu says. “Now I try my best to push e-commerce forward.”

He is updating his “Qingyanliu Model.” His new plan is starting a smart storage center. Currently he has raised more than 10 billion yuan to establish such a center in Chengdu, Sichuan Province.

“In the smart center everything is highly efficient,” he says, showing a blueprint. “A printer prints 400 pieces of courier receipts every hour, a worker in the warehouse can take 50 orders an hour and goods on conveyor belts are automatically sent to different delivery companies.”

Liu say Yiwu’s e-commerce growth will stagnate because most customers are from nearby provinces who pick Yiwu products partly due to cheaper shipping fees and quicker delivery time.

To open the southwestern China market, they need a warehouse in a location that allows customers in the region to receive goods as fast and as cheap as Zhejiang customers.

“Not everyone understands me,” Liu says. “I have been doubted many times. But I want to do good things for my hometown and since I helped the industry get started, I need to keep it running.”