A busting country fair.	Li Binghai serving a prospective customer.	Stalls of flowers and cosmetics.

LI BINGHAI stands amid his racks of fabrics of various colors and textures, hopefully scanning the crowd for likely customers. He has been setting up his drapery stall at the town and village markets near his home for the past two decades. Business, however, could be brisker.

From Bike to Trike to Car

Donghuishe, in Pingshan County, Hebei Province, is a moderately well-off town of more than 30,000 residents. In common with other towns and big villages in China, it holds a market every five days.

On Donghuishe market day, stalls selling everything from cooking utensils to farm tools line both sides of its 400-meter-long commercial street. Farmers' markets resumed when China started its reform and opening up. Initially, farmers sold their home produce, such as fruits, vegetables or self-made farm tools, and spent the proceeds on buying in the goods they needed. These days country fairs are manned by full-time professional vendors whose stalls bristle with manufactured products.

Li Binghai grasped the opportunity to branch out from farming as a sole means to a living in 1978, at the onset of the reform and opening-up policy. Under the previously planned economy there was no free circulation of commodities; rural retail business was dominated by the Rural Supply and Marketing Cooperative system -- a market arrangement for rural areas under the planned economy. During the days of scarce commodities, it was impossible to buy as much as a washrag or pair of socks without a special purchase certificate. Li started his vending career peddling household comestibles, such as sesame oil, corncobs and apples, which he transported by bicycle. His other equipment comprised a single steelyard.

During the thirty years since, Li’s resourcefulness and diligence have paid off. After five years he was able to buy a motorized three-wheeler and six years ago became, as he proudly states, “The first vendor in the county to own a car.” He continues to labor hard during the farming season. The rest of the time he is a canny vendor.

Flourishing Country Commerce

Vendors at country fairs are exempted from related taxes since the central government implemented a series of preferential agricultural policies which also raised the consumption level of rural dwellers. Li, whose drapery stall earns him RMB 12,000 a year, and his fellow vendors can reckon on making a 15 percent profit. This is confirmed by Dr. Huan Pingqing of Renmin University’s research into countryside consumption. State Development and Reform Commission of China statistics show that a revival in the rural consumer market occurred in 2005. That year its contribution to national gross retail sales increased 3.8 percent, as compared with the urban 0.7 percent increase. Dr. Huan’s research shows that rural-dweller consumption expenditure in 2006 surpassed that of urban residents in Hebei Provinces. This expansion he attributes to the increase of surplus laborers working in the larger towns.

A promising rural market, however, has attracted giant producers and retailers. The Ministry of Commerce signed a memorandum of understanding regarding promotion of village and township markets with P&G in April 2007. P&G are to develop products catering specifically to rural markets. Supermarkets and department stores run by corporate retailers are now seen in rural towns and even some large villages. This is a move that challenges rural vendors like Li Binghai. As he says, “Customers are far pickier these days because of the increased purchasing options open to them. The ever-harder bargains they drive affect my income.”

Beware Brand Awareness

The absence of style-conscious young and middle-aged country dwellers from the traditional marketplace contributes to Li's financial headaches. The greater proportion of rural consumers either works in the cities, which precludes the possibility of going to country fairs, or is disinclined to buy the goods they sell. It was six years ago that fabric vendor Guo Junting’s school-age son refused to wear clothes made from his wares. “From that year on, my turnover went into decline. In the late 1990s, I would generally make about RMB 400 at each fair, but these days my takings are RMB300 at the most,” grumbles Guo. For Li Binghai and Guo Junting, the avilability and popularity of ready-made garments is another reason why business is less brisk. People are no longer prepared to take the time necessary to have their clothes tailored.

The brand-savvy younger generation, raised since the advent of television in every household, would rather pay more for quality-guaranteed brands than bargain for what could turn out to be shoddy goods, having long since grasped the concept of added value. Their main consuming concern is keeping pace with their peers. Surveys carried out by Horizon Research reveal that 57.5 percent of rural-dwelling respondents buy Diao Pai washing powder and 47.6 percent use Rejoice shampoo, both of which are widely advertised.

Liang Lijun, 18, a Qinman Garment carrier bag proudly proclaiming itself a “Listed CCTV Brand” hanging from his bicycle handlebars, says that he and his peers generally shop at downtown supermarkets or shopping centers. Jia Jianghong has become a trendsetter among his circle of friends since he began making clothes shopping forays into Beijing. “We are less focused than our parents were on buying at the lowest price possible because we’re better off. That means we can afford to take texture, workmanship and brand, as well as price, into consideration when clothes shopping.”

Dr. Huan says that the traditional country marketplace focuses on local farmers; it offers a means to self-sufficiency while avoiding the cutthroat competition of the macro-environment. Despite being a car owner, Li Binghai is still more farmer than businessman. Yet the rural consumer market, albeit having experienced great development, remains at a relatively low level. The already fading prosperity of conventional country market vendors will grind to a halt when the countryside economy falls prey to brand loyalty. At that point, professional retailers and more heavily populated townships will instead promote the tertiary industry and overall rural urbanization.