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Journal of Resources and Ecology >

2024 , Vol. 15 >Issue 6: 1618 - 1630

DOI: https://doi.org/10.5814/j.issn.1674-764x.2024.06.018

Rural Revitalization and Ecotourism

How Taobao Village Empowers New Urbanization: Understanding the Mechanisms and Paths

  • PANG Xinsheng ,
  • ZHUO Wenjun , * ,
  • JI Yuguo
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  • School of Economics and Management, Beijing Forestry University, Beijing 100083, China
* ZHUO Wenjun, E-mail:

PANG Xinsheng, E-mail:

Received date: 2023-12-15

  Accepted date: 2024-04-30

  Online published: 2024-12-09

Supported by

The Ministry of Agriculture of China Scientific Research Project(08200127)

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Abstract

The proliferation of new digital villages, exemplified by Taobao villages, is profoundly influencing production, livelihoods, urban-rural relations, and overall life within contemporary Chinese villages and catalyzing the process of new urbanization. This study comprehensively examines the intricate interplay among Taobao village, mobile Internet, and the paradigm of new urbanization. It contends that a Taobao village stands as a quintessential emblem of new urbanization, with grassroots entrepreneurs actively engaging in both domestic and global production and consumption networks facilitated by information technologies. This engagement effectively transcends traditional spatial constraints, thereby reshaping the status, scale, and functionality of villages. Moreover, Taobao village emerges as a pragmatic solution to the lingering challenges of conventional urbanization, uniquely positioned to guide China’s transition into the new stage of developmental and facilitate its rural revitalization strategy. Furthermore, employing panel data on 31 provinces and cities from 2013 to 2021, this study systematically investigates the through which Taobao villages influence the trajectory of new urbanization. The results reveal that Taobao villages directly and substantially help elevate urbanization levels. Furthermore, mobile Internet penetration mediates this influence. Intriguingly, the influence of Taobao villages on urbanization exhibits conspicuous regional disparities and spatial diffusion patterns. As such, efforts to enhance integration, interaction, and complementary synergies among regional Taobao villages should be contingent upon the specific contextual nuances and local conditions.

Key words： Taobao village; mobile internet; new urbanization

Cite this article

PANG Xinsheng , ZHUO Wenjun , JI Yuguo . How Taobao Village Empowers New Urbanization: Understanding the Mechanisms and Paths[J]. Journal of Resources and Ecology, 2024 , 15(6) : 1618 -1630 . DOI: 10.5814/j.issn.1674-764x.2024.06.018

1 Introduction

In 2011, China achieved a significant milestone as its urbanization level surpassed 50%. With expansive rural landscapes and a substantial agricultural populace, China has innovatively embraced a dual urbanization paradigm. This model encompasses a top-down urban agglomeration centered around cities, especially major urban hubs, and a bottom-up, on-site urbanization strategy unfolding across the vast rural expanse. The latter is propelled by township enterprises, serving as the driving force, and small towns, functioning as pivotal carriers (Cheng, 2022). These two complementary models synergistically facilitate the occupa-tional and spatial migration of a considerable rural demographic encompassing both permanent residents and transient populations. As the forces of globalization gain momentum and emerging technology industries take center stage, the concentration of production factors has intensified within economically dynamic urban centers. Consequently, urban agglomeration around large cities has become the predominant theme shaping China’s urbanization trajectory in the 21st century. The “first half” of China’s urbanization has been significantly influenced by the vital role played by bottom-up urbanization. Nevertheless, the rapid pace of urbanization has inevitably lead to challenges about the quality of urban development. Moreover, the growing divide between urban and rural classes has precipitated a substantial exodus from rural areas, exacerbating economic and social issues such as rural regression and the decline of small towns. These challenges loom large in the landscape of China’s ongoing urbanization journey.
Meanwhile, with the rapid expansion of global e-commerce, “Taobao village” in China offers a unique perspective and successful model for leveraging online platforms to drive regional economic transformation. Typically, e-commerce is recognized as a vital tool for facilitating the circulation of goods and services, predominantly in urban and developed regions. However, Taobao village illustrates the innovative use of e-commerce in rural settings, effectively bridging traditional rural economies with the global market.
With the rapid evolution of information technology and substantial reduction in barriers to Internet access, e-com- merce and mobile payment have become increasingly prominent. China has also seamlessly transitioned into the mobile Internet era. As of 2022, the number of Chinese netizens surpassed 1.067 billion, with an Internet penetration rate of 75.6%. Notably, the Internet penetration is rural areas is 61.9% ① . The extensive reach of the Internet has significantly enhanced the interconnectedness between urban and rural areas, fostering a two-way flow of production factors. This has created new characteristics in the development stage of both urban and rural production and consumption systems (Zhao and Peng, 2018). The traditional markers of local development potential, such as economic level and population size, are gradually yielding ground to the importance of connectivity among spatial organizations in specialized divisions of labor. This shift has substantially mitigated the scale hierarchy between urban and rural regions, creating a new barrier for the movement of people, capital, and resources. Further, the return of production factors to rural areas has been facilitated through expanded channels (Luo, 2020). An illustrative example of China’s urban and rural transformation in the mobile Internet era is the explosive growth of Taobao villages (or towns) ② . The genesis and progression of Taobao villages signify a comprehensive reshaping of material space and production systems in rural areas through e-commerce. This phenomenon, born out of China’s information age, is fundamentally altering the flow dynamics between urban and rural factors established over the past three decades.
As a burgeoning phenomenon within the realm of new economic geography, Taobao village has garnered attention from both domestic and international scholars. Research predominantly delves into the spatial distribution, influencing factors (Xu et al., 2017; Xin and Qiao, 2018), formation mechanism, industrial layout, classification (Zhu et al., 2016; Lan et al., 2022a), and rural governance dynamics of Taobao villages (Zhang et al., 2019), and the rurality and rural culture embedded within Taobao villages (Sun, 2021; Guo, 2022). Some also explore the rural urbanization practices within these settings (Chen and Zhang, 2018; Lan et al., 2022b). Scholars widely concur that, propelled by the impact of “Internet+”, e-commerce is gradually permeating various strata of Chinese society, leading to a transformative spatial evolution from “traditional to industrial to urban, finally, to Taobao villages” in certain rural areas of China (Zhang et al., 2016). The rural transformation exemplified by Taobao village is seen as a viable pathway for optimizing regional spatial patterns and overcoming challenges in urbanization (Wang et al., 2023a). However, few examine and provide empirical evidence on the mechanisms and pathways of new urbanization development in Taobao villages, dwelling primarily on theoretical frameworks.
The agglomeration and fragmentation observed in Taobao villages serve as a microcosm of China’s current economic era. Aligning with the overarching goals outlined in the national rural revitalization strategy, emphasizing “prosperous industries, livable ecology, civilized rural customs, effective governance, and prosperous life”, most Taobao villages currently excel in fostering prosperous industries. While notable progress has been made in this dimension, significant challenges persist in other areas. The Chinese leaders emphasizes that urban-rural integration serves as the “accelerator” for rural revitalization. However, the envisaged new urban-rural relationship, characterized by urban-rural complementarity, mutual industry-agriculture promotion, and shared prosperity, is yet to be fully realized. This poses certain constraints on comprehensively advancing rural revitalization. Given that Taobao village is a new phenomenon born out of China’s information age, extant research remains nascent. Hence, we urgently need research to comprehensively understand and address the dynamics associated with Taobao village (Fig. 1).
Fig. 1 The number of Taobao villages in China during the 2009-2021

2 Theoretical analysis and research hypothesis

2.1 Taobao village and new urbanization

Taobao villages, as an emerging rural industry cluster in the Internet era, have undergone an initial stage of formation marked by rural entrepreneurs’ persistent exploration of untapped market niches, resulting in entrepreneurial breakthroughs and impactful demonstration effects. This phenomenon is a collaborative effort involving local governments, farmers, social organizations, and e-commerce enterprises, contributing to the emergence of localized urbanization. This process facilitates the dual descent of both the central players and spatial infrastructure, reinvigorating dormant urbanization drivers from the grassroots level. Specifically, online merchants can harness the Internet’s long-tail effect, seamlessly connecting offline niche products and physical stores to the broader online marketplace. Simultaneously, China’s rural areas continue to have strong ties rooted in blood relations, kinship, and geographic affiliations, creating an intricate web of social connections that can function as a rudimentary form of credit source to a certain extent (Zhu et al., 2023). The ripple effect of these interconnected relationships exhibits noticeable diffusion within close spatial proximity. Supported by proactive local government initiatives, this network’s diffusion radius and efficiency rapidly expand (Wang, 2019). Building on this foundation, entrepreneurs returning to the villages, newly formed farmer collectives, and rural intellectuals acquainted with advanced knowledge and cutting-edge technology assume pivotal roles in driving e-commerce development throughout the industrial growth and diffusion phases. This facilitates a substantial flow of resource elements back to the rural landscape. A symbiotic interplay of information, capital, and technology unfolds, effectively forming a dy- namic spatial framework for harmonizing urban and rural realms. This consequently creates a potent driving force fueling the rapid expansion of the new urbanization process. Thus, the “Taobao village” model effectively promotes both local and neighboring urbanization. As economic activities increase, rural areas gradually evolve into communities with urban characteristics and small towns. This bottom-up urbanization strategy not only promotes balanced and sustainable urban development but also comprehensively facilitates the realization of new forms of urbanization (Fig. 2).
Fig. 2 Development model between Taobao village and new urbanization

2.2 Positive interaction between Taobao villages and the Internet

In contrast to urban areas, the Internet economy assumes a more pronounced role in the advancement of counties and rural regions, particularly in remote locales with limited endogenous resources. The reduction in the urban-rural digital divide, shifts in interaction dynamics, and amplified social engagement collectively create a fresh platform for real industry progression. This novel impetus, underpinned by mobile Internet penetration, is especially pertinent for areas marked by gradual industrialization (Si and Cao, 2022). Communities embracing the mobile Internet era are dismantling the traditional paradigm of incrementally focusing on primary industries and actively engaging in e-commerce endeavors facilitated by online retail platforms. Through channels including direct and proxy sales, they have created a unique “farmer + online merchant” dynamic and “triple-industry integration”, fostering a landscape of localized part-time production. This creates a transformative surge in non-agricultural employment and production, ushering in local economic growth.
Moreover, the “free” and “inclusive” nature of the Internet has ushered modern and market-based concepts into the rural tapestry of China. Consequently, this has broadened the cultural horizons within rural enclaves. Furthermore, it has catalyzed the evolution of rural life, harmonized urban and rural values, and popularized contemporary technologies within new villages. Together, these factors have modernized villagers’ lifestyles. Further, Taobao villages have undergone continued agglomeration and fission, creating novel business models and expanding spatial requisites. Yet, conventional rural functional zoning, spatial arrangements, and related configurations struggle to accommodate the demands of industrial convergence and extended value chains. Consequently, the progressive restructuring and optimization of rural spatial arrangements have propelled the adoption of more intensive and efficient land utilization practices. These endeavors have gradually extended into township domains and beyond, engendering a panorama of intensified spatial urbanization. The symbiotic interplay of these three facets coalesces to cultivate a fresh genre of urban-rural dynamics, galvanizing the emergence and progression of this newfound relationship paradigm (Fig. 3).
Fig. 3 The regulation mechanism of Mobile Internet between Taobao village and urbanization paths

2.3 Spatial effects of Taobao village’s influence on the level of new urbanization

Significant disparities exist in the extent of Taobao village agglomeration across various regions. According to the “2020 China Taobao Village Research Report” by the Ali Research Institute, in 2020, over 90% of Taobao villages were concentrated in the eastern region. These villages, exemplifying traditional e-commerce development, have experienced consecutive annual growth. Conversely, the western region faces constraints stemming from imbalanced Internet economy development, weak competitiveness, and underdeveloped foundations (Wang, 2021). Indeed, the number of Taobao villages in China’s western region is merely 1.5% of that in the eastern region, underscoring the substantial geographical divide. The dynamic progression of rural e-commerce and evolution of rural communities amidst the urbanization process reciprocally drive each other (Han, 2019). Hence, the influence of Taobao villages on the urbanization level may exhibit regional heterogeneity, as illustrated in Fig. 4. Drawing from the diffusion of innovation theory, the growth, division, and dispersion of e-commerce clusters engender discernible attributes of proximate replication within physical space (Mei and Jiang, 2020). Consequently, phenomena such as labor concentration, the diffusion of innovative knowledge, and the sharing of resources manifest as economic externalities. In this context, the impact of Taobao villages transcends the confines of local urbanization levels, extending its influence to neighboring areas through the spillovers of human capital, technology, knowledge, and capital.
Fig. 4 Spatial effects of Taobao villages on the level of new urbanization
Hence, this study presents the following hypotheses.
H1: Taobao village construction promotes new urbanization.
H2: Mobile Internet positively moderates the relationship between Taobao village construction and new urbanization.
H3: There is regional heterogeneity in the impact of Taobao village construction on the level of urbanization under the moderating effect of mobile Internet.
H4: Taobao village construction has a spatial spillover effect on the level of urbanization under the moderating effect of mobile Internet.

3 Research design

3.1 Model selection and setting

This study examines the impact of Taobao villages on China’s urbanization levels employing a two-way fixed effects model. The fixed effects model is an empirical approach particularly suited for panel data where variations are observed across individuals rather than over time. This methodology effectively addresses endogeneity concerns arising from factors that remain static and unobservable, consequently enhancing the model’s overall estimation precision. Further, this study examines the mediating influence of mobile Internet penetration in the relationship between Taobao villages and new urbanization. To explore this aspect, we adopt a similar approach to that of Wen et al. (2005) as follows.
First, the following model is used to examine the impact of Taobao villages on the level of urbanization:
U r b i , t = α 0 + α 1 t b c i , t + α m c o n t r o l i , t + λ i + η i + ε i , t
Second, the direct impact of mobile Internet penetration on the level of urbanization is explored using the following model:
U r b i , t = α 0 + α 2 n e t i , t + α m c o n t r o l i , t + λ i + η i + ε i , t
Third, Taobao villages and mobile Internet penetration are simultaneously included in the model for joint significance tests:
U r b i , t = α 0 + α 1 t b c i , t + α 2 n e t i , t +                     α m c o n t r o l i , t + λ i + η i + ε i , t
Fourth, to measure the moderating effect of mobile Internet use on the relationship between Taobao villages and urbanization level, the interaction term between Taobao village construction and mobile Internet is included in the model as follows:
U r b i , t = α 0 + α 1 t b c i , t + α 2 n e t i , t + α 3 t b c i , t n e t i , t +                     α m c o n t r o l i , t + λ i + η i + ε i , t
In these models, Urbi,t signifies the urbanization level of region i during period t. tbci,t stands for the count of Taobao villages in region i during period t. neti,t represents the mobile Internet penetration rate within region i during period t. controli,t encompasses an array of control variables. a0 denotes the intercept term. a1 signifies the regression coefficient linking Taobao village construction to urbanization level. a2 signifies the regression coefficient relating mobile Internet to urbanization level. a3 reflects the regression coefficient depicting the interaction term between Taobao village construction and mobile Internet. am embodies the regression coefficient pertaining to control variables. λi and ηi represent the individual and time fixed effects, respectively. εit symbolizes the stochastic disturbance term.
Fifth, to test the spatial spillover effect of Taobao village on new urbanization, the following spatial Durbin model is constructed following Wang et al. (2023b):
U r b i , t = α 0 + ρ W 1 U r b i , t + β 1 t b c i , t n e t i , t + β 2 c o n t r o l i , t +                     θ 1 W t b c i , t n e t i , t + θ 2 W c o n t r o l i , t + λ i + η i + ε i , t
where, W represents the spatial weight matrix employing a binary spatial geographic adjacency matrix. ρ denotes the spatial autoregressive coefficient, while β1 and β2 symbolize the coefficients corresponding to the core and control variables, respectively. θ1 and θ2 represent the coefficients associated with the spatial lag terms of the core and control variables, respectively. The remaining variables retain their earlier definitions.

3.2 Variable setting and description

(1) Dependent variable: Regional urbanization level
The urbanization level is gauged by the proportion of the non-agricultural population to the total regional population in each area, serving as an indicator of the regional urbanization extent (Gao et al., 2023).
(2) Independent variables: Taobao village development level
The level of Taobao village development is quantified through the annual count of Taobao villages, as documented in the China Taobao Village Research Report publicly disseminated by the Ali Research Institute (Liu et al., 2023).
(3) Moderating variable: Mobile internet penetration
The mobile Internet penetration rate is used to assess the level of mobile Internet integration. Areas marked by high mobile Internet penetration hold substantial potential for fostering the emergence of Taobao villages and “new farmers.” This enhances the likelihood of rural laborers engaging in non-agricultural employment, including wage labor and self-employment (Wu et al., 2022).
(4) Control variables
Bottom-up new urbanization, characterized by grassroots-driven urbanization initiatives, is intricately linked to various factors such as geographical surroundings, economic status, resource allocation, cultural heritage, technological advancement, infrastructure development, and policy context unique to each locale. These are described in further detail below.
1) Economic development level
Urbanization is a manifestation of economic and social progress, emerging from the interplay between geographical transaction patterns and spatial division of labor structures. The degree of urbanization exhibits a strong correlation with the level of economic advancement (Chen et al., 2009).
2) Industrial development level
The urbanization process is inherently linked to industrial resource concentration, factor agglomeration, transformative industrial dynamics, and the symbiotic relationship between urban and rural industries. This process optimizes the allocation of production systems across urban and rural domains, aligning with industrial and economies of scale (Zhang and Zhu, 2008).
3) Population migration
The widening income disparity compels surplus rural labor to migrate to urban areas, driven by the aspiration to enhance personal wealth and elevate family consumption. Simultaneously, this migration enriches information and resource reserves, priming individuals for entrepreneurial endeavors in their hometowns (Li and Mao, 2021). These aspects collectively contribute to small town development.
4) Scientific and educational attainment
Urbanization is bolstered externally by the radiating influence of towns and internally by the pursuit of superior educational resources in urban locales. The integration of urban and rural education stands as a pivotal advancements towards strengthening rural education and preserving cultural heritage (Cheng, 2009).
5) Infrastructure quality
Infrastructure constitutes a pivotal nexus within the urban system’s effective operation, intricately connecting numerous industrial chains. Better infrastructure significantly ameliorates the spatial layout of urban areas, fosters optimal functionality of town cores, and augments the comprehensive carrying capacity of urban environments. These factors collectively impact the harmonization of urban and rural landscapes (Jiang et al., 2009).
6) Institutional framework
The “commercialization rate of agricultural products” reflects the circulation efficiency of the agricultural product market and marketization level of the economy. Higher commoditization rates generally imply more effective market access policies and regulatory frameworks, indicating the efficiency of supply chains and logistics systems, which are important indicators of a sound institutional environment. Therefore, it is used as a proxy variable for “institutional environmental conditions” (Ren and Song, 2018).
7) Population density
Population density forms a fundamental basis for realizing urbanization. Labor scarcity operates as a pivotal constraint on urbanization dynamics. Regulating the population aggregation direction and depth mirrors changes in the spatial distribution of urban and rural landscapes. The bidirectional flux of population inflow and outflow yields distinct spatial implications for the urbanization rate (Li et al., 2021).
Details are shown in Table 1.
Table 1 Variable descriptions
Indicator type Variable selection Specific indicators Calculation method Indicator meaning
Dependent variable Urbanization level Regional urbanization rate The ratio of urban population to total population The level of urbanization in various regions
Explanatory variable Development level of Taobao villages Number of Taobao villages in the region Number of Taobao villages The development level of Taobao villages in various regions
Moderating variable Mobile Internet Mobile Internet penetration rate Regional mobile internet penetration rate The development level of the Internet in various regions
Control variables Economic development level Per capita GDP Per capita GDP The impact of economic development level on urbanization
Industrial development level Proportion of output value of the secondary sector of the economy GDP of the secondary sector of the economy/Gross regional product The impact of industrial development on urbanization
Proportion of output value of the tertiary sector of the economy GDP of the tertiary sector of the economy/Gross regional product
Employment proportion of the secondary industry of the economy Secondary sector employment /total regional employment
Employment proportion of the tertiary sector of the economy Tertiary sector employment/total regional employment
Population migration Income gap between urban and rural residents Per capita disposable income of urban residents - per capita disposable income of rural residents The impact of population migration on urbanization
Urban registered unemployment rate Urban registered unemployment/total employment in the region
Technological education level Ratio of education, science, culture, and health expenditure to local financial expenditures Expenditure on education, science, culture, and health/total expenditure of local finance The impact of technological development and educational foundation on urbanization
Number of college students in the region Number of degrees awarded to regular undergraduate and vocational students in higher education institutions
Infrastructure level Per capita social fixed assets investment Regional social fixed assets investment/regional total population The impact of infrastructure construction on urbanization
The impact of marketization on urbanization.
Highway mileage Highway mileage
Institutional environment Commercialization rate of agricultural products Regional agricultural product volume/total regional agricultural product output The impact of population density on urbanization
Population density situation The proportion of urban population per unit urban area Regional urban population/urban area The impact of infrastructure construction on urbanization

3.3 Data sources and description

Rural e-commerce was relatively nascent prior to 2012. Further, the number of Taobao villages in each region was relatively stable during that period. Rather, Taobao villages flourished across China from 2013, spurred by the national policy support for rural e-commerce. To ensure data availability and comprehensiveness, this study anchors its analysis from 2013 onwards, spanning the 2013-2021 period. The research scope encompasses the 31 provinces (autonomous regions and municipalities) of China, excluding Hong Kong, Macao, and Taiwan. The primary data sources include the China Statistical Yearbook, EPS database, China Internet Network Information Center, and Ali Research Institute; these are supplemented by provincial and municipal statistical yearbooks, along with various publicly available information. Any absent data points are remedied using an interpolation technique. Table 2 lists the descriptive statistics of the main variables. Notably, logarithms are applied to the moderating variables C1, C6, C9, and C11 as part of the analytical approach.
Table 2 Descriptive statistics
Variable name Symbol Observations Mean Standard deviation Minimum Maximum Unit
Urbanization rate urb 279 61.236 12.042 26.230 89.300 %
Number of Taobao villages tbc 279 115.265 319.421 0.000 2426.000 Count
Mobile internet net 279 59.091 11.649 34.100 90.883 %
Per capita GDP lnC1 279 10.994 0.416 10.172 12.173
Proportion of output value of the secondary sector of the economy C2 279 39.733 7.963 15.713 54.100 %
Proportion of output value of the tertiary sector of the economy C3 279 50.966 8.636 35.400 84.150 Log of currency unit
Employment proportion of the secondary sector of the economy C4 279 24.859 7.890 11.334 44.764 %
Employment proportion of the tertiary sector of the economy C5 279 48.706 8.504 33.482 81.076 %
Income gap between urban and rural residents lnC6 279 9.971 0.259 9.406 10.853 Log of currency difference
Urban registered unemployment rate C7 279 0.013 0.007 0.005 0.049 %
Ratio of education, science, culture, and health expenditure to local financial expenditures C8 279 0.281 0.042 0.176 0.388 %
Number of college students in the region lnC9 279 11.435 0.951 8.478 12.681 Log of count
Per capita social fixed assets investment C10 279 5.082 1.821 1.129 9.758 Currency unit
Highway mileage lnC11 279 11.730 0.840 9.466 12.898 Log of kilometers
Commercialization rate of agricultural products C12 279 0.048 0.078 0.000 0.425 %
Urban population density C13 279 0.502 0.235 0.093 1.233 People per unit area

4 Empirical analysis

4.1 Baseline analysis

Stata 16.0 is employed for regression analysis using a two-way fixed-effects model. Model 1 exclusively has Taobao Village as the explanatory variable and urbanization level as the explained variable. In Model 2, the mobile Internet variable is introduced. Model 3 incorporates several control variables into Model 1. Model 4 includes the control variables in Model 2. The results are presented in Table 3. Both the number of Taobao villages and mobile Internet directly influence the urbanization level at the 10% and 1% levels, respectively. These effects hold after including the control variables and remain significant at the 5% and 1% levels, respectively, with coefficients of 0.017 and 0.152, respectively. Consequently, hypothesis H1 is supported.
Table 3 Benchmark regression results
Variables Model 1 Model 2 Model 3 Model 4 Variables Model 1 Model 2 Model 3 Model 4
tbc 0.006* 0.017** C8 -5.988 -3.791
(0.000) (0.016) (5.016) (4.805)
net 0.301*** 0.152*** lnC9 10.613*** 9.160***
(0.028) (0.033) (2.448) (2.393)
lnC1 0.297 -2.104 C10 0.441*** 0.401***
(2.296) (2.117) (0.088) (0.086)
C2 -0.132* 0.043 lnC11 9.885*** 3.416
(0.079) (0.080) (2.625) (2.735)
C3 -0.172** -0.035 C12 -3.591 0.367
(0.074) (0.075) (3.039) (2.911)
C4 78.640*** 58.443*** C13 0.066 1.755
(11.781) (12.474) (1.156) (1.123)
C5 98.936*** 69.615*** _cons 50.055*** 37.924*** -5.811 -3.587
(10.711) (9.428) (0.471) (1.195) (6.679) (6.598)
lnC6 11.208* 7.825 Pro Yes Yes Yes Yes
(6.417) (6.263) Year Yes Yes Yes Yes
C7 6.885 -3.940 N 279 279 279 279
(19.163) (18.705) R2 0.991 0.994 0.996 0.996

Note: *, **, and *** indicate significance at the 10%, 5%, and 1% levels, respectively. Robust standard errors are in parentheses.

4.2 Moderation effect analysis

The emergence of mobile Internet has redefined infrastructure, production factors, and collaborative structures. To assess the potential moderating effect of the mobile Internet on the relationship between Taobao village construction and the urbanization level, this study utilizes the moderating effect model described before. Model 5 focuses on examining the direct impact of Taobao villages on the urbanization level under the moderating influence of the mobile Internet. In Model 6, control variables are introduced in Model 5. Model 7 takes a distinctive approach by decentralizing the mobile Internet penetration rate and number of Taobao villages to mitigate covariance effects. Subsequently, interaction terms between decentralized mobile Internet and Taobao village construction are constructed, and integrated into the model for analysis. The results are outlined in Table 4. Model 5 demonstrates a direct transmission mechanism between the number of Taobao villages and urbanization rate, with a significant positive impact at the 5% level. Model 6 reveals that each incremental Taobao village increases the regional economic level by 0.021 units. This impact remains statistically significant at the 1% level. Model 7 shows that the interaction term between Taobao villages and decentralized mobile Internet positively affects the urbanization level at the 1% level. Thus, mobile Internet positively moderates the positive influence of Taobao village construction on urbanization levels. Consequently, hypothesis H2 is supported.
Table 4 Moderating effect results
Variables Model 5 Model 6 Model 7 Variables Model 5 Model 6 Model 7
tbc×net 0.007** 0.021** 0.042*** lnC9 10.587*** 10.587***
(0.000) (0.014) (0.033) (2.462) (2.462)
lnC1 0.138 0.138 C10 0.450*** 0.450***
(2.302) (2.302) (0.089) (0.089)
C2 -0.127 -0.127 lnC11 9.821*** 9.821***
(0.079) (0.079) (2.636) (2.636)
C3 -0.170** -0.170** C12 -3.237 -3.237
(0.074) (0.074) (3.028) (3.028)
C4 79.661*** 79.661*** C13 0.101 0.101
(11.781) (11.781) (1.161) (1.161)
C5 98.565*** 98.565*** _cons 50.044*** -152.934*** -152.830***
(10.966) (10.966) (0.469) (30.239) (30.238)
lnC6 11.001* 11.001* Pro Yes Yes Yes
(6.446) (6.446) Year Yes Yes Yes
C7 7.098 7.098 N 279 279 279
(19.207) (19.207) R2 0.991 0.996 0.996
C8 -6.430 -6.430
(5.073) (5.073)

Note: *, **, and *** indicate significance at the 10%, 5%, and 1% levels, respectively. Robust standard errors are in parentheses.

4.3 Robustness test

(1) Endogeneity problems
Taobao villages, as a byproduct of new urbanization’s evolution in the Internet era, present a multifaceted reflection of urbanization’s progression and the advancements in information technology witnessed within rural domains. Simultaneously, the urbanization process serves as a pivotal determinant affecting the extent of information technology adoption. Moreover, the effective utilization of information technology tends to be higher in regions with heightened urbanization levels. Thus, a bidirectional causal relationship may exist between Internet usage and the level of urbanization, especially in regions with relatively lower Internet penetration rates. Hence, this study systematically examines the potential endogeneity effect from two distinct perspectives. First, divergence in data sources and statistical methodologies can contribute to endogeneity concerns. While the regional urbanization rate is documented within the China Statistical Yearbook, the tally of Taobao villages is provided by the Ali Research Institute. Given the intricate assortment of elements influencing local economies, the scope of factors affecting regional urbanization extends beyond the 13 pertinent indicators scrutinized in this study. Thus, some missing variables may influence the regional urbanization level. Second, in alignment with established literature, this study addresses endogeneity through a two-stage regression approach involving lagged explanatory variables. This entails a primary regression on the lagged urbanization level, followed by another round of regression to further address the endogeneity concern (Cheng et al., 2022). The regression analysis results (Table 5) reveal that the impact of Taobao village on the local urbanization level remains conspicuously positive at the 1% level. However, this effect exhibits temporal lag compared to the initial one-period valuation. This temporal lag in impact is largely consistent with the findings of the baseline analysis.
Table 5 Endogeneity test results
Variables No control variable Adding control variables
tbc×net 0.016*** 0.011***
Pro Yes Yes
Year Yes Yes
N 248 248
R2 0.980 1.000
F 202.52 144

Note: *, **, and *** indicate significance at the 10%, 5%, and 1% levels, respectively.

(2) Robustness test
This study employs two distinct methods—winsorizing outliers and excluding specific municipalities—to rigorously test the robustness of the results. First, all variables are winsorized at the 1% threshold to control for the effect of outliers. Second, due to the economic and policy development disparities associated with municipalities and ensure the generalizability of the findings, this study deliberately omits four specific municipalities directly under the Chinese central government: Beijing, Shanghai, Tianjin, and Chongqing. The results are presented in Table 6. Across both methodologies, the influence of Taobao village on the urbanization level remains notably positive at the 1% and 5% levels. The consistent results underscore the robustness of the findings.
Table 6 Robustness test results
Test
variable		 Winsorizing at 1% for
both extremes		 Excluding municipalities directly under the central government
No control variable Adding control variables No control variable Adding control variables
X 0.017*** 0.010*** 0.007*** 0.004**
Pro Yes Yes Yes Yes
Year Yes Yes Yes Yes
N 247 247 243 243
R2 0.992 0.997 0.980 0.985
F 210.49 128.40 233.22 264.80

Note: *, **, and *** indicate significance at the 10%, 5%, and 1% levels, respectively.

4.4 Spatial heterogeneity analysis

Taobao villages’ influence on the urbanization level exhibits three overarching spatial evolutionary characteristics: a progressively diversified range of spatial functions, swift restructuring of spatial arrangement, and marked escalation in spatial concentration. The notable dissimilarities stemming from China’s diverse regional attributes, including geographical position, economic standing, cultural heritage, resource allocation, and technological advancement, may lead to spatial disparities in the impact of Taobao villages on the urbanization level. From a multi-scale geographic distribution perspective, Taobao villages are unevenly spatially distributed. At the provincial level, Taobao villages exhibit a distinct clustering tendency along the peripheries of the eastern coastal region, especially on Zhejiang Province. At the county level, clusters manifest predominantly in the East while displaying a more scattered distribution in the Midwest and Northeast. Furthermore, a discernible horizontal gradient pattern emerges at the administrative unit level, spanning the geographical spectrum of “East, Center, and West.” To probe the potential presence of heterogeneity in the impact of Taobao villages on the urbanization level, we perform heterogeneity analysis for varying regions and list the results in Table 7.
Table 7 Heterogeneity test results by region
Variables Eastern region Central region Western region
tbc×net 0.021*** 0.015*** 0.000
(0.033) (0.027) (0.000)
lnC1 3.180* -4.036* 8.679***
(1.844) (2.193) (2.714)
C2 -0.063 0.560*** -0.128
(0.062) (0.154) (0.096)
C3 -0.094 0.484*** -0.145
(0.058) (0.163) (0.100)
C4 51.949** -1.761 -6.827
(19.772) (20.350) (20.837)
C5 98.301*** 184.172*** -47.726***
(15.454) (19.520) (17.827)
lnC6 -11.473* -10.792 24.270***
(6.189) (11.292) (5.929)
C7 33.530** -23.429 32.637
(12.446) (15.528) (38.754)
C8 -5.983 7.963* 17.410***
(4.651) (4.255) (4.995)
lnC9 5.333 -3.899 6.676***
(4.331) (4.977) (2.066)
C10 0.668*** 0.275** -0.152
(0.088) (0.107) (0.112)
lnC11 -1.670 -6.210 -26.531***
(2.104) (4.672) (3.180)
C12 -2.501 4.868** 6.367
(3.454) (2.293) (6.775)
C13 2.314** -2.599 0.303
(1.112) (2.219) (0.836)
_cons 14.206 0.930 30.921
(35.448) (53.024) (31.087)
Pro Yes Yes Yes
Year Yes Yes Yes
N 72 99 108
R2 0.997 0.983 0.971

Note: *, **, and *** indicate significance at the 10%, 5%, and 1% levels, respectively. Robust standard errors are in parentheses.

Table 7 demonstrates that the coefficients signifying Taobao villages’ impact on the local urbanization level in both the eastern and central regions are significantly positive at the 1% level, exhibiting a strong correlation. Conversely, the western region is less influenced by the development of Taobao villages. This spatial distribution characteristic, to some extent, mirrors the gradual pattern of spatial diffusion inherent in information technology across distinct levels of economic development, thus corroborating hypothesis H3.
The eastern region, endowed with a robust e-commerce foundation, well-established transportation infrastructure, an open market environment, and efficient resource allocation, serves as fertile ground for the rapid proliferation of Taobao villages. Concurrently, the sustained “fission-type” growth and concentrated developmental trajectory of Taobao villages have led to their strong presence in the eastern region. Indeed, the total count of Taobao villages remains predominantly higher in the eastern region, especially across the six coastal provinces. Coupled with an ever-strengthening spatial agglomeration effect, this expanded base continues to propel urban-rural integration in the eastern region. The eastern cities, supported by their robust e-commerce ecosystem, remain at the forefront of this trend.
In central provinces, rich cultural heritage takes precedence as Taobao villages predominantly focus on agricultural products, traditional handicrafts, and local specialties. These regions, often marked by traditional handcraft workshops that have faced substantial competition from large-scale industrial factories, have experienced rapid rejuvenation. The emergence of Taobao villages showcasing strong folk culture, such as Xiaying Village in Jianchi Township, Shiyan, Hubei Province (specializing in turquoise handcrafts), and Huozhuang Village in Lingjing Township, Xuchang, Henan Province (recognized for social fire props), further illustrates this revitalization.
However, the formation of Taobao villages in the western provinces faces relatively more challenges due to factors like economic standing, geographical location, transportation access, industrial foundation, and resource allocation. These Taobao villages are often anchored in local natural endowments and traditional skills. These industries possess a profound local affinity, rendering them less amenable to large-scale replication or realization. Hence, the spatial diffusion and echo effects tend to be less pronounced. Furthermore, these villages are widely dispersed and frequently situated around provincial capitals or gateway cities. Consequently, the spillover effect remains less conspicuous. Noteworthy examples include Xinhua Village (known for traditional handmade silverware) in Caohai Town, Dali, Yunnan Province, and Cangfanggou Village (celebrated for honey production) in Urumqi, Xinjiang Province.

4.5 Spatial spillover effect analysis

After conducting a spatial autocorrelation test, the global Moran index demonstrated significant spatial correlation between Taobao village and the urbanization level. Subsequently, several tests, including the LM, Wald, and Hausman tests, were applied to determine the appropriate model. The spatial Durbin model with two-way fixed effects, controlling for both time and region, was deemed most suitable. The results are depicted in Table 8. The spatial regression coefficient of Taobao village, denoted as Wx, is 1.157, signifying a significant positive impact at the 1% level. This substantiates the presence of a spatial spillover effect emanating from Taobao Villages, thereby influencing the surrounding regions. The direct effect coefficient of Taobao village is 2.052, signifying a significant positive impact at the 1% level. In tandem, the indirect effect coefficient is 1.223 and significant at the 5% level. Thus, a Taobao village not only significantly affects the urbanization level within its own region but also positively affects neighboring regions. This can be attributed to the rapid attraction of neighboring villagers to participate in the Taobao village economic model due to the wealth effect. The swift increase in practitioners within a specific geographic range fosters a neighborhood effect, leading to a cascading scale effect. As industrial agglomeration intensifies, external production factors flow into Taobao villages, culminating in the gradual formation and expansion of industrial clusters. These clusters then stimulate the concurrent growth of specialized services and auxiliary support structures, thereby facilitating the rapid construction of a robust industrial ecosystem. Thus, hypothesis H4 is supported.
Table 8 Spatial spillover effects of Taobao villages on the level of new urbanization
Variables x Wx Direct effect Indirect effect Aggregate effect
tbc 1.057*** 1.157*** 2.052*** 1.223** -0.830
(0.0954) (0.0918) (0.105) (0.532) (0.590)
lnC1 0.531*** 0.514*** 0.496*** -0.480*** 0.0164
(0.0790) (0.0721) (0.0713) (0.104) (0.0996)
C2 0.114 0.0989 0.0533 -0.705 -0.652
(0.0738) (0.0723) (0.0854) (0.432) (0.482)
C3 0.324*** 0.302*** 0.273*** -0.548* -0.274
(0.0750) (0.0706) (0.0743) (0.317) (0.343)
C4 1.524*** 1.499*** 1.575*** 0.480 2.055**
(0.247) (0.233) (0.241) (0.867) (0.938)
C5 -0.0899 -0.0847 0.0779 0.135 0.0567
(0.0672) (0.0742) (0.108) (0.642) (0.734)
lnC6 0.219*** 0.0208 0.243*** -0.255 0.498**
(0.0591) (0.0960) (0.0596) (0.199) (0.224)
C7 -1.161*** -1.189*** -1.137*** -1.212*** -1.0748*
(0.0491) (0.0486) (0.0441) (0.0524) (0.0429)
C8 -0.144*** 0.0921 0.141*** 0.0259 -0.115
(0.0456) (0.0798) (0.0487) (0.174) (0.197)
lnC9 0.0319 0.0714 1.0515 0.205 0.257*
(0.0463) (0.0723) (0.0434) (0.136) (0.143)
C10 0.441*** -0.461** 0.409*** -0.437 -0.0282
(0.154) (0.183) (0.148) (0.315) (0.347)
lnC11 0.0133 0.304*** 0.0731 0.683** 0.756**
(0.0420) (0.107) (0.0573) (0.269) (0.314)
C12 0.107*** 0.0102 0.143*** 0.055 0.234**
(0.0221) (0.0060) (0.0596) (0.111) (0.124)
C13 0.217 0.389 0.333 0.705 0.652**
(0.138) (0.123) (0.154) (0.432) (0.482)
Pro Yes Yes Yes Yes Yes
Year Yes Yes Yes Yes Yes
ρ 0.4195***
(0.0474)
N 651
R2 0.175

Note: *, **, and *** indicate significance at the 10%, 5%, and 1% levels, respectively. Robust standard errors are in parentheses. x is the original effect of independent variables; Wx is the spatial lag effect of independent variables, representing the impact of spatial spillover effects.

To ensure the robustness of the results, the inverse geography and economic distance matrices were used to test the spatial spillover effect of Taobao village on regional urbanization. Again, the findings consistently corroborate the main conclusions; these additional results are not provided here due to space limitations.

5 Conclusions and policy recommendations

5.1 Conclusions

We show that Taobao villages in China play a substantial role in elevating urbanization. This influence is not rooted in the traditional notion of agricultural population transfer from rural to urban regions, which typically relies on higher government interventions. Instead, it stems from a local urbanization phenomenon fostered by the concerted endeavors of local governments, farmers, social organizations, and e-commerce enterprises. This collaborative effort triggers a dual process: the increasing involvement of key stakeholders and activation of latent urbanization potential at the grassroots level over an extended period. Furthermore, mobile Internet penetration significantly amplifies the impact of Taobao village on urbanization through three primary channels: leapfrogging non-agricultural employment, comprehensive modernization of daily life, and intensified spatial urbanization. Regional disparities manifest in the interaction between Taobao villages and new urbanization, with pronounced positive effects observed in the central and eastern regions. The eastern region exhibits the most pronounced effect, while the western region exhibits relatively subdued effects. To address this divergence, the government should devise dynamic and tailored urbanization development strategies. Furthermore, the impact of Taobao village extends spatially, engendering substantial spillover effects. Essentially, the emergence of Taobao villages acts as a catalyst for the proliferation of similar economic models in neighboring areas. Consequently, neighboring Taobao villages can progress to the status of Taobao towns by harnessing the benefits of compact spatial organization, robust economic interconnectivity, and notable factor agglomeration advantages.

5.2 Policy recommendations

In the digital economy era, Taobao villages stand as quintessential examples of innovative urbanization and can help address historical challenges in spatial governance. The significance of Taobao villages extends beyond the variety and feasibility of their models; it includes their role in narrowing the information divide and bolstering villagers’ awareness of their rights. As Taobao villages navigate the intricate web of stakeholder interests and conflicts, their development strategies must be both nuanced and bespoke, aiming to cultivate a vibrant rural society characterized by unique cultural identities and robust autonomy. According, the following policy recommendations are proposed:
First, non-agricultural employment opportunities are urgently needed within these villages to prevent the rural exodus. By expanding the scope and industrial base of the rural economy and weaving it into the broader regional economic fabric, policymakers can facilitate structural advancements in traditional industries by introducing dynamic, non-agricultural elements. Second, rural culture should be strengthened while advancing modern living standards. This entails not only ensuring the unobstructed flow of resources and equal access to public services across urban and rural divides, but also preserving and enhancing the rich cultural tapestry defining rural life. By fostering culturally intact and adaptable communities, the self-sustaining engines of rural innovation can be activated. Third, spatial urbanization and governance require thoughtful reform. This involves drafting intentional industrial spatial strategies that cater specifically to the needs of Taobao villages, establishing modern residential and productive environments, and providing high-standard infrastructure and services. Concurrently, governance structures must be re-envisioned to cultivate an equilibrium between the market forces, governmental oversight, and villagers’ will, thus propelling the rural governance framework into a modern paradigm.

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