Effects of E-commerce on Suppliers and Clients

Jing Cai , Adam Szeidl

This project evaluates the impact of a business-to-business and business-to-consumer e-commerce platform on the industry producing the Chinese writing brush, a tool that was used for writing in ancient China and remains popular today. Jing Cai and Adam Szeidl study a famous location of production in Jiangxi province thought to account for the majority of writing brush sales in China. The supply chain of the writing brush is organized in two layers: (1) firms producing intermediate inputs, among which the main ones are the brush and handle; (2) firms assembling and selling the final good. Key to this study is a recently developed online trading platform (both B2B and B2C) designed for trades involving the writing brush industry in the study's location. The platform should facilitate transactions (i) between intermediate- and final-good-producers in this location, and (ii) between final-good producers in this location and consumers everywhere. This should improve access to business partners, and also generate a positive trust effect for consumers because the location is famous for its high quality.

Before the introduction of the platform, baseline survey of 805 firms in the local industry was conducted in summer 2018, which included almost all producers in both layers of the supply chain. The researchers collected detailed firm performance data and also price, quantity, and a measure of product quality. In April 2019, when the platform was still in trial mode, a baseline survey of firm-to-firm transactions was conducted, which resulted in network data including transaction values. At this time the main intervention was also introduced: personalised training to use the platform was provided to 50% of the businesses in the study sample. In addition, when a treated owner did not have a smartphone, one was provided for her/him. After the intervention take-up was 67% among treated firms and 5% among untreated firms. This project will conduct four more surveys of these firms (partially funded by PEDL) in the summers of 2019, 2020, 2021 and 2022. The researchers also intend to conduct a survey of consumers and some additional interventions to uncover mechanisms.

The project has great potential to impact policy. The researchers are in contact with CIIT, which is the key government department in China designing and implementing policies to promote firm growth, for whom e-commerce for SMEs is a major policy priority. If the platform is found to improve firm outcomes, CIIT intends to scale it up first in other industries in Jiangxi province, and then potentially throughout China. This gives potential to reach hundreds of thousands of firms in China. Through CIIT, there is also potential for the results of the survey to be applied to platforms in East Africa and the researchers also have the opportunity to present their findings to a broad segment of African policy makers via the Institute of New Structural Economics at Peking University, which has been involved in the training of hundreds of government leaders in African countries.


Jing Cai

University of Maryland

Adam Szeidl

Central European University