China Horizon concluded that running its own small stores at a town level was difficult to manage. They suspended operations in Shandong and Jiangxi.

One of the major decisions in the new project was to focus all the company's resources on Henan with the goal of becoming profitable and improving the model further in that province, said Clingman.

Speaking about the reason for selecting Henan province, Clingman emphasized its infrastructure.

"The roads are world class, the roads to the villages are in very good condition," he said.

He was also amazed by the use of cell phones and the availability of electricity in villages in the province.

Most importantly, however, choosing the right partner to work with in rural China is vital.

The distribution system centers owned by China Post have eased the investment pressure for international partners.

The use of traditional mail in the world is declining because of electronic and wireless services. "Physical mail is a dying business, with the exception of package delivery thanks to e-commerce," said Clingman.

However, the value of the postal network is enormous, he said, and cannot be replicated by private businesses. In addition, China Post is the most famous brand in China, especially in rural areas where it is most trusted.

"Some of the best people in rural China already work for China Post," said Clingman. "The key to success is to have an efficient distribution model at massive scale."