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How Digital Transformation is Shaping a New China

6 Minutes Read

Chinese digital transformation isn’t just providing opportunity for those within its borders, but for businesses around the world. Learn how your business could be part of one of the biggest digital transformation stories in history.

The rise of China is setting the stage for an Asian century, but businesses are still figuring out how they can enter this new and exciting market.

Technology provides the answer. The Chinese market is undergoing rapid digital transformation – understanding this massive shift, and how to harness it, will be vital for businesses all over the world.

Much of this growth has been focused on consumers, as they spend more money online in traditional e-commerce outlets. According to a Cisco survey, 89 percent of Chinese respondents said they use independent shopping apps on a smartphone at least once a week – compared to 34 percent of U.S. respondents.

The potential for Chinese growth is even higher. Outside consumer-based commerce, many businesses in China are not yet using the internet to innovate and grow. In 2013, the cloud computing market was only worth $1.5 billion, around 3 percent of China’s enterprise IT market. However, that’s projected to rise to $20 billion by 2020, representing 20 percent of China’s IT market.

The Opportunity Abroad

This poses a significant opportunity for businesses outside China who are hoping to enter the competitive market. According to All China Review, the next phase of digital transformation in China could contribute between 7 and 22 percent of the increase in China’s gross domestic product (GDP) from 2013 to 2025.

So how can U.S. businesses take advantage of this?

Firstly, businesses should understand that there is a huge demand for digital services and skills in the Chinese market. An Accenture Strategy study shows 22 percent of the world’s economy will be linked to digital skills and services. In the U.S. that sector is 33 percent of GDP, while in China that figure is only 10.5 percent.

As the study explains, there is room for growth in China to adopt more of a focus on productivity and the consumption of services, rather than through pure e-commerce.

“Organizations need to act aggressively in shifting the focus of their digital talent and technology from making efficiencies to creating entirely new business models”, Accenture Strategy Group Chief Executive Mark Knickrehm said in a 2016 statement.

Over time, businesses in China will rely less on product development and manufacturing, shifting focus onto marketing, customer service and sales channels.

As McKinsey explains in its research, Chinese firms will need to invest in more IT services to make this shift successful: “Technology investments and product portfolios may have to be revisited more frequently, and CIOs [chief information officers] may need to have a greater voice in strategy.”

What Does This Mean for CIOs?

These changes represent significant opportunities for offshore businesses to invest in the growing Chinese demand for infrastructure.

For instance, according to McKinsey, China is facing opportunities with regard to some of the country’s largest markets including used-car sales, chemical companies, real estate and even healthcare. Recent news points to the Chinese government seeking even greater private investment.

The Cyberspace Administration of China has said it has placed an emphasis on building out technologies including 5G networks, cloud computing, the Internet of Things, smart cities and ecommerce. All of these areas will present opportunities for infrastructure creators.

Businesses all over the world are seeking to take advantage of this trend, with China’s call to build a “Digital Silk Road” attracting foreign investment. The Belgian telecom Belgacom has stated it finds the prospect of digital investment in China an attractive one.

Businesses may find it difficult to enter the Chinese market at first. Partnering with leading Chinese IT service providers can be a crucial first step to gaining a foothold in the market. Businesses like China Telecom Americas, with existing partnerships in the region, can be one of the best ways to access new opportunities in China.

Learn more about how to partner with trusted telecommunications providers in China and enter this exciting market with China Telecom Americas.