Chinese enterprises’ investment in digital transformation is expected to witness speedy growth in the next few years, as innovative digital technologies like big data, cloud computing and artificial intelligence are being integrated into the real economy to upgrade traditional industries and empower high-quality development , industry experts said.
Market research firm International Data Corp expects that 52 percent of the global GDP will be driven by digitally transformed enterprises by end-2022, while spending on digital transformation worldwide will account for about 52 percent of overall information and communications technology (ICT) expenditures by 2023 .
IDC said COVID-19 is the catalyst for enterprises shifting their focus to digitalization, as 96 percent of organizations or companies around the world have begun to implement or consider “digital-first” strategies, and about 92 percent of Chinese enterprises are doing so. The consultancy also said the scale of the global ICT market likely surpassed $5.3 trillion in 2021.
“The next five years will be a golden period for pushing forward digitalization. The compound annual growth rate of China’s digital transformation investment will reach 18.9 percent between 2022 and 2025,” said Wu Lianfeng, IDC China vice-president and chief research analyst.
Enterprises in the fields of finance, telecommunications and the internet have taken the lead in digitalization and invested heavily in digital technologies, Wu said, adding that governments around the world have also attached great significance to digitalization.
Digital transformation is accelerating in new retail, high-tech manufacturing and transportation sectors, and there is a huge room for growth in agriculture, Wu said.
China will bolster in-depth integration of digital technologies with the real economy, and speed up the digital transformation of industries, according to the digital economy development plan for the 14th Five-Year Plan period (2021-25).
The scale of China’s digital economy reached $7.1 trillion last year, the world’s second-largest, said a white paper released by the China Academy of Information and Communications Technology, a government think tank.
“We have found that global manufacturing enterprises which continued to invest in digitalization during the 2015-20 period saw compound annual growth rates of their revenues and profits rise 4 percent and 3.5 percent, respectively, while the non-digitalized ones witness downturns in those indices ,” Wu said.
Wu added that Chinese enterprises are facing challenges in the process of digitalization, such as a lack of innovation and collaboration among various departments of an enterprise, budgetary shortfalls, limited experience and lack skills. He called for enterprises to come up with long-term plans for digital transformation and continuously pour money into this field.
Li Wei, deputy head of cloud computing and big data research at the China Academy of Information and Communications Technology, a government think tank, said digitalization of enterprises serves as the cornerstone of the digital economy.
Enterprises should speed up the pace of digital transformation, concentrate on consumer requirements, integrate online and offline channels, as well as promote the digital transformation and upgrade of industries, Li said.
“The emerging digital technologies represented by 5G, big data and AI have played a critical role in enhancing operational efficiency, cutting costs and improving core competitiveness of traditional industries amid economic downward pressure,” said Xiang Ligang, director-general of the Information Consumption Alliance. , a telecom industry association.
Xiang said in-depth integration of digital technologies with the real economy will further reinforce China’s advantages in global supply chains.
As for security issues arising from enterprises’ digital transformation, Wu said small and medium-sized enterprises are vulnerable to potential cybersecurity risks. He emphasized that enterprises should establish a comprehensive security system, which involves security risks, compliance issues, privacy and ethics.
“Although digital technologies have brought about convenience for many industries, data security, which serves as the foundation of the digital economy and digital infrastructure, shouldn’t be underestimated,” said Qi Xiangdong, chairman of Chinese cybersecurity company Qi-Anxin Technology Group.