Chinese SMEs seeks opportunities through digital transformation

Small and medium-sized enterprises (SMEs) contribute more than 50 percent of China’s tax revenue, over 60 percent of its GDP, more than 70 percent of technological innovation and over 80 percent of urban employment, according to the country’s Ministry of Industry and Information Technology (MIIT).

Chinese SMEs suffered severe impact from the COVID-19 pandemic. To stabilize them is to stabilize half of the Chinese economy.

As the COVID-19 pandemic broke out, digital transformation is becoming an important approach for SMEs to seek opportunities in the crisis.

According to calculation, digitalization can cut 17.2 percent of cost and increase 22.6 percent of revenue for manufacturing enterprises, and the figures stand at 34.2 percent and 33.6 percent in logistics industry, and 7.8 percent and 33.3 percent in retail sector.

However, statistics indicate that only 25 percent of Chinese enterprises have started digital transformation.

A program was recently launched by the National Development and Reform Commission (NDRC) in cooperation with other government departments, leading enterprises, financial institutions, research institutes, and industrial associations, to provide online services for SMEs to help them be more digitally savvy. An initiative was released at the inauguration ceremony of the program, and over 500 service measures tailored for SMEs were rolled out to help them lower cost, reduce transformation period, and improve the success rate of transformation.

Wu Hao, director of the NDRC’s Department of High-Tech Industry, suggested that platforms be established and access be lowered to enhance supports for enterprises’ efforts in digital transformation and promote in-depth integration of artificial intelligence and the real economy. His suggestion was actively responded by enterprises.

Fuqing, southeast China’s Fujian province is home to over 4,000 food and seafood SMEs whose imports and sales were mainly handled through offline channels. However, the COVID-19 pandemic caused drastic decline in their foreign orders, and many enterprises were struggling to survive. To tackle the problem, e-commerce giant JD.com tailored an online exhibition and trading platform for SMEs in the city, offering services of online business negotiation, collective matchmaking and livestream marketing.

JD.com is not the only one facilitating the development of SMEs. It is reported that tech firm Tencent recently launched the “Digital Ark” program that supports key industries such as agriculture, industry, commerce, education, healthcare and tourism through digital transformation. The program aims to facilitate digital transformation of SMEs by cost reduction, online traffic expansion, special fund and open source technology.

E-commerce conglomerate Alibaba, tech firm Huawei and software company Kingdee also launched respective digital transformation products and services. From information interconnection, open source and capability building, to software & hardware support and supply chain, SMEs are seeing lowered access for digital transformation.

Shan Zhiguang, director-general of Informatization and Industry Development Department of the State Information Center, believes that the promotion of digital transformation conforms to the demand of most of the Chinese SMEs. The program jointly launched by NDRC and other sectors of the society to offer targeted assistance is conducive to breaking the bottlenecks and obstacles impeding enterprises’ digital transformation.

The program will help SMEs build digital supply chains, integrate logistics, talents, technology and capital at a higher level, and seek breakthroughs during upgrading and transformation, said Jiang Qiping, secretary-general of the Center for Informatization and director of the Research Office of Informatization & Network Economics Study under the Chinese Academy of Social Sciences.