Digital Transformation In China

November 24, 2021

The covid-19 pandemic that struck the globe in 2020 brought on b2b companies worldwide to press the pause button. For those who rely heavily on offline transactions, the outcomes of the pandemic have been specially stark. It is honest to mention that, with offline channels hindered , the pandemic has improved the method of b2b ecommerce groups’ virtual transformation in china, and certainly, worldwide.

Previous to the pandemic, and over the past 10 years, the upward push of ecommerce systems such as taobao had seen b2c agencies be pioneers in cross border ecommerce virtual transformation inside the middle country.
But for classic b2b companies, the process of digital transformation has no longer been as sincere. Many have traditionally depended on offline channels, however the pandemic has highlighted, and hastened, the want for change.


What is digital transformation?


So what precisely is virtual transformation? Does it involve the brand’s new website or the implementation of a few company-wide software? Is it approximately clients wanting to have interaction with the brand in a totally exclusive manner? Or, about using new technology to re-modify the way we do commercial enterprise?

It is largely all of these items. The authentic essence of digital transformation ought to be a complete shape of digitalization, the usage of large information, synthetic intelligence, (ai), internet of factors (iot), cloud computing and other new technologies to completely reconstruct the patron revel in, in addition to the enterprise version and operation methods of a enterprise.

All of this need to shape a part of an adoption of a new and green version to create cost and growth business, at the same time as at the identical time improving the emblem photograph, and turning into extra than a brand that sells’just’ products – however also a service. It is not handiest a technological transformation, a commercial enterprise transformation, but additionally a piece culture transformation, and the final end result is a whole transformation of the business version.

In precis, virtual transformation especially focuses on the following four components:


(1) middle operation transformation


Shifting the middle operations from traditional offline channels to on-line.


(2) experience transformation


Reap non-stop comments from the experience of customers/partners and employees, and shift from now not just offering products, however to also offering offerings.


(3) building a digital architecture


Use cloud generation to run software, build and seamlessly integrate applications, keep, retrieve and calculate records, and damage thru the virtual limitations of numerous departments.


(4) facts management and analysis


To build a statistics-pushed company, with selections based totally on data instead of preconceived assumptions. Selection-making is based largely at the insights received from the amassed statistics, and the usage of ai and big records for better-degree analysis.


The nation of china’s b2b ecommerce panorama


China’s virtual economy is accelerating at an exponential fee, occupying an increasingly more important position in the chinese language economy as a whole. Research have shown that the dimensions of china’s virtual financial system reached round 39.2 trillion yuan in 2020, with its percentage of gdp increasing from 14.2% to 38.6%, and the growth fee of the virtual economic system reaching greater than 3 times the gdp increase fee.

In terms of b2b ecommerce, the explosive growth of the virtual economic system provides a market increase point for corporate procurement. It’s far anticipated that via 2022, the dimensions of the ecommerce marketplace for b2b chinese language agencies will exceed 1 trillion yuan.

In step with the records as proven within the figure above, in 2019, the percentage of chinese groups shopping on line became 24.2%, offline procurement accounted for 34%, and forty one.8% of groups followed a aggregate of online and offline procurement strategies for commercial enterprise. After the onset of the covid-19 pandemic in 2020, through april 2021, we had observed a leap on this fashion, with businesses selecting on line procurement methods attaining 70%.

The model above indicates the results of a survey of b2b emblem suppliers in china. It shows that by way of february 2021, eighty three% of respondents looked upon online procurement favorably, in comparison to fifty four% in april 2020 (within the early ranges of the pandemic).


China’s marketplace environment


What elements have affected the online penetration fee of china’s b2b procurement?

There are various factors that have contributed to its boom, consisting of:

(1) the favorable guidelines in the direction of digital procurement that the chinese language authorities propose;

(2) due to the results of the pandemic, agencies were looking at ways to reduce their costs, with on line procurement being one manner to do this;

(3) an increasing number of corporations have gradually evolved the habit of company on-line purchases;

(4) new technologies that facilitate on-line procurement together with cloud computing, massive data, the iot, and ai have persevered to develop;

(5) the digitalization of chinese language internet users, particularly the access of these born in the 80s and 90s into the job marketplace, who have grown up within the digital technology. This has modified the general sample of social consumption habits.

In spite of the positive factors, there are nonetheless some drawbacks, particularly:

(1) the blessings of still using offline conventional channels for some product kinds stay obvious, mainly products with complete offline distribution channels and a excessive call for for services, inclusive of the chemical enterprise;

(2) the development pace of assisting centers and services of providers may be slower than predicted, making it difficult to meet the needs of clients.


The class of b2b ecommerce structures


As proven inside the model above, china’s b2b ecommerce systems may be kind of divided into three classes:

The first category is procurement systems derived from traditional b2c ecommerce, inclusive of taobao, tmall and jd.

The second class is b2b ecommerce subsidiary platforms. This sort of platform may be similarly subdivided into complete and vertical b2b ecommerce procurement platforms, such as, and various industry structures including the ones specializing in easy-to-purchase merchandise, and industrial merchandise.

The 1/3 class is structures coming from the logo itself, along with gree, haier’s corporate shopping, schneider, and 3m. Increasingly groups are growing these b2b structures. This form of platform relies on manufacturers and manufacturing. This sort of enterprise has already set up a great emblem popularity and attraction, as well as a stable supply of customers.

Those kinds of corporations may additionally face opposition between the primary kinds of platform merchants or the low-pricing of the platform’s self-built manufacturers.

Without delay dealing with the customers will provide companies the possibility to directly reap actual-time statistics from them. This turned into hard to achieve with the channel models of the beyond. This information will assist agencies benefit clients with personalised services, and in turn, with any luck boom sales , consumer pleasure and loyalty.

In addition, the ecosystem of b2b emblem self-constructed ecommerce systems remains being advanced, which is specially meditated within the following aspects:


(1) payment strategies have become extra varied:


it may help online charge together with alipay and wechat pay. At the same time, it could additionally aid conventional offline bills, along with bank transfers, and credit score limits. Organizations can customize different payment techniques for clients in line with extraordinary situations and transactions. As an instance, there are a few b2b transactions strategies which might be extra extensively diagnosed with the aid of the tax authorities in china.


(2) logistics channels are getting greater handy:


Cainiao, jd logistics, zhongtong express, sf specific, deppon explicit and other not unusual logistics businesses have all thrown out olive branches, which enables the manner for each agencies and clients.


(3) monetary services are becoming more complete:


They offer a number of offerings including financing, charge, agency credit and different infrastructure aid.


(4) services have become extra mature:


With offerings inclusive of tianyancha (天眼查), enabling on line company verification tests to be achieved speedy and effectively.

Regarding these specific points, we will look at them in greater element in subsequent articles, so stay tuned.


Not unusual ecommerce models of b2b companies:



Branded b2b platform version (b2b)


This form of model is specifically based totally on ecommerce (at the respectable website of the emblem). The common b2b version calls for the organisation to prepare a provider group to resolve purchaser associated product issues and provider wishes.

The gain of this model is that they can control excellent themselves as the whole lot is performed internally. But, it is able to take time to put in force, and scalability may not be quick. An instance of this model is adobe commerce, a platform which offers personalized answers to the desires of b2b customers.


Distribution model (b2b2c)


By cooperating with local partners to lessen the intake of the organisation’s personal hard work costs, it has evolved into a dealer platform version, particularly b2b2c (enterprise to commercial enterprise to client). Brands provide merchandise, and dealers pick products based on their personal advantages, in addition to producing their personal income leads.

Every now and then this model also lets in vendors to listing their very own products, but no longer merchandise that are an instantaneous competitor to the employer itself.


Logo b2b + distribution model (typically within the shape of o2o)


Combining the strengths of the two now not only ensures the professionalism of products and services, but also saves on manpower and time. It may additionally use the advantages of neighborhood companions to satisfy the needs of localized services.

In a common o2o version, (a time period normally utilized in china – which means a model that attracts customers from on-line to offline – into bodily stores) agencies offer merchandise and take gain in their suppliers’ geographical advantages (being in near proximity to clients) to provide localized offerings, even as helping agencies with the success and upkeep of consumer relationships.


The technique of virtual transformation


Digital transformation is a long and hard avenue, and is never a short-term process. It requires difficult planning at every degree. Therefore, this technique can take a long time. There are different pillars to digital transformation, which, relying at the organisation and industry, may also take varying durations of time to implement. We can classify the technique of virtual transformation as being segmented into 4 pillars, as visually proven in the version below, and elaborated on further down in the article.


Facts series, consumer adoption and user education



(1) accumulate information with ecommerce as the primary recognition factor


Because the preliminary degree of digital transformation, ecommerce is absolutely the point of interest here. With the aid of using ecommerce structures constructed by means of, as an instance, adobe trade (magento commerce), a range of features together with online communique, browsing, order placement, on line fee, historical orders and logistics can be found out.


(2) groups regularly learn from comments to reshape new experiences that meet purchaser expectancies


Differing from the conventional lifestyles cycle method of acquiring feedback, it demanding situations the organisation to transform from an impartial technique to an give up-to-stop method (for example, the advertising and income departments from the preceding operation one at a time to coordinate adjustments in a feedback and decision-making technique), in ecommerce operations.


(3) integrate the data waft of the whole supply chain


Real-time monitoring of the deliver chain will permit the business enterprise to better respond to modifications in consumer call for, improve the logistics efficiency of suppliers and distributors, permit organizations to control powerful stock greater efficaciously, and gain more agile and flexible production requirements.


(4) continuously instill digital standards into the behavior and concepts of give up users


We’ve observed that in this procedure, every so often businesses will lose clients due to the concern of changing the conventional sales model, and hesitate about the pace and velocity of the digital transformation technique.

In fact, there may be no need to fear. Users are truly more adaptable than you could consider, and in reality, conventional sales fashions can co-exist with newer income fashions.


Records control, person personalization and person activation



(1) manipulate virtual assets


Businesses moving into this level will develop a relatively complex records management device that transforms selection-making based totally on revel in and intuitive assumptions into information-driven choices and moves. Companies be given the front-give up comments and use big information and analytical competencies to promote insights into purchaser facts. In these facts-driven times, the capacity to acquire, successfully control and use customer data can frequently carry huge capacity value to agencies.


(2) provide a personalized consumer revel in


This involves optimizing current tactics through facts control and analysis to reduce expenses and provide a extra personalized revel in. From product charges to logistics channels, price methods and even discounts, customers can now take delivery of a retail experience unique to them.


(3) statistics privacy and transparency


With the growth in records breaches in diverse industries, statistics privacy has become an area of increasing problem for clients. This has especially been the case in current years, with numerous high-profile stores suffering records breaches, ensuing in tens of millions of debit and credit card information being leaked.

Incidences of different purchaser information (along with email addresses) being stolen have additionally took place. Whilst negatively affecting a huge wide variety of consumers, it additionally raises the public’s consciousness of the dangers resulting from information security vulnerabilities. Facts breaches have also introduced punitive monetary effects to groups.

Despite the fact that companies use facts to enhance offerings and personalized experiences, they have to ensure the security and privateness of customers’ online information. As a end result, records safety and privacy policies are being deepened worldwide.

Adhering to records security and data transparency policies is of the utmost importance, due to the fact most clients will flip to companies that offer them with trust.

Any other way to win believe for groups is to sell the transparency of statistics and data by means of disclosing product and deliver chain data, which include presenting traceability of product uncooked substances.

That is also critical when thinking of the fact that young chinese language customers pay extra interest to the social impact in their buy selections than any figure. They are more inclined to pay for merchandise made with environmentally pleasant materials.

So by using supplying facts transparency and adhering to statistics rules, agencies can increase their recognition as well as leaving an ecological footprint – a win-win state of affairs.


(4) cultivation of digital abilities


Virtual talents are now not confined to the it department; instead each department should have virtual abilties with a digital mind-set, so that the entire agency can function correctly – whether it’s far inner control or the external-dealing with side of the commercial enterprise.


(5) from product to provider


The shift from a product to more carrier-based totally sales experience is now becoming a truth. The preference of the patron has moved from no longer simply shopping for merchandise, however also shopping for the services of a brand, so obviously this has accelerated brand loyalty.

On the identical time, the transformation from offering a single product to a continuous, multi-faceted service permits corporations to establish a more long-time period and solid dating with their clients.

An example can be seen with caocao chuxing (a subsidiary of chinese multinational car corporation geely) a journey-hailing provider in china. At present, they offer’inexperienced’ journey-hailing offerings the usage of low-carbon emitting vehicles. In the destiny, however , additionally they plan to offer self reliant using automobiles to their clients, for you to enlarge the range of offerings furnished by using the employer.

Within the b2b discipline, many businesses have additionally began to explore a way to use iot generation to help their customers predict disasters and preventive upkeep. As an instance, a business printer gadget business enterprise may also use iot solutions to offer price-brought services together with fault prediction, auxiliary material estimation and the ordering of recent components thru chip detection and applications.


Clever generation


While a organisation has entered this period of virtual transformation, every department is facts-orientated and specializes in cultivating virtual capabilities. The largest trade in this era is the digitization of the supply of production. Via clever deliver chains, the intake behavior of end customers is fed returned to the intelligent supply chain and manufacturing facility through the virtual footprints that purchasers leave at the back of, and then merchandise can be produced hence primarily based on demand tendencies.

The pass closer to smart factories is any other key component of the adulthood duration of digital transformation. Clever factories operate on iot generation to produce a greater sophisticated production line. With a extra and greater emphasis on consumer personalization, smart factories can help to facilitate production lines and make products easier to reformulate and faster to supply.

Moreover, an increasing number of corporations will now not be entirely based at the pursuit of earnings, however steadily rework to provide items and services driven through human health and nicely-being.

Cellular smartphone producers have already moved into this place. As an instance, samsung has launched into developing fitness-related sensors, together with pedometers, in a number of its latest smartphones. Those telephones assist customers music exercising plans, meals consumption, weight, sleep styles and heart price. Fitbit, a health wearable device enterprise, lets in their customers to share their health outcomes and compete in sports with friends.


Big information, internet of things, and synthetic intelligence


Advancing technological traits are leading to an growing occurrence in the application of big facts, iot, and ai in virtual transformation. But how can those elements play a component within the process?


1. Large data


With the growing quantities of statistics that needs to be processed on a day by day basis via companies, the cost of massive statistics for corporations worried in the virtual transformation procedure can not be hyped up. It is able to help to:

(1) comprehend the visualization of transaction information, order information, and logistics information – all vital kinds of information inside the b2b field.

(2) recognize your customers better. Via analyzing patron facts and tendencies, businesses are higher located to devise techniques in order to higher serve the desires in their customers.

(3) improve the performance of deliver chains and employer operations – by way of analyzing transaction facts, order records and logistics facts, higher-knowledgeable decisions may be made on the way to make supply chains, and corporation operations as an entire, extra green.


2. Internet of factors (iot)


Iot era can help organizations with the digital transformation method within the following methods:

(1) to enable businesses to put into effect more state-of-the-art approaches to acquire actual-time information. This can be executed in numerous methods, as an example through the use of:

Proximity sensors:
They’re used for example in meeting traces of various industries to make sure the performance of operations.

Temperature sensors:
They may as an example be utilized in manufacturing to make sure equipment is kept at a specific stage.

In offline shops, clever cameras can be used to pick out wherein certain agencies of people generally tend to move around in, and product tiers and items appealing to their demographic then be positioned hence.

(2) to decorate the patron experience

Thru the use of iot generation, groups can decorate the client enjoy in ways that had been simply now not possible before. This can be achieved as an instance through the usage of:

Clever virtual wireless charge tags. Fee tags are updated in real-time. This could be specifically beneficial for gadgets which include seafood, which can also perish throughout the day.

Self-test checkout machines. You can now go shopping with out the want to interact with all people else thanks to self-experiment checkout machines. The usage of the self-test checkout machines, buyers can clearly scan the goods and pay as they pass.

Each those features were pioneered by way of hema, a series of supermarkets owned by retail giants alibaba, in china. The chain has been labelled ‘the destiny of retail.’


3. Artificial intelligence (ai)


Ai technology can assist agencies with the virtual transformation manner by:

(1) providing wise chatbots. Through using ai smart decision-making technology, ai can provide immediately solutions and a 24/7 service. This could be carried out within the form of answering queries, or automatic messages.

(2) imposing statistics-driven smart pricing systems. Ai generation can be used to implement smart pricing systems (using facts gathered via big facts analytics), to cater to unique groups of clients, or even people.

(3) personalizing the shopping revel in for clients.

Retail giants amazon were one of the pioneers in making use of ai to personalize the buying revel in for customers. Amazon personalize makes use of ai technology to deliver real-time personalised suggestions, such as products, gives and content (banners and phone to moves).

Extra traditional avenues of operation, including r&d and design, manufacturing and manufacturing, advertising and income, will all still play a large component in every day operations in the coming years, however each branch in a corporation will need to go through the method of virtual transformation to a point.