A staff member communicates with a digital avatar at the digital economy immersive experience zone during the Global Digital Economy Conference 2024 on July 2. Photo: XINHUA

In recent years, with the continuous development of science and technology, the digital economy has become a key driver of high-quality economic development worldwide, as evidenced by China’s performance in this sector. To explore the global trajectory of the digital economy and its prospects in China, CSST recently interviewed Sharon Coyle, a senior lecturer at the Business School of the University of New South Wales in Australia, and Hanna Halaburda, an associate professor from the Stern School of Business at New York University in the United States.

Benefits

Digitalization is revolutionizing the ways people live, work, study, and conduct business, as technological advancements, alongside the popularization of the internet and smart terminals, have fueled the exponential growth of online trade. Emphasizing the strong vitality of the digital economy, Coyle noted that it has not only delivered economic benefits to developed nations but also holds significant potential for economic transformation in developing countries.

“Compared with developed countries, developing countries are more interested in the digital economy,” Coyle noted. For developing countries, this economic transformation offers immense potential for economic growth, job creation, and poverty reduction. E-commerce and digitalization enable new business models, reduce startup costs, and improve access to regional and global markets for entrepreneurs and small businesses in developing countries. For consumers, digitalization offers access, convenience, lower prices, and more choices. “Anyway, the digital economy is not just about technology. It’s about people. It’s about creating opportunities for everyone, regardless of their location or background,” Coyle said.

Status quo in China

China has taken the lead in the development of the digital economy. While many countries are mired in growth challenges and have limited familiarity with QR codes and e-commerce platforms, Chinese consumers are using these digital tools to meet their everyday needs. Halaburda observed that the rise of local digital trade has led to rapid economic growth in China, a development that Chinese companies have continued to leverage over the past decade.

The rapid growth and development of China’s digital economy can be largely attributed to its active consumer market, which includes approximately 900 million online shoppers. With over 1 billion internet users in the country and more than 80% of this demographic willing to spend on local e-commerce platforms, China offers a market value that businesses seldom encounter elsewhere, Halaburda said.

With active government support and stringent market regulation, consumer confidence has been rising year by year, she continued. China’s efforts and initiatives to address virtual consumer needs have led to high engagement rates, with numerous local internet users becoming content creators. Unlike traditional industries, social commerce platforms enable users to share ratings and reviews about their purchases. These posts serve as valuable resources, providing businesses with plentiful data on consumer preferences to refine their marketing strategies.

In Halaburda’s view, the notable shift from passive consumption to active engagement and content creation has made Key Opinion Leaders a powerful force in China’s digital ecosystem. China’s online shopping platforms cover a wide range of products and have become the primary daily consumption venue for many people. This drives growth for external industries such as logistics, payment processing, and digital advertising. Additionally, China’s digital economy creates new opportunities for small and medium-sized enterprises, simplifies market entry for foreign brands, and enhances their ability to reach a wider audience locally.

Factors for success

Coyle attributed the successful digital transformation of Chinese companies to three factors. Firstly, these enterprises are more flexible and agile, diverging from traditional organizational and operating models. Secondly, they encourage innovation and build competitive cultures. Thirdly, they prioritize incubating and expanding new business platforms.

Discussing innovation within China’s digital economy, Coyle predicted that the consolidation of previously distinct retail sectors will continue, integrating omnichannel retail with the on-demand economy, the social economy, and the retail supply chain. She also noticed that the integration of the digital and real economies has spawned numerous new business forms. Additionally, digitalization has accelerated innovative development across various service industries. For example, in medical insurance and education, digital advancements can improve efficiency and solve problems like uneven resource allocation.

Coyle highlighted the global success of Chinese electric vehicles as a prime example. These vehicles, along with fully autonomous driving technologies, involve the development and innovation of artificial intelligence, software development, algorithm applications, as well as innovations across the entire industrial and supply chains. These digital enterprises are more committed to social responsibility, environmental responsibility, and smart city development.

The digital development strategy and path of Chinese enterprises are of great significance in the world, Halaburda said, adding that their digital transformation has both expanded the scale of business and driven innovation and disruption across various sectors, including omnichannel retail, social media, on-demand services, mobility, fin-tech, and health-tech.