Faculty & Research

Insights

Each trend is a future happening. On Sept. 17, Peking University’s Guanghua School of Management and Alibaba Cloud Research Center jointly released the Top Ten 2020 Digital Economy Trends at the Apsara Conference 2020 of Alibaba Cloud, as China is undergoing rapid digital transformation.

How will digitization transform people’s lives, redefine industrial outlooks and reshape administrative governance? The chart, the outcome of Guanghua’s academic research combined with Alibaba’s economic perspective, provides an answer by observing and analysing the huge changes in people’s daily life, business operations and administrative governance.

DIGITAL LIFE

Trend 1: Digital consumption enters daily life

The year 2020 sees huge changes to people’s life and work amid the Covid-19 pandemic. When all industries were practically on pause, China’s digitization started accelerating. During a lengthy social-distancing period, many engaged with the outside via the Internet, ordering deliveries, attending online classes and working remotely. Within months, digital services have been deeply embedded into all aspects of our lives as the average online duration of 900 million Chinese netizens surpassed 30 hours per week this year. The digitization of daily needs, normalization of remote working and the integration of various aspects of life have become new trends in a digital 2020. Under the pressure of the coronavirus, people have to explore new ways to solve as many of their consumer needs as possible via the network. No longer a niche tool for some to buy certain products, digital consumption has become ubiquitous. Take delivery for example. While most delivery workers previously frequented restaurants, they now also deliver vegetables and frozen food,medicines, clothes, books and even furnitures. Whatever consumers want, they deliver.

Trend 2: Remote is the new normal

To some extent, businesses in every industry are riding the wave of digitization as they resume operations. Many that once focused on offline business have quickly switched to the online mode. Emerging fields like cloud education, cloud healthcare and cloud office are growing vigorously. In March, users at DingTalk, a mobile working platform, surpassed 300 million. One mobile education brand saw its monthly revenue equal to that of last year’s entire summer holiday as the penetration rate of online education soared from 15 percent to 85 percent. With the outbreak under control in most Chinese regions, offline activities are recovering too, but the benefits of digitization — higher work efficiency and diverse ways of meeting demand — are here to stay. Online medical consultation will co-exist with hospital services, making medical info and resources more easily available to people. The pandemic will end, but the remote life is bound to stay as the new normal.

Trend 3: Fusion of consumer activities across different scenarios

With the online technology experiencing constant upgrades, the mobile network has now covered 99.3 percent of online users. Digital technology has permeated into very aspect of life and work and increasingly led to the fusion across multiple scenarios, with people watching videos on their tablets and shopping via smartphone. As the digital technology progresses, these activities will merge even more smoothly.

In a word, people will not simply switch from online to offline in a post-Covid-19 world since digitization will have become a crucial part of their day-to-day life. How to integrate online and offline activities, merge different scenarios and better meet people’s rapidly changing demand is an urgent question that all firms need to ponder. It is also why firms need to digitize as quickly as possible.

DIGITAL INDUSTRY

Trend 4: Construction of new infrastructure kicks off

As the Chinese saying goes, better roads lead to better life. Infrastructure construction is key for economic development. During the 40-plus years of reform and opening-up, China’s infrastructure construction efforts paid off as its economy grew rapidly. New infrastructure refers to the crucial new technology facilities and equipment for the era of digital economy. It will be a solid foundation for China’s full-scale digital transformation and intelligent upgrade. The year 2020 marks the starting point of China’s new infrastructure construction, and such construction is progressing fast, and in some cases, has already yielded results. Chengdu has wrapped up the construction of its big data-based digital traffic coordination system, and the State Grid is upgrading its power network to a digital one. More advanced new infrastructure construction projects will complete in the coming years.

Trend 5: Data integration reshapes business operations

The blending of online and offline data is accelerating along with the fast development of digital upgrade in corporate governance and new retail. Wider data fusion not only makes people’s daily spending more convenient, but also helps boost the transformation and upgrade of firms’ business operations in various aspects from research and development to manufacturing. It also bolsters the upgrade of supply chain system. For example, established China footwear maker Red Dragonfly managed to quickly resume businesses online during the Covid-19 outbreak with the help of cloud services and a data platform. With more precise observation and analysis of consumers’needs, the brand also saw boosted efficiencies in marketing and operation, offered customized services and overtook competitors in responding to market trends and making innovations based on data-driven decision-making.

Trend 6: Wider applications of AI

In step with the development of data integration, artificial intelligence (AI) technology is being applied to an explosive amount of new scenarios. AI is,in essence, a data-accumulating technology. With the accumulation of more and better data in wider scopes, AI will be applied to more fields. As the AI industry develops, a firm’s employment system will undergo profound changes, with the emergence of many new professions. Data shows that China is in need of more than five million people with AI talents. The integrated development of the industrial chain, the education chain and the talent chain is aimed to provide talents for China’s new infrastructure construction.

Trend 7: Financial services are integrated into life and work

The financial industry has long been a pioneer in information technology innovation. The blending of digital information technology, AI and services is boosting the innovation and development of the industry. One major trait of the Internet-based new technology is openness. Fast developing information technology is gradually dismantling the barriers to social resources, boosting the flow and sharing of digitized factors of production. Against this background, the financial industry will inevitably head in the same direction of openness, transparency, sharing and inclusion. Brett King says in Bank 4.0 that bank will be everywhere but never at a bank, a viewpoint young people might better identify with since most of them seldom go to an actual bank for bank services. For them, bank services are in their smartphones and scenarios of spending money. Not that traditional financial institutions like banks will disappear anytime soon, it is just that the ways financial services engage with clients are experiencing profound changes.

From the Internet to the Internet of Things, China followed others at first and is now leading the pack, exploring technological benefits in the era of digital economy. With new infrastructure construction, data integration and wider AI applications, the digital economy is bound to unleash great potential.

DIGITAL GOVERNANCE

Trend 8: From fragmentary offices to integrated governance

Digital governance is much more than setting up a few official websites or bringing office work online. It requires breaking the data barriers among different departments and reform the interactions between the government, citizens and economic groups represented by companies. Previously, citizens had to shuffle between different places multiple times in order to get something done because each department has its own data management system and such data is not shared. Digital governance requires the smooth flow of data among different departments within a behind-the-scene system. As a result, people only have to visit one place to get something done like a one-stop shop. This entails coordinated governance between different government departments at different levels in different regions.

For instance, residents in east China’s Zhejiang Province are able to get more than 500 administrative services like checking social insurances and obtaining birth certificates within a smartphone application. The Chinese government has been rigorously pushing forward online administrative services to boost efficiency, quality and coverage and make more people more satisfied. In addition, provinces like Guangdong and Jiangsu pioneered services like “instant approval” and online approval requests, all in a bid to transition from fragmentary office work to integrated digital governance.

Trend 9: From administrative orders to cooperative governance

In addition to enhanced efficiency and people’s satisfactions,digital governance is also changing the logic of governance. The Chinese society used to rely on top-down, one-size-fit-all administrative orders, but diverse grassroots conditions meant implementations of such orders at lower levels would not be smooth. Digital governance makes bottom-up feedbacks possible and enables interactive, cooperative governance between the government and citizens. An online administrative platform set up by a village in Ninghai County in Zhejiang connects a service group consisting of village officials, farm experts and grassroots community workers with villagers, enabling villagers to launch inquires and complaints using writings, pictures and voice recordings. These cases are accessible to all service group members, and they are responsible for giving timely feedbacks to each case. Encouraged by online convenience, some 180,000 villagers have joint the platform and submitted more than 20,000 cases.

Trend 10: High-precision online services for firms

In addition to solving citizens’ daily problems, offering high-precision online services to firms is another key function of digital governance. The government should explore ways to make full use of the data accumulated along the years so as to support firms’ development. One website set up by the city of Hangzhou serves as an business policy-themed interaction platform between local government departments and firms. The website accepts all kinds of business service requests from firms and data sharing with multiple government organs at all levels enable fast processing and responses. A company once had to submit multiple documents in order to apply for employees’ housing subsidies, but now the online system can easily check these documents digitally stored in related departments and automatically wire subsidies to those employees’ bank accounts. Real-time information sharing between a corporate database, digital supply chains and the online system also enables better evaluation of a firm’s credit risks so that one can obtain a loan within seconds after submitting an application online.

Technology makes efficient digital governance possible and increasingly popular. It also helps better meet people’s increasing needs for a greater life.

Guanghua’s research team for the Top Ten 2020 Digital Economy Trends project:

Zhang Ying, Associate Dean and Professor of Marketing and Behavioral Science

Lei Ying, Assistant Professor of Marketing

Wang Chong, Associate Professor of Management Science and Information System

Yi Xiwei, Assistant Professor of Organization and Strategic Management

© 2019 Guanghua School of Management Peking University