Digitization is gaining ground in China with wider application

An employee works at an intelligent production facility in Tianjin in June. [Photo/Xinhua]

IDC: Investment from Chinese companies in digital solutions to thrive in the next five years

Chinese companies’ digital business expenditures will grow rapidly in 2023, as cutting-edge digital technologies, such as 5G, artificial intelligence and cloud computing, have been increasingly applied to a wide range of fields and integrated with the real economy, according to market research firm International Data Corp.

IDC said that the digital transformation of enterprises will stand at an inflection point this year and the next five years will remain a golden period for advancing digital transformation, predicting that more than 50 percent of global GDP will be driven by digitally transformed enterprises in the world. the next five years.

“Chinese companies’ investment in digital transformation is expected to quadruple their economic growth in 2023, with the compound annual growth rate of digital business expenditures reaching 19.1% between 2023 and 2026,” said Wu Lianfeng, vice president of IDC China and senior research analyst. “. .

By 2027, Wu said, 40 percent of the total revenue of China’s 2,000 largest companies will be generated from digital products, services and experiences, while the current figure stands at less than 20 percent.

Spending on digital technologies will remain the main focus of both global and Chinese corporate executives. The number of technology companies among China’s 500 largest companies will double by 2027. In addition, by 2024, 40 percent of CEOs from China’s 2,000 largest companies will have strategic relationships with cloud computing service providers, according to the International Data Center.

Enterprise expenditures on software as a service, or SaaS, businesses worldwide are likely to exceed 50 percent of total expenditures. By 2026, companies that fail to address the digital talent and skills gap in their organizations will limit revenue growth opportunities by 20%.

With the boom of 5G networks, big data, artificial intelligence and other innovative digital technologies, the digital economy has gradually become the integrated driving force of economic growth.

The size of China’s digital economy reached 45.5 trillion yuan ($6.6 trillion) in 2021, ranking second in the world and accounting for 39.8% of the country’s GDP, according to a white paper issued by the Chinese Academy of Information and Communications Technology.

Companies in the fields of finance, telecommunications and the Internet have taken the lead in digitization and invested heavily in digital technologies, Wu said, adding that governments around the world have attached great importance to digitization.

Wu said digital transformation is also accelerating in new retail, high-tech manufacturing and transportation sectors, and there is plenty of room for growth in agriculture.

Last January, the State Council, China’s cabinet, announced a plan to further promote the development of the digital economy during the 14th Five-Year Plan period (2021-2025). The country aims to raise the percentage of added value of basic digital economy industries in its GDP to 10% in 2025, according to the plan.

Wu also noted that Chinese companies are facing increasing difficulties and challenges in the process of digital transformation, such as lack of innovation and cooperation between various corporate departments, lack of budget, and insufficient skills. He called on companies to develop long-term plans for digital transformation and to continue pumping money into this field.

The digitization of enterprises is the cornerstone of the digital economy, said Li Wei, vice president of cloud computing and big data research at CAICT, adding that the COVID-19 pandemic has accelerated the development of cloud services and cloud computing applications, which have played a vital role in promoting the development of the digital economy.

Li said companies should accelerate the pace of digital transformation, focus on consumer demands, integrate online and offline channels, as well as promote the transformation and upgrading of traditional industries.

Xiang Ligang, general manager of the Information Consumption Alliance, a telecom industry association, said that emerging digital technologies represented by 5G networks, big data and artificial intelligence have played an important role in enhancing operational efficiency, reducing costs and improving the core competitiveness of traditional industries amid downward economic pressure.

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