China eyes digital innovation as key to overseas expansion

China eyes digital innovation as key to overseas expansion

More and more Chinese companies in traditional industries are turning to digital technologies as cloud computing plays an increasingly important role in helping them expand their international business, according to Amazon Web Services.

The cloud service platform of US technology giant Amazon said that over 60% of polled companies have established an overseas presence in more than three continents or regions, according to a survey commissioned by AWS and conducted by Sino-Bridges, a research and consulting company.

These companies are expanding from traditional overseas markets like South-east Asia, the United States and Europe to regions such as South America, the Middle East and Africa.

The survey said the first wave of Chinese companies expanding overseas through cloud computing technology was mainly those in digital industries such as social media apps, video streaming and short video platforms. In the past few years many traditional enterprises have established a global presence via adopting digital technologies.

“The digitalized and intelligent transformation in the Chinese manufacturing industry has driven the transition and upgrade of foreign trade,” said Li Xiaomang, general manager of the commercial sector of AWS China, adding that Chinese enterprises are shifting from labour and capital-intensive manufacturers to exporters of technologies and brands.

The survey found that an increasing number of Chinese business-to-business (B2B) service providers are going abroad, while some companies that have succeeded in business-to-consumer service (B2C) abroad are expanding into the B2B sector.

Moreover, SMEs are showing a stronger desire to go abroad, with 65% of them planning to do so. More start-ups have global ambitions from day one, especially in sectors like gaming, developer services and SaaS (software as a service), smart devices and e-commerce.

“We are supporting cross-border e-commerce enterprises to build global supply chain systems and overseas sites, and providing assistance to traditional manufacturing industries in upgrading their products with big data, artificial intelligence and the internet of things to increase the added value of products,” Li said.

China’s overall cloud computing market is expected to increase from 209.1 billion yuan ($31.9 billion) in 2020 to reach nearly 400 billion yuan in 2023, according to the China Academy of Information and Communications Technology.

The increasing number of Chinese companies utilising cloud services to work overseas has pushed cloud service providers to improve and enhance what they offer their customers.

Nearly 60% of companies surveyed said that security and compliance are the most important factors when choosing an overseas cloud provider. More than half of the interviewed companies said they wanted to migrate their core business systems to the cloud and build data-driven capability for business innovation with artificial intelligence, machine learning and the Internet of Things (IoT) being crucial to driving innovation.

Noting that Covid-19 has sped up many companies’ digitalization plans, Cliff Liang, general manager of digital native business at AWS China, said Chinese enterprises should strengthen the security and compliance of their businesses in the global arena.

Liang added that cloud computing is expected to play a bigger role in empowering the digitalization of small and medium-sized enterprises, helping them to expand outside of their traditional home market

Industry experts said that cloud computing has gradually become an important engine driving the transformation and upgrading of traditional industries and empowering China’s digital economy.

 

Gradual recovery on the cards

China’s economy is expected to recover gradually as the country fights to control the latest outbreak of Covid-19 and implements policies to boost economic growth, according to Fu Linghui, spokesperson for the National Bureau of Statistics.

The country's economy took a hit from the domestic resurgence of Covid-19 cases in April, but “the impacts are short-lived and external”, Fu said.

“The fundamentals of the Chinese economy remain unchanged. The overall trends of economic transformation and upgrading and high-quality development remain unchanged,” he said.

“There are many favourable conditions for stabilizing the economy and achieving the expected development goals,” Fu said.