Small businesses push to go digital
COVID-19 has dealt a heavy blow to business operations of Chinese small and medium-sized enterprises, but there is another side to the coin.
With traditional offline businesses stagnant and online business activities flourishing during the pandemic, more and more Chinese SMEs are speeding up digital transformation in an effort to adapt to the way things now are. The global public health crisis is giving smaller businesses in the country the impetus to adopt digital changes crucial for their long-term growth.
The Shenzhen fashion brand group Eeka Fashion is one such company.
“We are endeavoring to promote digitalization in our research and development,” said Wu Qingye, executive vice-president of Eeka Fashion.
“Traditional business models in the apparel industry have customers buy clothes that we produce. If we use digital tools to help with R&D we can change that model and produce clothes based on the needs and preferences of customers. This way the problem of excess inventory can be eased.”
The quick move to go digital has helped the company cushion the economic shock brought about by COVID-19, Wu said.
“During the pandemic in China all our physical shops were closed. But because of the launch of our omnichannel online store on WeChat in mid-January we were able to generate 70% of the revenue of a year earlier in February, about 300 million yuan ($43.8 million) for the month.”
Eeka Fashion is just one example of SMEs’ intensifying efforts in digital transformation in Shenzhen. The metropolis in southern China known for its private sector vitality, is home to more than 2.15 million SMEs, which account for more than 99% of its companies.
Ikas Industries (Guangdong) Co Ltd, which specializes in providing intelligent solutions to companies in the semiconductor sector for technology upgrades, is also jumping on the digitalization bandwagon.
“There is a pressing need for us to enhance the level of digitalization in our operations,” said Li Jie, chief executive officer of the company in Shenzhen.
“On the one hand, the semiconductor companies we serve work around the clock. That requires us to have quick response capacity. On the other hand, we are operating a number of technical support centers in various cities across the country and overseas. How to manage them well is a challenge for an SME like us.”
Although there is a growing awareness of digitalization among Chinese SMEs, most are still in the early stages of development and face a number of hurdles.
The China Electronics Standardization Institute said the lack of talent and relatively weak capabilities in information technology are believed to be the biggest challenges facing smaller businesses to carry out digital transformation. The high costs involved are also problematic.
The pandemic has accelerated the pace of Chinese SMEs to go digital and service providers that offer services such as smart payment, online financing, digital marketing and digital management to SMEs are expected to grow rapidly, the consulting firm iResearch said.
Ping An Smart City, a unit of Ping An Insurance (Group) Company of China Ltd, focuses on smart city projects and has set up five online platforms to energize SMEs in their digital transformations.
Tencent Cloud, the cloud computing arm of the internet company Tencent Holdings Ltd, launched Star Park Plan in July, providing marketing, technical, financial and other support for SMEs in high-tech industrial parks across the country.
“Traditional business models in the apparel industry have customers buy clothes that we produce. If we use digital tools to help with R&D we can change that model and produce clothes based on the needs and preferences of customers.”
WU QINGYE