Digital China 2020 – Accenture Report
Article Synopsis :
Digital technologies are the new driver of macroeconomic and industrial productivity growth in China. By harnessing the power of digital, China expects to grow its GDP by 3.75 percent by 2020 – adding the equivalent of US$527 billion to the Chinese economy during that timeframe.
”Digital China 2020” from Accenture explores the digitalisation wave in China, including potential barriers and opportunities available to market participants. (Note: this is not an insurance-centric report.)
At the end of 2015, China had 688 million Internet users and 620 million mobile Internet users. Among them, 413 million had shopped online, generating US$623 billion in online retail transactions, accounting for 12.9% of China’s total retail purchases. Moreover, 152 million Internet users utilized the convenience of digital health services by making doctors’ appointments, seeking medical advice or tracking workouts online via mobile apps. Nearly 100 million people used apps for transportation. This growing uptake of digital technologies is turning into a boon for Chinese companies at large. The Chinese government has rolled out plans to increase mobile Internet penetration by 28% and fixed broadband penetration by 30% by 2020.
Key challenges include Chinese enterprises failing to invest in digital growth (only 52% said they would increase digital investments in the next 12 months—lower than other major economies such as Spain and Italy) owing to a lack of well-defined digital strategy, less integrated business models, and lack of digital expertise.
Acknowledging the enormous digital potential, the Chinese government has outlined a new vision – “Digital China” in its latest economic plan. To make this a reality, Chinese enterprises must learn to leverage digital technologies to create new value for customers. For this to occur, enterprises will have to undergo a major transformation in terms of their strategy and IT investments. To this end, Chinese enterprises require a roadmap to properly plan their digital transformation journey. The report provides a three-step digital transformation framework applicable to companies operating not only in China but globally:
Digital Insurer's CommentsWith the Belt and Road Initiative and planned liberalization of Foreign Direct Investment (FDI) laws in the insurance sector, China is becoming increasingly attractive to foreign investors. This should accelerate the rate of digitalisation across China.
With China’s enormous base of digital savvy users, there exists a unique opportunity to grow and scale digital platforms, in manufacturing and beyond. Insurers such as CheBao and Zhong An are leading the way in digital insurance delivery. Though it’s hard to predict what the future holds for foreign insurance players in China, the market bears watching for digital trends and developments transferrable to other markets.
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