Small enterprises stepping up digital transformation efforts

Although there is a growing awareness of digitalization among Chinese SMEs, most of them are still in the early age of development and face a number of hurdles.

The China Electronics Standardization Institute said nearly 90 percent of the SMEs surveyed are in the process of exploring how to digitalize their businesses; and 8 percent are in the process of transformation, making digital changes to their core equipment and data. Only 3 percent are fully applying digital tools in their business.

The report based its findings on a survey of 2,608 SMEs in Jiangsu, Shandong, Zhejiang and Guangdong provinces along with other regions where a large number of SMEs are based.

The lack of talent and relatively weak capabilities in information technology are believed to be the major challenges facing smaller businesses to carry out digital transformation. What adds to their difficulty are the high costs involved, it said.

Zhang Yi, chief executive and chief analyst of online consulting firm iiMedia Research, said that the government should play a more active role in helping SMEs make the change.

"The government can launch various training sessions and introduce third-party organizations to provide related services for SMEs," he said.

"It can also introduce some role models in digital transformation and make them play a leading role in helping others make the move."

With robust demand for digitalization among SMEs, the services market for such transformations has grown at a fast rate in recent years. While its size stood at roughly 18 billion yuan in 2015, it expanded to over 100 billion in 2019, according to consulting firm iResearch. It is expected that the market will grow to over 330 billion yuan by 2022.

The novel coronavirus outbreak has accelerated the pace of Chinese SMEs to go digital and service providers that offer such services as smart payment, online financing, digital marketing and digital management to SMEs are expected to see rapid development, iResearch said.

Spotting the opportunities, leading digital services providers are ramping up efforts to grab a piece of the pie in the booming market.

Ping An Smart City, a unit of insurance giant Ping An Insurance (Group) Company of China Ltd, focuses on smart city projects and has launched five online platforms to energize SMEs in their digital transformations.

For example, it has developed an online vocational education platform in which over 200,000 courses are on offer to help SMEs reduce training costs and enhance training efficiency. An online law-related knowledge-sharing platform has also been set up to help SMEs better deal with legal matters.

Tencent Cloud, the cloud computing arm of internet behemoth Tencent Holdings Ltd, said it will invest hundreds of millions of yuan within the next three years to help 300,000 Chinese SMEs grow.

It launched "Star Park Plan" in July, providing marketing, technical, financial and other support for SMEs in high-tech industrial parks across the country.

"We hope to export our resources and capabilities through this program to serve as a helper in SMEs' digitalization processes and support their innovation," Wu Qisheng, vice-president of Tencent Cloud, said in an earlier interview.

Huawei Technologies Co, meanwhile, has initiated a plan to promote digital development of SMEs in Shenzhen.

"We believe that 77 percent of SMEs in the country will use artificial intelligence in their business by 2025. The core objective of going digital is to increase productivity and revenue, and enhance competitiveness in the global market," said Chen Bin, vice-president of Huawei China region government and enterprise business group.

He said about 10,000 SMEs in Shenzhen are using Huawei's cloud services this year through the plan and the number is expected to reach 200,000, or even double that figure, within the next two or three years.