By Lawrence Wong, Managing Partner, GCE Consulting Limited
Digitalization is changing the compositions of the market resources all over the world, reducing market barriers, simplifying intermediate links, remodeling industry boundaries and market patterns, as well as promoting cross-industrycompetitions and cooperation. With the popularity of the mobile Internet and smartphones, China has the largest population in digital market. It brings tremendous opportunities in the development of digitalization, becoming contested in this industry. Dr. Lawrence WONG Chi Wing -- the Managing Partner of GCE-Consulting andformer Manager Director in Accenture, shared the characteristics and trends of the Digital ConvergentMarket, together with the competitive strategies between traditional companies and new entrants/cross-industryenterprises.
“Digital Convergent Market” came into being in the competitions
With the rapid development of economic society,the environment that business is facing is changing rapidly. In the following 15 to 20 years, what willbusiness managers need to face and resolve? Will those factors affect the development of the enterprises? Internet, 3D printing, new energy and other new technologies have a powerful impacton product development, design, competition and marketing. In China, digital revolution is mainly driven by consumers. The characteristics of this consumer market now named as “Digital Convergent Market” is very open and highly competitive, bringing tremendous opportunities in technical innovation and business models innovation.Currently, the Digital ConvergentMarket in China is mainly rising in the consumer market, as shopping market, payment market, audio-visual market and travel market.
Dr. Wong mentioned, “We've never thought that the computers we designed will be smarter than us one day.”According to the continuous imitation and tests at different stages, it proves that computers can be superior to human beings in some ways, just like the relationship betweenthe emerging industries and traditional business. Emerging industries are built on the basis of traditional business, while its speed, efficiency and scale are far beyond the traditional business. Based on statistics, more than half of the Fortune Global 500have disappeared since 2000. Of course, a part of those has successfully finished the transformation or cross-industry. However, most of those have disappeared indeed. Another example is currently in China. The new economyobviously shocks the traditional economy. The threats fromthe Internet anddigitalization for real economy is even more serious. A large number of convenience stores are not able to survive. Meanwhile, it influences a lot on the retail industry.
After the birth of Digital Convergent Market, transformation becomes a must
China is undergoing a fundamental digital transformation. Our traditional lifestyle has been completely changed by the network which can be connected anywhere and anytime, the business data, and the smartphones in hands. Followed by the social networking, mobile technology, data analysis, cloud computing and other digital technology, it makes the industry boundaries increasingly blurred. Competitors are going to break the bounds of different industries, looking for cross-industry growth. Therefore, "Digital ConvergentMarket" comes into being and rises rapidly.
Affected by digitalization, 3D printing and etc., the forces of the enterprises which are developedby building platforms should not be underestimated. For example, Uber is the world's biggest taxi company, but does not own any car. Take Alibaba as another example.It is the most valuable retailer, but has no inventory. Its main task is to establish a digital information service platform and make full use of its influence to gather a number of outstanding resources. Due to the great understanding of customers’ needs,it allows customers to communicate as well as find out the products on the platform as they need. No matter how large the scale of the traditional business is, it will eventually be obsolete by the times if it does not fully absorb the operation of emerging industriesand their profit model. As a result of it, transformation is necessary.
Promote Digital ConvergentMarket relying on the effective platforms
In the Digital ConvergentMarket, there continually exists some emerging industries, followed by the changes of the traditional business. They both compete and cooperate with each other and break the original value chain. In the meanwhile, the new value portfolio is molded as a larger and more complex ecosystem surrounded by the consumers. As Chinese economy develops at a stable moderate-speed, seeking for new growth space and growth pattern have become the top priority of Chinese enterprises. Compared with the core and traditional businesses, the market potential of Digital ConvergentMarket is huge. It is expected to provide the cross-industry enterprises with excellent opportunities. For the moment, though the market output values in China is still less than those in the United States, but the shopping market and financial services market are developing quickly under the promotion of digital technology. Hence, the significant strategic importance of competitions among digitalization should be emphasized to the Chinese market and enterprises.
Dr. Wong stressed that, apart from the huge consumer groups in China, this process should also depend on three key factors: the network, cloud computing and big data analytics. Not only competitions, but also cooperation should be considered to tap the customers experience, provide more effective services and create cooperation platforms based on customers’ demands. Only these emerging information and technology can companies understand the customer needs, gather superior resources and optimize the configuration.