Thoughts on Digital Disruption in China

The rapid growth of China’s middle class has meant that this targeted segment of Chinese consumers have access to more information via Internet and have a stronger autonomy in decision making due to greater choices and information flow. Foreign MNCs entering China will be increasingly competing with local Chinese companies on the basis of product innovation and speed to market.

Hence, enterprises have to constantly adjust business model so as to constantly cope with changes in customer expectations and needs. The growth rate of China’s economy may be declining as it matures but in absolute terms, it is significant and the world’s top multinationals remain attracted by the opportunities arising from increased consumer spending, urbanisation and infrastructure development.

Competition from both international and domestic players in China remains fierce with the rise of digital retail and sophistication in consumer choices, enterprises entering China have to constantly establish new business models, attract talent and also operate in a complex regulatory environment.

Local competitors are exploiting innovations such as e-commerce, digital media and big data in order to capture market share or to create new markets entirely as they do not have the global resources particularly in marketing to compete head to head with MNCs.

One example is that local Chinese E-Commerce retailers are now using different ways to optimise their omni-channel marketing through online and offline to effectively manage new product launches which may later be rolled out more extensively to all retailers, differentiated pack sizes and cross category promotional picks.

However, the rapid evolution in business models revolving e-commerce and digital media space has intensified the skills mismatch and exacerbated talent shortages in China. Both International and local Chinese enterprises will have to start investing in building human capital and infrastructure to support the talents required to support growth in big data, analytics and eCommerce.

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