Abstract
This chapter delves into the potential and threats facing the digital sector in China, as well as the country's ongoing digital transformation and business evolution. Focusing on e-commerce, FinTech, AI, and the Metaverse, it analyzes the government's involvement in supporting the digital landscape and the ways in which businesses have benefited from digital trends. This chapter looks at potential barriers to the widespread use of digital technology, including those associated with cybersecurity, data privacy, digital literacy, and the digital divide. It offers a scathing evaluation of the Chinese government's digital policies, sparking discussions about privacy and competitiveness in the Chinese market. Future digital trends are predicted, along with their possible effects on Chinese enterprises and the opportunities for those organizations to leverage digital technology to ensure long-term viability and superior customer service.
TopIntroduction
China, the world's most populous nation and the second-largest economy, has experienced an unprecedented transformation in the realm of digital technology over the past few decades (Cheng & Li, 2023). Historically rooted in its rich traditions and spurred by economic reforms in the late 20th century, China embarked on a journey that positioned it at the forefront of technological innovation (Hao, 2023). The nation's unique fusion of ancient culture with a keen focus on the future has enabled it to harness the potential of digital advancements, with technology giants like Alibaba, Tencent, and Baidu illustrating its rapid ascent in the global digital landscape (Evron & Bitzinger, 2023; Hu, 2023).
The historical context of China's digital transformation is a remarkable journey that spans several decades, marked by significant milestones and transformative events. It is a narrative that begins with the gradual introduction of digital technologies and culminates in the country's emergence as a global digital powerhouse. China's digital transformation can be traced back to the late 20th century when economic reforms initiated by Deng Xiaoping opened the doors to foreign investments and technology transfers (Jia-Zheng & Broggi, 2023). The early 1980s witnessed the establishment of China's first Special Economic Zones, such as Shenzhen, which became hubs for technological innovation (Cheng, Chen, & Tang, 2023). These zones served as fertile grounds for experimenting with digital technologies and fostering an entrepreneurial spirit.
One of the pivotal milestones in China's digital evolution was the launch of the “863 Program” in the 1980s (He & Zhnag, 2021). This national initiative aimed to advance high-tech industries and laid the groundwork for research and development in areas like telecommunications, information technology, and semiconductors. It provided the impetus for indigenous technological innovation, setting the stage for the digital revolution that followed. The 1990s saw the proliferation of personal computers and the internet in China (Reardon et al., 2021). The government recognized the potential of these technologies for economic growth and gradually liberalized access to the internet. The result was a surge in online activities and the emergence of homegrown tech giants like Tencent, Alibaba, and Baidu, which would later shape China's digital landscape (Yeo, 2022).
The early 2000s witnessed the rapid expansion of mobile telecommunications and the advent of 3G technology (Kalem et al., 2021). This development was a game-changer, bringing internet access to a broader segment of the population and paving the way for mobile-based services, including e-commerce and mobile payments. The rise of smartphones in the 2010s further accelerated the digitization of various sectors, from finance to entertainment (Ganichev & Koshovets, 2021). In recent years, China's digital transformation has been characterized by advancements in artificial intelligence (AI), big data, and the Internet of Things (IoT). The government's “Made in China 2025” initiative aimed to bolster the country's position in high-tech industries, with a particular focus on AI and robotics (Agarwala & Chaudhary, 2021). Additionally, the widespread adoption of digital technologies in areas like healthcare, education, and smart cities has redefined the daily lives of Chinese citizens.
Today, China stands as a global leader in digital innovation, boasting a thriving digital ecosystem that encompasses e-commerce giants, cutting-edge technology companies, and a digitally savvy population. Its historical journey from technological nascentness to digital prowess is a testament to the country's adaptability, strategic planning, and commitment to embracing the digital era. The digital transformation path that China has been on is truly astonishing, growing at a rate that few other countries have been able to match. The country's admittance into the World Trade Organization in the early 2000s paved the way for a more globalized market and cutting-edge technology developments, marking the beginning of this shift (Gallagher, 2016).
Key Terms in this Chapter
Blockchain: A decentralized ledger of all transactions across a network, enabling secure, transparent, and tamper-proof data storage and transfers without the need for intermediaries.
Fintech: An industry comprising companies that use technology to offer financial services. These companies operate in areas like payments, insurance, investment, and more, and are generally seen as disruptors to traditional financial institutions.
5G (and Beyond): The fifth generation of mobile network technology, succeeding 4G. It is designed to be faster and more efficient, with the ability to handle more connected devices, making it suitable for IoT and other advanced applications.
Sustainable Development Goals (SDGs): A collection of 17 global goals set by the United Nations General Assembly in 2015, intended to be achieved by 2030. They cover social, economic, and environmental development issues.
Metaverse: A collective virtual shared space created by converging physical and virtual reality. This space is typically facilitated by the internet and encompasses augmented reality, virtual reality, and 3D internet.
Digital Divide: The gap between individuals, households, businesses, or geographic areas at different socio-economic levels with regard to both their access to information and communication technologies (ICTs) and their use of the Internet for various activities.
Digital Transformation: The integration of digital technology into all areas of a business, fundamentally changing how businesses operate and deliver value to its customers. It also refers to the cultural shift that organizations undergo to continually challenge the status quo and experiment with new technologies.
Edge Computing: A distributed computing paradigm that brings computation and data storage closer to the sources of data, aiming to reduce latency and bandwidth use, thereby optimizing the speed at which data is processed.
Internet of Things (IoT): A system of interrelated devices, machines, objects, or people that are provided with unique identifiers (UIDs) and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction.
Artificial Intelligence (AI): The simulation of human intelligence processes by computer systems. This includes learning (the acquisition of information and rules for using the information), reasoning (using the rules to reach approximate or definite conclusions), and self-correction.