The digital transformation of a whole country: China’s battle against the economic downturn

Graphic: Suvcon

With over 650 million internet users, China is one of those countries for which the future holds a lot of potential when it comes to e-commerce. In an attempt to counteract the economic turndown, the Chinese government has introduced a programme which should supply the internet to rural districts and network traditional industries.

The campaign “Internet Plus” is supposed to bring China back on course. Alibaba has already shown that East Asian companies are not to be underestimated. But there chances for foreign companies in China too. For instance,’s largest market is the People’s Republic. At the same time, technology companies have to battle with censorship and IP blocks. Will China still manage to take the next step and become a digital nation?

Digitalisation as an economic miracle cure

It is definitely too early to talk about a “crisis”, but the Chinese economy is slowing faster than expected: In May Imports sank 17.6 percent and exports 2.5 percent. A failing real estate market and excess industrial capacity are supposed to be at fault. Analysts see further downturn trends in store for the Chinese economy.

While we already sang another swan song (to the service economy) you have to think a step back in China. Many see a tool for counteracting economic downturn in a service oriented, stronger tertiary sector. The internet is supposed to help with this – at least, that is the plan.

“Internet Plus”

Premier of the State Council Li Keqiang will introduce the campaign “Internet Plus” in detail in a few weeks. The measures are supposed to combine different areas which are dependent on the internet: big data, cloud computing or mobile internet to mention a few. This bundling is supposed to result buff up the image of China as manufacturers of cheap, bad products.

Schon jetzt ein riesiger E-Commerce Markt
Already a giant e-commerce market

The digitale transformation is expected to bring innovation, especially in e-commerce. The “Internet Plus” campaign is supped to modernise existing industries, as well as lead to innovative ideas in younger tech companies. Apart from this, the Chinese big players: Alibaba (e-commerce), Tecent (social media) and Baidu (search engine and Chinese Google competitor) will also profit.

650 million are not enough!

But the Chinese government doesn’t just want to support providers, but consumers too. Even though 648.5 million people in China already used the internet in 2014, in one of the largest countries in the world, it is mainly the rural areas which lose out. The internet is supposed to be built up in this area and e-commerce companies be motivated to push forward in this market.

Prognose Internetnutzer 2015
Estimate of internet users 2015

This is exactly why especially young companies, with don’t have the logistic services to cover all of China, are reliant on the “Internet Plus” campaign. At the same time, this further opening of the Chinese market is an invitation to foreign companies to invest in China, especially in B2B.

Internet campaign, despite censorship?

A programme like “Internet Plus” in a country which has made negative headlines within the world wide web through censorship seems counterintuitive. Especially Google has some stories to tell about this. Undesirable content is blocked to Chinese internet users via IP blockades. This behaviour has already brought a lot of criticism to the country, maybe “Internet Plus” will also lead to a change in thinking for the censorship politic of the Chinese government.

Never the less, there is a lot of potential for e-commerce companies, national or international, in the Chinese market. Whether or not you support a country which actively blocks websites is a matter of conscience. But Western companies in China should use a different yardstick, as the culture which reigns in Europe, the USA, and other Western states, is not comparable to that in China.

The “Internet Plus” campaign aims for no less than the digital transformation of an entire country. It remains to be seen how this will work, and if the targets are achievable.

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