China's new bussiness model benefits consumbers worldwide

2024-March-29 16:29 By:

The International Monetary Fund updated its "World Economic Outlook Report" in January this year, raising the global economic growth forecast for 2024 to 3.1% based on the resilience of major economies such as China. In 2023, China's economy grew by 5.2%, significantly faster than the average growth rate of developed economies at 1.6% and also faster than the 2.5% economic growth rate of the United States. In terms of economic contribution, China's economic increment accounted for about 30.2% of global economic increment in 2023, while the United States accounted for approximately 20.5%. Against the backdrop of inadequate momentum in global economic recovery, frequent geopolitical conflicts, and exacerbated trade protectionism and unilateralism, it is particularly challenging for the Chinese economy to maintain its position as the engine of global economic growth.

Behind this lies the drive of China's innovative economic development, particularly in the field of digital technology application, where a batch of new formats, models, and platforms has emerged, becoming the most dynamic and innovative part of the Chinese economy. Among these, innovative business models characterized by digitalization are important manifestations of China's economic vitality and resilience.

Digital business models can be understood as commercial models that digitize various aspects of business processes, channels, marketing, and operations using communication technologies such as the internet, Internet of Things (IoT), wireless communication, and data analysis. They not only involve the application of modern information technology to business activities but also emphasize the utilization of data value in the business domain to achieve the intelligence and automation of business processes and operations. Firstly, digital commerce breaks traditional geographical restrictions, allowing business activities to transcend geographic locations, enabling enterprises and consumers to engage in transactions nationwide or even globally, facilitating the allocation of markets and resources on a larger scale. Secondly, it accelerates the sharing and dissemination of business information and data, enabling enterprises and consumers to access various goods and business information more conveniently, making better business and consumption decisions. Lastly, it enhances the efficiency of business activities, reduces business costs, minimizes waste of time and resources, and promotes the development of green and low-carbon economy. In recent years, driven by the rapid development of digital technology and digital economy, China's business models have embraced opportunities for digital innovation, driving the development of new formats and models, profoundly changing domestic consumption, circulation, and trade patterns, as well as the operating methods of enterprises and the production and living styles of individuals, injecting new impetus into China's economic development.

From a domestic business perspective, over the past decade, the pace of digital transformation in domestic business has significantly accelerated, especially digital business models, which have played a very important role in post-pandemic economic recovery. Online exhibitions, virtual industrial parks, unmanned supermarkets, contactless services, remote work, sharing economy, gig economy, and other emerging models have emerged one after another, driving the growth of the digital economy and digital commerce against the trend, greatly enhancing the vitality and resilience of the Chinese economy. E-commerce is a major hallmark of China's emerging digital business, and as an example, it vividly demonstrates the vitality and strength of China's emerging digital commerce. According to data from the STATISTICA website, China's e-commerce sales revenue reached $935.14 billion in 2023, making it the world's largest e-commerce market. According to statistics from the Ministry of Commerce, China's online retail sales reached 15.42 trillion yuan in 2023, making it the world's largest online retail market for 11 consecutive years.

Data from the People's Bank of China shows that during the Spring Festival period from Lunar New Year's Eve to the eighth day of the first lunar month in the Year of the Dragon, China's National Clearing House and China UnionPay processed an average of 2.63 billion online payment transactions per day, totaling 1.25 trillion yuan, representing an increase of 18.6% and 8%, respectively, compared to the Spring Festival holiday in 2023. E-commerce and online shopping have also driven the development of logistics and express delivery industries. Data from the State Post Bureau shows that in 2023, China's express delivery business accumulated a total of 132.07 billion parcels, a year-on-year increase of 19.4%. Driven by e-commerce and online shopping, domestic consumption in China has rebounded strongly. In 2023, final consumption expenditure drove China's economic growth by 4.3 percentage points, an increase of 3.1 percentage points over the previous year, with a contribution rate to economic growth of 82.5%, an increase of 43.1 percentage points, highlighting the fundamental role of consumption.

From an international business perspective, digitalization has also profoundly affected the current global trade patterns, with China undoubtedly leading the way in this process. Digitalization of trade has become an important factor driving stable growth in China's foreign trade. According to data from the Ministry of Commerce, China's cross-border e-commerce import and export reached 23.8 trillion yuan in 2023, an increase of 15.6% year-on-year, indicating that cross-border e-commerce has become an important stabilizing force for China's foreign trade growth. Currently, China's cross-border e-commerce exports account for more than 7% of total exports, with more than 100,000 cross-border e-commerce entities and over 200,000 independent platforms. Leveraging its strong industrial chain and supply chain advantages, Chinese sellers are reaching the world through international e-commerce platforms such as Amazon, providing benefits to global consumers.

At the same time, China has also seen the emergence of a number of domestic cross-border e-commerce platforms, which are not only important channels for Chinese enterprises to go global but also important channels for high-quality goods from various countries to enter the Chinese market. In addition, cross-border e-commerce has also promoted the development of new formats and models such as cross-border digital payments, cross-border logistics transportation, international trade big data marketing, AI e-commerce, and live streaming e-commerce. Relevant Chinese authorities are also actively promoting the digitalization of trade, accelerating the digitization of customs clearance, exhibition negotiation, and international trade documents, creating conditions for foreign trade enterprises to promote the digitalization and intelligence of the entire trade chain and process, significantly reducing the operating costs of Chinese foreign trade enterprises, improving trade efficiency, and enhancing trade competitiveness.

Looking ahead, with the acceleration of the Internet technology revolution and industrial application, especially the application and landing of new digital technologies such as artificial intelligence, blockchain, big data, and the Internet of Things in domestic trade circulation and international business activities, the global business development model will undergo significant changes, providing opportunities for strengthening cooperation in the digital commerce field among various countries and stabilizing the economies and trade of various countries. Currently, digitalization has become the new engine for the development of business in various countries, and its potential and future development space are still considerable. The STATISTICA website estimates that global e-commerce will continue to grow rapidly, predicting that by 2030, the scale of global cross-border e-commerce will reach $7.938 trillion, with an average annual growth rate of 29.3%, providing new channels for global trade cooperation.

At the same time, although China has the world's largest number of internet users, the proportion of consumers engaged in cross-border shopping is only 39%, still lower than many developed countries, indicating enormous growth potential in the future.

This article is contributed by Li Jun, reasearcher and head of the Ministry of Commerce International Trade in Services Research Institute.

Editor: WJH
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