Produced by | Big Whale Project Group
Author | Under the rainforest
Header image | Alita
From the COVID-19 pandemic to the energy gap to the supply chain disruption crisis, the impact has made countries around the world begin to reflect on the strategic mistakes of supply chain management in the past.
It can be said that an important factor leading to the crisis of broken chains is the wrong prediction of supply and demand. The significance of the development of digital technology is to combine historical precipitation to support long-term production capacity planning, avoid resource misallocation, and ensure the smoothness of each link and the overall operation efficiency.
This article is a series of special reports on the "2022 Whale List • Industry Digitalization", Tiger Sniff interviewed a number of expert judges, presenting key industry stories and trends, in this issue, we chatted with Wu Lianfeng, the mentor of The Great Whale, about the wave of digital transformation from a global perspective, and discussed how China can give full play to its own advantages and characteristics in this process.
Lianfeng Wu is vice president and chief analyst at IDC China, with more than 20 years of experience in the IT field, covering the overall ICT market, Internet and new media, intelligent connected devices, digital economy and so on.
The following is a transcript of Tiger Sniff's dialogue, edited and compiled:
Tiger Sniff Survey: What changes have taken place in the global supply chain stimulated by the COVID-19 pandemic?
Wu Lianfeng: In the past, people rarely considered the spread of the global epidemic and geopolitical instability, and the supply chain did cost reduction and efficiency, that is, zero inventory or as low as possible inventory, and demand to leverage supply. Before the COVID-19 pandemic, we published a global report defining it as an "unfettered supply chain", which does not mean chaos, but says that the supply chain is driven by the demand side, and often uses efficient outsourcing methods to do information digital management.
After the epidemic came, the previous demand forecasts failed, and the zero inventory state did not work, why was the supply chain tight and prices rising? An important factor is that everyone hoards a lot of goods in advance, resulting in the entire upstream production capacity can not keep up, at this time the supply chain becomes dominated by the supply side, from unconstrained to constrained. Moreover, many companies are also beginning to consider abandoning outsourcing and building their own supply chains to prepare for future uncertainties.
Therefore, these changes today are to a certain extent catalyzed by the epidemic and the international situation.
Tiger Sniff Survey: From a global perspective, what are the outstanding constraints facing digital transformation?
Wu Lianfeng: We have sorted out five global constraints, including insufficient innovation and collaboration, limited experience and skills, short-sighted tactical planning, outdated assessment systems, and isolated transformation initiatives.
First of all, digital transformation will involve almost all departments and upstream and downstream ecosystems, but many enterprises are not enough to innovate and collaborate with internal or suppliers, which makes it difficult to establish a unified platform. Everyone is now talking about the middle stage, the significance is to better integrate and mine data through the platform, and finally achieve agile development. Therefore, innovation collaboration is the first challenge.
Second, business owners are relatively short-sighted about the tactical planning of digitalization, and the proportion of 20% of the real determination to invest resources and budgets to transform is less than 20%, on the one hand, the external competitive environment has not forced entrepreneurs to do what they must do, on the other hand, the value of digital transformation to enterprises is not obvious enough.
Third, many companies are still using traditional KPI assessment, such as just looking at sales, profits, efficiency improvement, ignoring customer satisfaction, monthly active users and other indirect indicators, so this assessment system must also change to mobilize enthusiasm.
Fourth, some traditional enterprises have limited experience and skills, and the salary gap with Internet companies is relatively large, making it more difficult to transform the transformation of talent reserves that understand both business and digital technology.
The fifth challenge is somewhat similar to the previous innovation collaboration and tactical short-sightedness, in that enterprises operate and manage digital transformation as an isolated project or a single department, making it difficult to play synergy between different departments.
Tiger Sniff Survey: What are the specific stages of the global digital transformation process?
Wu Lianfeng: IDC has made a maturity model of "5 stages of digital transformation". Starting from a single point of experimentation, innovation is done in local places, and digitalization is nurtured; after the experiment produces good results, it is promoted to more fields and expanded digitalization; and then it is coordinated and copied to the whole company and the upstream and downstream of the industry, so that the various systems are integrated, and finally the scale of data is realized.
In addition to these stages, many companies have also begun to open up a second curve, seeking new product or service disruption opportunities, prompting the scale of digitalization to expand larger and faster.
Tiger Sniff Survey: How long is the entire transformation cycle expected to take? Benchmarking advanced countries, what is China's current level of digitalization?
Wu Lianfeng: It will be a very long process, and if you look at it for ten years, it may not be more than that.
Combined with the research of the Chinese market in the past two years, most of the enterprises are in the stage of promoting and coordinating the replication of digitalization, ranking more than 100 countries in the world, and the mainland is in the midstream average. Compared with the United States, Singapore, Germany and other relatively developed countries, there is still a certain gap, most of the enterprises in these places have been in the stage of realizing scale data.
Overall, the higher a country's IT spending as a percentage of GDP, the better the maturity of digitalization.
China's current digital transformation is entering the deep water area, not only the coverage area is getting larger, but also the difficulty is getting higher and higher. How to keep up with the pace of global technological innovation is something we should seriously consider.
In the past, the value of digital transformation was more in terms of efficiency improvement and cost reduction, but now the innovation of products and services, the innovation of business models, and the innovation of social responsibility are also reflected in the angle.
Tiger Sniff Survey: Is there a link between the level of digitization and industrialization of the country?
Wu Lianfeng: Not necessarily. Some countries have underdeveloped industries, but the service industry is leading and the application of digital technologies is also widespread.
In the past two years, we have done industry segmentation reports in the fields of manufacturing, banking, retail, and medical treatment, and found from historical data, first-hand interviews and various research materials that the average annual sales and profit gap between companies that have done digitization and companies that have not done digitization will be very obvious in 5 years.
Taking the manufacturing industry as an example, the average annual sales and profits of companies that have done digitization can increase by 23%, which at first glance seems to be a small number, but after 5 years, the gap between them and not doing digitization will become wider and wider. Therefore, today's markets, both developed and developing, are considering how to bridge the digital divide.
Tiger Sniff Survey: What are the characteristic advantages and catch-up opportunities of China's layout digitalization?
Wu Lianfeng: China's institutional advantage is certainly a strong point. If the relevant government departments introduce industry policies to convey downwards, state-owned enterprises and private enterprises will respond and follow the direction. The so-called concentration of efforts to do great things is also the same in the promotion of digitalization. After the set-tone document comes out, especially the central enterprises, they will quickly begin to implement actions, and this unity can prevail in the world.
In addition, the Chinese market is large enough and the application scenarios are diverse, which can contribute more test fields and trial and error space to digital transformation solution providers, which is conducive to the iteration and polishing of the system.
Tiger Sniff Survey: What is the significance of digitalization for the role of the "world factory" in stabilizing the mainland?
Wu Lianfeng: China's manufacturing industry has "two 1/3": one is that GDP accounts for nearly 1/3 of China's GDP, and the other is that the output value accounts for 1/3 of the global manufacturing output value. This pattern will not change much in the next three or five years, or even five to ten years.
Therefore, from a macro point of view, the development of digitalization can better open up manufacturing, logistics, transportation, support the internal cycle, the internal cycle is done well, and in turn, the outer cycle attracts foreign investment to pay attention to the Chinese market, and the two promote each other. Moreover, digitalization is also a good support for the implementation of China's new development concepts of innovation coordination and green opening up.
The third is to solve the problem of population aging. China's labor force population has begun to show a downward trend around 2012, and by 2025-2030, the total population will reach a peak and then begin to decline. Once the labor force population declines, it will cause it difficult for enterprises to recruit workers and labor shortages, and it is necessary to replace simple jobs through digitalization and robots.
From a micro perspective, digitalization can also better improve the quality of enterprise products. In the first 30 years, China's manufacturing in the global positioning belongs to the medium quality products, with low prices or even ultra-low prices to enter the market, the future does not say the top quality, at least high quality, medium price will be the key direction, and enterprises in the acquisition of higher profits, will also strengthen technological upgrading, enhance comprehensive competitiveness and global influence.
Tiger Sniff Survey: China's diplomatic style pays more attention to and cares for neighboring countries, how to view the international synergy of digitalization?
Wu Lianfeng: From the experience of the Belt and Road Initiative, we can find that a good foreign policy can significantly enhance China's global discourse power. Now Vietnam's manufacturing industry continues to rise, part of which benefits from the spillover and transfer of manufacturing enterprises along the south Coast of China, and this division of labor helps China's manufacturing industry to break through to the high end. Bridging the national digital divide by providing economic, technological and cultural support to neighboring countries is a way to spread and publicize national soft power, and is one step closer to achieving the goal of a "community with a shared future for mankind".
"Big Whale List" is an industry list initiated by Tiger Sniff, which aims to continue to look for growing enterprises with vision and continuous innovation with a forward-looking vision, and empower "Big Whale" enterprises from the aspects of communication, customer acquisition, capital and cognition. Tiger Sniff invites industry experts, top institutional investors and head companies to work together to discover the hidden whale.