Global experts from Microsoft, IBM, and McKinsey shared insights on China’s digitalization at a webinar, “China’s Digital Transformation: Shaping the Global Data Landscape,” hosted by Chueng Kong Graduate School of Business (CKGSB) and Asia House on November 17. As China enters a new age of digitalization, companies operating there are having to navigate new trends and regulations in a changing data landscape.
Roan Kang, Microsoft’s Chief Operating Officer and Global Accounts Manager for Greater China, kicked off the webinar discussing the regulatory environment in China and gave examples of how companies are navigating the digital changes. Kang said, “For any enterprise or any customer working in China, or frankly globally, data is at the heart of any digital transformation that they’re going to drive.”
Anthony Butler, IBM’s Chief Technology Officer in the Middle East and Africa echoed this saying, “data has emerged as a fifth factor of production if you think of land, capital, and entrepreneurship.”
In his keynote speech, Sun Tianshu, CKGSB Visiting Professor of Information Systems, gave an overview of the key differences between China and the United States’ digital landscape. “Data is more concentrated among a few players in the Chinese market, but in the US, especially before the Cambridge Analytics [data scandal] and before 2020, you see a much more open data ecosystem, while also the scope of their data collection is narrower…for example, Facebook is only in social, Amazon in e-commerce and some video-streaming data, and Google mostly in search. In China you see companies like WeChat and ByteDance span a range of sectors.”
Due to crowded market, Sun said that many Chinese companies have had to expand their monetization models (which he divided into advertising, content monetization, gaming, and e-commerce) and venture into new sectors. “In China you see a lot of business model innovation empowered by rich data collected by companies across different digital platforms.”
He added that although many Chinese companies like TikTok have previously opted for the globalization route, data localization in overseas markets is becoming increasingly challenging due to various reasons.
Evidently, as a result of restrictions placed on companies on their ability to store and process data, many increasingly need to localize their data and thus adapt their IT systems and operating models across different regions and markets.
In the panel discussion, Violet Chung, Partner at McKinsey and Company, said there needs to be a combination of globalization and local functions. She explained that certain functions such as front-end systems and operating models should be localized to different markets and regions, while other functions like infrastructure depend on which market the company is operating in.
Li Yang, Professor of Marketing at CKGSB, highlighted that it is not always countries and markets which place restrictions on data flow but companies too. “DiDi has its own standards for transportation, Uber also has its own standards – who wins depends on their own business models.” He discussed the concept of “walled gardens” where companies tend to protect their own services and place stringent restrictions on other companies using their data.
Chung pinpointed some issues surrounding the lack of data management in companies, such as how data is often spread across hundreds of different source systems and often only controlled by one department or business unit (known as data silos). “You see a lack of clear roles and responsibility of management of data across organizations,” she said.
The webinar ended with a discussion on the benefits of digital trade agreements, such as the UK-Singapore Digital Economy Agreement and the Asia-Pacific Economic Cooperation (APEC) Trade Agreement.
Butler from IBM highlighted, “For countries that might not have access to a global market, being able to leverage hyperscale cloud capabilities and being able to move data offshore for process is allowing them to develop new business models while lowering the cost of market entry and distribution…these types of agreements need to be put in place to facilitate us moving forward.”
Watch the full webinar: