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Pandemic Accelerated Digital Transformation in China

What can we learn from China's agile response?

Digital transformation and the rapid adoption of remote and autonomous technologies has underpinned China’s rapid recovery from the COVID-19 pandemic. In this blog, we will take a quick look at some examples in different industries and give the reader a snapshot of China’s post pandemic technology landscape.

China’s return to normalcy

Shanghai lowered its public health emergency response from second to third level after an announcement from the municipal government on May 8th. The same day, Shanghai Disneyland, which was closed since Jan 25th, reopened its ticket sales for May 11th and sold out within minutes.

The rest of the country, including epicentre Wuhan and capital city Beijing, lowered its risk level earlier than Shanghai. This allowed 90 million people to travel within China over the Labor Day holiday. Many held their breath to see what would happen after the holiday, but with controls such as capacity restrictions and support of digital tools, such as the health check QR-codes, the country is on its way to recovery with many sectors transformed.

Accelerated digital transformation

Technology such as the health check QR-codes were not newly invented. It was launched by the Chinese government through leveraging two ubiquitous apps, Alibaba’s Alipay and Tencent’s WeChat, to host the QR-codes for contact tracing. Only with the support of the government at the highest level, could it have rolled out so comprehensively. Similarly for other sectors, such as logistics, retail, and healthcare, Chinese government and businesses made rapid decision to deregulate and encourage the use of existing technology to combat COVID-19.

Drones and autonomous vehicles were rapidly deployed, despite previous struggles with regulators, as both sides united to minimize human-to-human contact. SF Express, China’s biggest private courier, was the first to obtain a license to test drones in 2017 from Civil Aviation Administration of China (CAAC). However it still faced barriers to operate large commercial drones that weighted over twenty-five kilograms, which would require five years to get approval as a general transport aircraft. The government was slow to respond to SF Express’s appeals for regulatory overhaul, but due to COVID-19, SF Express was given permission to deliver medical goods in Wuhan. Another company, JD.Com, not only used drones but also L4 autonomous vehicles to deliver medical supplies.

Digitized healthcare, or telehealth, was a natural target for acceleration. The combination of self-isolation and need for healthcare increased the use of telehealth platforms. China’s biggest telehealth company, Ping’an Good Doctor, experienced ten-fold growth in newly registered users between January to mid-February. With over 1,000 telehealth companies in China trying to alleviate China’s overburdened healthcare system, COVID-19 forced many patients to try telehealth services and adopt new habits (read patient journey here).

Robots also gained wider acceptance in a wide array of sectors as a result of COVID-19. Hospitals and shopping malls were quick to use security robots for sterilization and temperature monitoring. Many of these robots existed prior to COVID-19 but due to budget, education, or policy concerns were only used in small pilot scale that quickly changed with the pandemic.

Even traditional food & beverage sectors increased automation with robot chefs and waiters. Panasonic originally formed a joint venture with Haidilao, China’s biggest hotpot restaurant chain, to use robots to decrease the cost of human labour and increase efficiency. The smart restaurant (video here) opened in 2018 with plans of expanding to 5,000 stores worldwide. With COVID-19, smart robot restaurants also have improved hygiene and decreased human contact, which allowed Haidilao to reopen safely as early as March.

Opportunity for Japanese companies

Japan is also opening itself to trial and adopt new technology to battle COVID-19 but for many technologies, China’s user acceptance is relatively higher and as a result technology more mature and tested. For example, Japan’s restrictions for online medical service were lifted in April, and 10,000 clinics were approved for telemedicine. However Japanese doctors are still hesitant to digitize consultation due to lack of mature supporting infrastructure such as payment and medical records. Compared to China, its Ping’an Good Doctor app alone had already served over 300 million patients before COVID-19, and as of March 31st attracted more than 1,000 million visits during the pandemic.

The Chinese technology landscape is evolving rapidly, and the pandemic response has brought an accelerated digital transformation across industries. Japanese companies have opportunities to offer their expertise to the China market, such as Panasonic has with Haidilao. Contact us to find out more about how Japanese companies can gain insights into digital transformation in China, and engage with Chinese technology companies to accelerate their own digital transformation.

About the Author

Emma Hsu is the Program Manager of Open Innovation Group at Intralink’s Shanghai office. She was born in Taiwan, grew up in Canada, and has worked in China for the past 10 years. If you have any comments, questions, or suggestions, please email her: emma.hsu@intralinkgroup.com.

Intralink’s Open Innovation Group is privileged work with NTT Data, NSSOL, Chubu Electric, Fujitsu, Hitachi, Mitsui Chemicals, and many more. For more information, visit: www.intralink.co.jp  

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