By 2024, China’s B2B industry will reach $350b in deals
ONLINE B2B transactions are booming in China. Their value is set to reach US$350 billion by 2024, growing steadily by 30 percent every year.
According to a study produced by Bain & Co, in collaboration with e-commerce group Alibaba Group Holdings, this surge is largely credited to the increase in digitization efforts by the nation’s manufacturers in the last five years.
“Manufacturers are aware that it is important to […] control costs by using digitalized technologies. Digitization also effectively helps companies better understand market demands and trends,” said Bain & Co Partner Bruno Zhao.
China has been working hard to sustain the exploding economic growth amidst trade tensions.
The foundation on which the economy is built has changed, morphing into one that is technology-based, such as big data analysis, blockchain, and artificial intelligence (AI).
Recognizing the importance of going digital, China is encouraging manufacturers and service providers to integrate technology into their operations.
China has also been encouraging various R&D efforts. Early this month, the Hangzhou Municipal Government, for example, announced plans to pump US$4.3 million into projects that aim to advance AI.
These may include the development of open AI platforms, computing hardware, core algorithms, and operating systems.
E-Commerce: B2B to go the B2C way in China
E-commerce offers much that brick-and-mortar businesses can’t: It can help businesses slash marketing and human-resource costs, and break down borders, and give businesses access to a global customer base.
China dominates when it comes to e-commerce, especially in B2C businesses, which has grown tremendously as companies focused on better serving a vast base of customers over the past two decades.
While B2C e-commerce is still greater than B2B e-commerce in the country, Zhao is confident that it is only a matter of time before former segment gains momentum.
“B2B e-commerce will enter into a high-growth territory in the next five years as the internet infrastructure for online trading improves.”
A flourishing B2B e-commerce segment is expected to fortify China’s position as leader of the global e-commerce industry.
With the backing of technology companies such as Alibaba and Tencent, the proliferation of B2B e-commerce will only give rise to companies such as Zhaogang.com, which connects buyers and sellers of industrial steel through an online platform.
Online B2B trading platform Imall’s General Manager Li Congshan said:
“B2B e-commerce can be more than online business transactions, and is imperative in a country’s digitization strategy.
“Data obtained can enhance business operations by reducing business overcapacity, and also by improving manufacturing capabilities to meet the ever-evolving and rising demands for better products.”
E-commerce is indispensable when it comes to moving an economy forward digitally. B2B companies in China ought to bank in on this opportunity, expanding their reach to a bigger customer base.
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