Chinese companies should invest in data, artificial intelligence and digital twins, which are increasingly perceived as key drivers to build resilient supply chains and achieve autonomous production, said a new report from global consultancy Accenture.
The report said the surveyed Chinese enterprises plan to invest 6 percent of their revenues in digitalization, automation and relocation related to their supply chains and production facilities — higher than the global average of 4.5 percent.
"Chinese companies are becoming more active in building digital maturity as resiliency has become an opportunity for growth, not just a strategy for survival," said Yu Hongbiao, industry X lead at Accenture Greater China.
Taking advantage of this opportunity requires companies to drive the digitalization of engineering, supply, production and operational processes, Yu said, adding that solutions like digital twins and technologies such as generative AI can help companies adapt more quickly to sudden changes and take data-driven and real-time actions.
He said few businesses have sustained their resilience and long-term growth amid external uncertainties, while the challenging business environment is prompting company executives to reevaluate diversifying and localizing their sourcing and production footprints.
The report noted that as Chinese enterprises have accelerated steps to expand in overseas markets, they should make forward-looking and systematic planning about local and global production layouts in a bid to make supply chains and production processes more predictable and autonomous.
For instance, one multinational company producing heavy and high-value equipment had struggled to ensure operational efficiency and continuity in meeting production goals due to a lack of real-time visibility of its production processes.
Accenture said the company should implement a cloud-powered, smart and connected factory via an industrial internet of things technology platform. Integrated sensors and connectivity tools can link physical assets in the factory to the digital world, providing valuable real-time insights.
Powered by data, digital modalities and AI, these capabilities allow companies to make broad changes, ranging from employee/customer interaction to sustainability, while increasing revenue and reducing costs, it added.
It is also important for Chinese enterprises to step up their push to apply digital twin technology, which will be the key to differentiating enterprises' digital capabilities in the coming few years.
Digital twin tech involves using data streams to create a digital representation of a real-world asset to improve collaboration, information access and decision-making.
Businesses must improve data use in the workforce, AI and other digital technologies so as to use predictive and visualization tools to make data-driven decisions on the frontlines of business activity and navigate the complexities of modern supply chains. About half of Chinese companies said they plan to have a multiskilled, digitally literate workforce by 2026, the report added.
Xiang Ligang, director-general of the Information Consumption Alliance, a telecom industry association, underscored the significance of developing digital technologies represented by AI and digital twins, which will inject fresh impetus into the country's economic growth and speed up digital and intelligent upgrades in enterprises.
"Digital technologies have played an increasingly vital role in enhancing operational efficiency, cutting costs and improving the core competitiveness of traditional industries," Xiang said.
Noting that global supply chains are constantly evolving, he said the in-depth integration of digital technologies with the real economy will further reinforce Chinese enterprises' advantages in global supply chains, while calling for companies to strengthen cooperation in building digital infrastructure such as cloud computing, data centers and smart cities.
Chinese companies' investments in digital transformation are expected to expand quickly in 2023, with the compound annual growth rate of digital business expenditures reaching 19.1 percent between 2023 and 2026, said Wu Lianfeng, vice-president and chief research analyst at market consultancy IDC China.
Wu pointed out that these enterprises are facing mounting difficulties in the process of digital transformation, such as a lack of innovation and collaboration among various departments of enterprises, budgetary shortfalls and inadequate skillsets. He said enterprises should devise long-term plans for digital transformation and continuously pour money into this field.
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