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Shanghai seeks digital upgrade

Shanghai has demonstrated its determinationto accelerate its digital push and outrank peer cities in the digital economythrough two major agreements with Chinese internet giants.

By teaming up with Alibaba Group HoldingLtd and Tencent Holdings Ltd on a number of new tech applications, themunicipal government is seeking to leverage internet technologies to spur newgrowth momentum and improve public services, experts said.

There are fears that Shanghai is fallingbehind in digital transformation, which has started to change the businessmodels of traditional industries in noticeable ways, said Chu Yin, a researcherspecializing in digital economy at the Center for China and Globalization.

"The latest deals suggest that thelocal authorities feel the need to embrace the internet on a much larger scaleand in a deeper way, or otherwise Shanghai will lag behind in the digitalrace," said Chu.

One case in point, according to Chu, isthat none of China's high-flying internet companies, such as the traditionaltech trinity of BAT - which stands for Baidu Inc, Alibaba and Tencent - norupstart players like JD and Toutiao, are based in Shanghai.

"A lack of tech majors could beproblematic, since the internet-based economy is perhaps the one that reliesthe most on economies of scale," he noted. "That is to say, thebigger you are, the more likely you are to squeeze out smaller players bygenerating the predominant amount of traffic."

The tie-up seeks to explore and employvaluable data from both the government and enterprises, which are seen as agold mine in the digital age, said Fu Weigang, executive dean at ShanghaiInstitute of Finance and Law.

"The agreements will help overcomeobstacles for companies to obtain certain data and create applications specificto a wide array of scenarios," Fu said. "We can expect a growingnumber of public services in terms of variety and sophistication."

The efficiency gains from the adoption ofnew technology have already created dividends for the city. For example, Shanghai'seconomic trackers pointed to the employment of big data and cloud computing torevamp traditional retail as a force to bolster consumption, which grew 7.7percent year-on-year in the first half.

But in this ongoing digital race, Shanghaineeds to carve out its own identity, which features sound commercialinfrastructure, a large population, and the highest level of disposable incomenationwide, analysts said.

"Thanks to its mature commercialenvironment, legal systems and logistics, Shanghai is where most businessespilot pioneering commercial endeavors in China," said Fu.

Whereas many pure-play internet companiesprimarily focus on the consumer end, Shanghai is in a position to providericher application scenarios that serve general business purposes such asadvanced manufacturing, said Li Zhu, founding partner of venture capital firmInnoangel.

"There is little room for complacency.But by playing to its strengths and enabling traditional sectors to digitalize,we can create economic, social and strategic benefits for the city," saidChu.

By He Wei in Shanghai | China Daily |Updated: 2018-08-22


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