The Digital Economy Offers New Opportunities for Europe and China to Cooperate in the Global Digitization Process

Since the turn of the century, Europe has been awestruck by China’s rapid digital economy growth and the emergence of global Chinese digital companies.

China is now seen as a leader in fields such as e-commerce, banking, artificial intelligence, and robots. The large volume of big data created by internet use and transactions by more than one billion people gives Chinese corporations a significant advantage over their European competitors.

However, this may not be entirely true. According to a report published by the China Academy of Information and Communication Technology in 2020, China’s digital economy accounted for about 35% of GDP, compared to over 60% in Germany, the United Kingdom, and the United States, 40% in France, and about 20% in major emerging economies such as Brazil, India, and South Africa.

Furthermore, the degree of digitization differs by province and sector, as well as by income level, reflecting China’s many stages of economic development. The digital economy scale in Beijing and Shanghai, for example, had already surpassed that of France. However, in Gansu Province in northwest China, the size was just 20% of the provincial GDP.

When we examine the factors that contributed to China’s success story, we find that massive foreign direct investment, such as major U.S. companies like Apple and their subcontractors, or global EU car manufacturers like Volkswagen, which formed a partnership with a Chinese battery maker, has played a significant role.

This trend is likely to continue in the coming decade, owing to the environment created by China’s tech behemoths, which gives providers rapid access to a big pool of consumers.

China’s success story demonstrates that digitalization is a global phenomenon that offers several potentials for China and Europe to collaborate in a win-win manner. In Europe, Chinese technology and innovation are progressively being absorbed. The QR-ization of our life, for example, is gaining on in Europe, as is the advent of mobile payments, which were already common in China a few years ago and have now become the norm in Europe.

In Europe, there is also a lot of opportunity for deploying Chinese drones and robots for last-mile delivery and in restaurants, hotels, and even coffee shops. Meituan and OrionStar, two Chinese enterprises, are already taking advantage of this potential.

In the retail industry, new kinds of vending and new models of online buying have proliferated in the Chinese market. For European players like Rhea Vendors Group, a world-leading coffee machine maker, the arrival of automated services has been enlightening in terms of speeding up their digital transformation process.

Chinese platforms Kuaishou and Douyin, as well as Alibaba’s Taobao Live and JD Live, have pioneered live streaming commerce, which is opening up significant prospects. On the one hand, these platforms use Multi-Channel Networks to enhance cross-border e-commerce. For example, Xinxuan Selection makes it easier for Chinese consumers to access foreign brands. These platforms, on the other hand, have inspired several European merchants to rethink their business structures.

Through partnerships with European telecoms businesses looking to minimize their reliance on leading smartphone suppliers, the implementation of 5G in Europe will also create opportunities for Chinese vendors like Xiaomi and Oppo to expand market shares globally.

However, issues like data privacy and cybersecurity must be addressed if international trade and investment are to grow. Furthermore, the position of tech companies as gatekeepers in digital sectors has recently generated worries about monopoly power’s impact on innovation and market stability.

As a result, policymakers and competition authorities have interfered with the corporations’ business strategies.

Another constraint to consider when looking for win-win cooperation between global Chinese platforms and possible European partners is the restrictions imposed by central banks on new payment services that Chinese fintech businesses are seeking to market in Europe.

To foster innovation in the global digital economy, it is critical to ensure that borders are open for trade and investment, as well as to promote the exchange of best practices and collaborations.

Photo Credit: https://taxaide.com.ng/2019/08/01/companies-income-tax-and-the-digital-economy/