CHEN Jin, a professor from the Department of Innovation, Entrepreneurship, and Strategy at Tsinghua University School of Economics and Management (Tsinghua SEM) and director of Tsinghua University's Research Center of Technological Innovation, told Economic Information Daily that – at this time of challenges and opportunities – Chinese companies should develop strategies that focus on improving industrial ecosystems, pursuing innovation-driven growth and accelerating digital transformation. "Not only large state-owned and private enterprises, but also technologically-advanced micro, small and medium-sized companies should think about how to become an integral part of the industrial chain," he said.

Chinese economy has bright outlook, innovation-driven development will sustain it

The Chinese economy is under a lot of pressure due to the COVID-19 pandemic and other factors, but "it has a bright outlook in the long run," CHEN said.

"Supply chains have been affected by the pandemic and, to some extent, by geopolitics," he said, "We should promote domestic circulation and a unified national market, restructure China's industrial chain, and make the supply chain stronger and more resilient."

Professor CHEN said, since the start of the 14th Five-Year Plan, traditional infrastructure construction and new infrastructure construction have produced positive effects. Plans for peak carbon and carbon neutrality, rural revitalization, and for world-class enterprises have provided major development opportunities for Chinese companies. Moreover, China is at the stage of transitioning into a consumer economy, and its next era will see further development of the digital economy.

CHEN said the innovation-driven development is what makes people confident about China’s economic prospects. "There are not many countries in the world today which place innovation as their primary engine of economic growth," he said, "China now is more focused than ever before on using high technology to transform traditional industries and boost the growth of conventional industries through the digital economy."

CHEN said innovation-driven growth is more powerful, heathier and more sustainable than resource-or investment-driven growth. "We should remain confident in this approach, aim for high-quality development and accelerate industrial and corporate transformation," he said.

Chinese companies need to think strategically, seize opportunities in restructuring and digital transformation

As for how to realize high-quality development, CHEN said a restructuring of industry chains is the key. Every company should consider how to become an integral part of its industry's chain. "Every company, large or small, needs to quickly change its strategic thinking, seek growth by cooperating with other companies, and help build a more comprehensive, systematic and resilient industry chain," he said.

"Specifically, Chinese companies should focus on improving their industrial ecosystems. They need to have a deeper understanding of the ecosystem and platform than conventional companies, corporate groups, and micro and small enterprises. This will set higher standards for the development of Chinese companies," CHEN said, adding that this would help Chinese companies gain international influence, ensure their industries are self-supporting and their risks controllable.

Speaking on industrial structure, CHEN said Chinese industries should try to increase their value and climb to the top of the global value chain. "Chinese companies now face difficulties caused by the pandemic and other negative situations. They need to make adjustments to their conventional business, focus on more environmentally-friendly products and services with higher added value, and view value creation as the target of their development," he said.

"For Chinese companies, digital transformation offers both opportunities and challenges," CHEN said. He advised Chinese companies to seize the dividends of the digital economy and fast-track their digital transformation. For example, as the pandemic runs its course, digital work and life platforms will become the norm, and digital work environments are forming. Hybrid workplaces and remote work will help boost productivity. "We have achieved great success in digital commerce. There will be considerable room for smart manufacturing and digital agriculture to grow in the future," he said.

Chinese companies should work together for synergy in innovation

Professor CHEN said the restructuring of industry chains and digital transformation will set higher standards for the development of Chinese companies. This will create considerable challenges, especially during the pandemic.

CHEN said that apart from providing aid to companies in the form of grant funding, the government should encourage companies to cooperate and form alliances for innovation, pushing them to grow together is crucial under the current circumstances.

"For small and medium-sized companies, working on their own and living off government aid won't last long. I think the government should formulate a policy to encourage them work with larger companies to get them past their pandemic-induced difficulties and maintain sustainable growth in the future," CHEN said. Small and medium-sized companies should seek to deepen cooperation with larger companies and take manufacturing and R&D tasks outsourced by the latter to form alliances for innovation.

"To this end, the government needs to change its supervision approach, and companies need to optimize their operations," CHEN said. The government should give politically loyal, well-managed, technically advanced, socially responsible large companies more power and allow them to assume a leading role in coordinating cooperation between companies in the same industrial chain. All companies should voluntarily assume the responsibility for building industrial chains, he said.

Editor: REN Zhongxi