Plan to help SOEs harness e-commerce

China’s State-owned enterprises will strengthen innovation in e-commerce to propel the sector’s growth, according to a key industry organization’s new action plan.

The China Central Enterprise E-commerce Alliance, a body whose members are mostly SOEs, rolled out the three-year (2021-23) action plan that asks the latter to focus on 10 tasks to steam up their e-commerce innovation and growth.

Among its key recommendations are the following: deepen cooperation on joint procurement; build modern intelligent supply chains; share logistics platforms; and establish a coordination mechanism for cross-border e-commerce to make better use of resources.

The plan was unveiled at a forum on SOEs and e-commerce on Sept 4 as part of the six-day China International Fair for Trade in Services — CIFTIS — that will close on Sept 7 in Beijing.

The CCEEA was founded in 2017 under the direction of the State-owned Assets Supervision and Administration Commission, the country’s top State asset regulator. The alliance members are engaged in a range of sectors like energy, telecommunication, manufacturing, transportation, construction, and logistics.

“Digital economy has become an important driver of quality, efficiency improvement, and economic growth,” said Wang Yanfang, general manager of State Grid Electronic Commerce Co Ltd, a wholly-owned subsidiary of State Grid that is the main initiator and member-director of the alliance’s executive council.

“Driven by technological and industrial revolution and consumption upgrade, and as an important part of the Chinese economy, SOEs should proactively seek opportunities arising from the development of the industrial internet, and strengthen its efforts in sectors like smart manufacturing, corporate digitalization, B2B supply chain digitalization and New Retail to propel development of e-commerce with SOE characteristics,” Wang said.

China’s combined e-commerce transactions were worth 37.21 trillion yuan ($5.77 trillion) last year, and 74 central enterprises included in the data contributed 7.86 trillion yuan. Annual growth rate of SOEs’ e-commerce transactions by value was 28 percent in 2020, 45.2 percent in 2019, and 39 percent in 2018, the alliance said.

According to its new action plan, items for joint procurement will be extended to office supplies, common industrial products, and printing, fiscal, taxation, and legal services, based on experiences gathered from pilot programs for joint procurement of software.

Some 41 central SOEs are part of the joint procurement mechanism, and 24 of them have jointly paid 170 million yuan to buy 140,000 packs of software, reducing the overall costs by half, Wang said.

The action plan asks SOEs to coordinate with each other to give full play to their advantages in operating in a wide range of e-commerce categories, make better use of their resources, and enhance the operations of industry and supply chains.

It also asks SOEs to share logistics information and platforms to establish a co-sharing freight and logistics network that can better balance demand and supply, while promoting low-carbon and green logistics.

The action plan also covers goals in sectors like cross-border e-commerce, development of private enterprises, rural revitalization, and scientific research applications.

Wei Jianguo, vice-chairman of the Beijing-based China Center for International Economic Exchanges, told the forum at the CIFTIS he is bullish about the growth prospects of SOEs’ e-commerce business.

SOEs have distinctive advantages in developing e-commerce business as they operate in a wide range of industry and supply chains. In the context of the digital economy and e-commerce in the future, industrial internet will be more influential than consumer internet, Wei said.

Besides, the action plan will encourage SOEs to become more market-oriented and support growth of the real economy. This, in turn, will further unleash SOEs’ strengths in concentrating resources on important tasks, he said.

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