Digitising operations helps 7% of Chinese companies outperform peers: Accenture

A small minority of Chinese companies are leading their industries and achieving higher profits by digitising their operations and innovation processes to transform their businesses and unlock new growth opportunities, according to new research by management consulting company Accenture.

The report, the China Digital Transformation Index, revealed that 7% of Chinese companies have become what Accenture refers to as “Rotation Champions” by generating more than half of their revenues from new businesses started in the last three years. This at a time when traditional growth efforts are too partial and fragmented to make a real impact in digitally contested industries.

The report found that Rotation Champions’ efforts have led to stronger financial performance. Rotation Champions substantially outperformed their industry peers, achieving, on average, a 14.3% three-year compound annual revenue growth rate, 5.5 times greater than the rest (2.6%). They also secured a sales margin of 12.7%t, compared to 5.2% for the others.

The Digital Transformation Index was developed to gauge companies’ digital proficiency across two critical capability sets – building intelligent operations and driving digital innovation. Rotation Champions scored an average of 66 out of 100 against the two capabilities, compared to the average score of 37. These companies, which stood out in their levels of intelligent operation and digital innovation, were able to venture into previously unexplored markets while driving profound transformation of their current businesses.

The report is based on a study of 450 Chinese companies across eight industry sectors in collaboration with the China Service Alliance for the Integration of Information and Industrialization (CSAIII). The Rotation Champions are spread across all eight industries surveyed, with automotive and consumer electronics sectors seeing the most champions among the industries studied.

“We are proud to join hands with CSAIII to launch the Digital Transformation Index and offer more quantitative analysis, systematic strategies and evaluation tools for digital transformation of industries in China. The Rotation Champions are well ahead of the rest, signifying that there’s a gap when it comes to how companies are investing in digital capabilities,” said Wei Zhu, chairman of Accenture Greater China. “To close the gap, companies should invest in and deploy digital technologies at scale and at speed, and they must seek to create an agile organisation with an innovation culture that will allow them to monetise new ideas.”

According to the report, these leading companies succeeded in enhancing their digital capabilities by developing seamless digital and physical customer experiences, adopting smart manufacturing and creating intelligent functions on the operations side. At the same time, they drove digital innovation through product and service creation and established digital ventures to accelerate the creation of digital business models.

By Muneerah Bee