New research from Accenture has found that a small percentage of Chinese companies are outperforming peers by digitizing their businesses. These companies, which Accenture refers to as “Rotation Champions,” are generating more than half of their revenues from new business areas.
The Accenture China Digital Transformation Index report was developed to gauge where companies stand in terms of what Accenture refers to as their rotation to “the New” — digital, cloud and security services. The research studied 221 Chinese companies across nine industry sectors, in collaboration with China’s Zhongguancun Alliance for Integration of Information Technology and Real Economy, a national society focusing on enterprise digital agendas.
According to the research, a majority of Chinese companies are actively advancing their digital capabilities: Two-thirds (67%) of the surveyed businesses said new innovations driven by technology is their top priority in the next two years and expect to increase investment in strengthening their core business, and 54% said they are exploring new business opportunities.
At the same time, however, only 9% of surveyed businesses meet the criteria to be considered a Rotation Champion — generating more than half of their revenues from new areas of business started in the last three years. This is a slight improvement from last year’s 7%.
“Chinese Companies have demonstrated great determination to digitize their organizations against the current complex business environment,” said Wei Zhu, chairman of Accenture Greater China. “But to stay ahead of the competition, business leaders need to achieve disruptive growth and reinvent businesses and ecosystems.”
The research found the Rotation Champions succeeded in making their operations and core businesses smarter while venturing into new business models in bolder steps. These leading companies regard “scaling the new” as the top priority in their five-year plan, while other companies only focus on the improvements of their current operations.
The report also revealed that when measuring their digital investments, Rotation Champions attach the greatest importance to the potential to create disruptive growth (cited by 57% of Rotation Champions), while other companies most value immediate financial returns (cited by 60% of these other companies).
“The Rotation Champions are well ahead of the rest and building new competitive advantages,” said Wei Zhu. “To close the gap, CEOs should drive organization-wide digital transformation and advance across all three levers — transforming the core, growing the core and scaling the new — to enable themselves to achieve sustainable growth and rotate to the future.”
The report also recommends actions for CXOs who lead functions driving and supporting their businesses’ digital transformation journey:
- Make a future-ready digital strategy to capture growth opportunities at new industrial frontiers.
- Build and leverage a digital ecosystem to accelerate synergy between core and new businesses to upgrade cross-enterprise capabilities.
- Integrate R&D, production, supply chain and customer services and reimagine processes and operating models to unlock trapped value in smart manufacturing.
- Make every product and every service smart to create completely new and differentiated experiences throughout the entire customer life cycle.
- Build a highly resilient, liquid and agile organization to enable rapid business expansion and changes.
About the research
The Accenture China Digital Transformation Index is a cross-industry framework to assess a company’s rotation progress based on 18 key financial and operational indicators. The study surveyed 221 Chinese companies in nine industries, including electronics components and materials, high-tech devices and equipment, automotive and engineering, life science, consumer goods, logistics and airline, retail, oil and gas, and chemicals.
