The Economist Intelligence Unit (EIU) has released a global research project commissioned by Telstra, a leading telecommunications and technology company, which assesses the confidence of business executives in their city’s environment and its conduciveness to supporting the digital ambitions of companies. Beijing and Shanghai rank fifth and seventh respectively in overall confidence, with Guangzhou and Shenzhen in the top 20.
The ‘Connecting Commerce’ report includes the first ever Digital Cities Barometer, a ranking of 45 cities around the world across five key categories relevant to business performance: innovation and entrepreneurship; the financial environment; people and skills; development of new technologies; and ICT infrastructure.
Sue Wang, Telstra’s China Country Managing Director, said the Barometer shows business leaders in China have a consistently high level of confidence in their city’s digital ecosystem.
“The digital ecosystem is booming in China’s Tier 1 cities thanks to a mix of business and government involvement.
“There is an extensive network of incubators and accelerators and frequent use of innovation labs. This is in addition to strong support from the Chinese government, particularly in the areas of technology innovation, intelligent manufacturing and ICT infrastructure, as well as initiatives such as ‘Made in China 2025’ and ‘Belt and Road Initiative’.
“China is placing digital innovation as one of its main priorities that can fuel the next stage of our country’s economic growth,” said Ms Wang.
The research also highlights the respective strengths of the four Chinese cities surveyed:
- Executives based in Beijing show higher confidence levels in the surrounding digital environment than any other city. Beijing’s strengths help it to position itself as a digital innovation hub, especially for start-ups, with large amounts of private and government funding available, a strong talent pool and a growing number of accelerators, incubators and co-working spaces. The city boasts the second largest population of ‘unicorns’ (start-ups valued at over US$1bn) in the world.
- Executives in Shanghai are especially positive about the support available in the city. Almost half of surveyed business leaders note the use of innovation centres to further their organisation’s digital transformation initiatives.
- Business confidence in Guangzhou’s digital environment is relatively high. However, it remains to be seen whether it can be sustained as there are concerns regarding the adequacy of the city’s talent pool. Businesses in the city rely primarily on innovation hubs and business unions as resources for digital transformation.
- Overall confidence in Shenzhen is slightly above average, although executives are more confident when it comes to the city’s environment for digital innovation and entrepreneurship and the development of new technologies. Venture capital also plays a bigger role in funding companies’ digital transformation programs here than in other cities.
Business leaders in all four cities also praised the effectiveness of local educational institutions such as universities and schools. However, executives note they are keen for these institutions to move beyond traditional technical skills to more advanced areas, such as cyber security and big data analytical skills. Similarly, executives surveyed agreed that talent and skills shortages are the single toughest challenge in pursuing their own digital transformation.
“Organisations today have numerous options – both domestically and internationally – as to where they base their business operations. This report makes an important contribution to exploring what support executives need to digitally transform their business and thrive in a connected world,” said Ms Wang.
The full report, including the Digital Cities Barometerand the China country briefing, can be found at http://connectedfuture.economist.com/.