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Shanghai takes the cyber highway

Shanghai is looking to leverage the “online new economy” to usher in its next chapter of growth, with experts saying a newly unveiled policy framework could bring “exponential momentum”.To get more Shanghai economy news, you can visit shine news official website.

The municipal government earlier this week released a 23-point action plan to transform and empower traditional industries by employing an array of technologies like artificial intelligence, 5G networks and big data.

The bevy of measures, prioritizing four goals and identifying 12 key industries for development, aims to make the metropolis a budding highland of global influence and national superiority by 2022.

Under the “Four 100+” initiative, Shanghai is aiming to foster over 100 innovative enterprises, roll out over 100 application scenarios, nurture over 100 brands and achieve over 100 key technological breakthroughs, said Wu Jincheng, chair of the Shanghai Municipal Commission of Economy and Informatization, a key industrial development regulator.

The 12 sectors given priority under the plan range from industrial internet on the manufacturing end, to fresh produce e-retail, online education, and industries like online finance and telemedicine in which Shanghai has a traditional foothold.

Xiaohongshu, a social commerce site that allows users to share their favorite goods in virtual communities, is on course to unveil a series of online-to-offline marketing campaigns in collaboration with over 100 physical stores in Shanghai, Beijing, Guangzhou, Shenzhen and Wuhan.

Influencers and key opinion consumers would then shop in these stores and share their experience and insights online. By influencing other users, they could help boost consumption and consequently drive economic growth, said Xiaohongshu’s founder, Qu Fang.

“Shanghai is a city that boasts the most diverse lifestyles and strongest sense of innovation in China. Our platform actually rides the digital online trend embraced by the younger generation of consumers, and hopefully we can contribute to the ‘consumption upgrade’ trend,” she said.

According to the 2020 Taobao Livestreaming Report, Shanghai is the source of the largest number of viewers on Taobao. International brands like Starbucks and Ikea, as well as homegrown, time-honored companies like food maker Xinghualou, have all been jumping on the livestreaming bandwagon.

Last month, the city even witnessed the debut of the online edition of Shanghai Fashion Week, where brands employed livestreaming for new product rollouts and provided home delivery.

“The ‘cloud launch’ is definitely going to shake up the traditional launch event,” said Hu Weixiong, head of fashion, luxury and fast-moving consumer goods at Alibaba Group’s Tmall site. “It tears down the physical limitations of time and geography for brands to engage with consumers.”

To ensure smooth implementation of the action plan, local authorities have pledged to launch six dedicated initiatives and introduce five measures to construct ecosystem parks to bolster the city’s development.

Dora Liu, eastern region managing partner and innovation leader at Deloitte China, pointed out that inclusive and cautious supervision is of particular importance to the development of novelties and innovation.

“The authorities mentioned ‘sandbox supervision’, meaning companies are given more liberty to conduct new trials under a given framework,” she said. “This is the fundamental guiding principle to enhancing governance capability. This is in line with Shanghai’s bid to construct an excellent global city.”

Rui Meng, a professor at the China Europe International Business School, said: “It’s a logical package of plans, combining technologies with application scenarios. But much more emphasis should be given to offering institutional guarantee, without which the construction of a new economy ecosystem could be a distant dream.”

Rui added that intellectual rights protection and relevant financing vehicles should also be put in place to ensure companies make long-term investments.

“I would advocate a truly open-minded partnership between State-owned entities and private enterprises,” Rui said. “For instance, research capital can be allocated to both key national labs as well as universities and private-run research institutes. Such an approach facilitates research that combines academic and industrial strength, thus forming a benign cycle.”

Jiang Hao, global partner at consultancy Roland Berger, said the highlight of the plan is Shanghai’s determination to be “first mover” in driving the online new economy through a concerted effort and integrated approach.

“It’s a package of policy signals saying that companies have the government’s all-round support. They encourage enterprises to take action, double down on investment and increase employment,” Jiang said.

“The government can also double as users, adopting these new services under the new scenarios (and) thus generating demand and creating job opportunities.”

Jiang believes it is critical for the authorities to lend support to small and medium-sized enterprises and innovative startups through incentives such as rent reduction or exemption and tax deductions.

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