Digital revolution transforming Asian supply chains

The oft-debated relationship between digital technology and economic growth was elevated to the global platform when China’s Luohan Academy presented its research paper at the 2019 World Economic Forum in Davos two months ago. The institute, created by Alibaba Group Holding Limited, subsequently related the e-commerce implications for Pacific Rim nations in a recent interview with Logistics Management. 

The report, “Digital Technology and Inclusive Growth,” demonstrates how digital technology can drive supply chains in ways previous technology revolutions have not, especially when policies and public-private sector cooperation are supportive. 

“With public-private joint efforts and the right policies, the digital age presents new opportunities for emerging markets that did not exist before,” says Chen Long, director of the Luohan Academy.

Chief among the highlights contained in the report include several pointing to larger macro-economic trends.

• Lowering the skill threshold:In order to promote digital penetration, lowering the skill threshold needed to use technology is as important as raising the level of technological expertise. For example, in rural Taobao villages in China, households that participate in e-commerce earn more than double the income of non-e-tail households at every education level because the skills can be learned on the job with no formal education required. 
• Leveraging digital platforms:Digital platforms represent a new form of exchange and coordination to create an ecosystem for inclusive growth. It’s a free-spinning wheel that connects numerous consumers and producers, and facilities interactions with very low cost, high efficiency, and reliability. 
• Forming effective public-private partnerships:It is more important than ever for the public sector to create a benign macro environment for the private sector to grow and make necessary investments for the population to access digital technology. 
• Managing unanticipated effects:In the digital age, there have been concerns about real and complex issues such as technological unemployment, abuse of private information, lagging competition policy, and increased inequality. The first step to address these challenges is to separate facts from speculation and anxiety. The evidence in China shows that the benefits of new market access and opportunities are more pronounced in less developed countries. 

Chen Long also notes that some of the world’s most populous nations and the world’s largest ports are in the Pacific Rim. “The large population and economic scale mean huge potential for digital technology’s adoption and penetration,” he says. “While China has a lower GDP per capita and less advanced traditional commercial and financial services than the United States, Chinese consumers are eager to take advantage of e-commerce and mobile payment to meet their daily necessities and improve their living standards.” 

The report observes that while previous technological revolutions have seen the rise of supply chains, the digital disruption has spawned new platforms where coordination spans beyond traditional boundaries and enhances the production and sharing of vital information.

Launched in June 2018 in Hangzhou, the Luohan Academy is focused on addressing universal challenges that arise from the rapid development of digital technologies. With 16 Nobel Prize laureates and prominent academics as committee members, the institute aims at bringing together the top scholars in the world to study the most pressing issues of the digital economy and advance the research of technology and its impact on humanity. 

Rosemary Coates, the executive director of the Reshoring Institute and president of Blue Silk Consulting, applauds this initiative, noting that the findings contained in its recent report have other significant implications for logistics managers. 

“China is leapfrogging the U.S. and other countries by rapidly deploying the latest mobile technologies for every day applications such as banking and shopping,” she says. “The speed of adoption of new ways of doing ordinary things on a mobile phone is astounding.” 

China is also making very significant progress in the development of Artificial Intelligence (AI), adds Coates, which is breakthrough technology that will change our lives. “But most importantly, China’s focus on education and the technology to support it is the pathway to that nation’s future.”