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Traditional to Digital Business Transformations in China (7 CASE STUDIES!)

Dragon Social > Doing Business in China  > China Market Insights  > Traditional to Digital Business Transformations in China (7 CASE STUDIES!)

Traditional to Digital Business Transformations in China (7 CASE STUDIES!)

After years of development, the business modules of digital businesses have evolved into several types, O2O(Online To Offline), B2B(business-to-business), B2C(business to consumer), etc. Naturally, there is no doubt that digital business will become a very important part of people’s life.

 

 

Companies like JD.com, Alibaba, and Amazon always present to users an impression of high-tech and youthfulness. However, there are also some companies from traditional industries that are transforming for the digital age.

 

 

Among these traditional companies, there are a lot of successful cases of digital transformation. Moreover, some of these cases are quite surprising when you acknowledge what their original business was.

 

 

So, in this article, Dragon Social has selected 7 of the most successful traditional companies who transformed into the digital businesses. Would you like to know more about insights into marketing in China? The Dragon Social team has the best way to help you!

 

 

Table of Contents (Click to read)

 

 

1. Top 7 Digital Transformation of Traditional Business Read Now

 

 

2. Digital Business in China  Read Now

 

 

3. How to be Successful Like These 10 Companies Read Now

 

 

 

Top 7 Transformation of Traditional Business

 

 

1. Wanda Group

 

 

Wanda Group is one of the biggest real estate companies in the whole world, and its owner, Wang Jianlin, is of the richest people in China since 2015. It owns many shopping malls and properties in many big cities in China, like Beijing, Shanghai, Dalian, Guangzhou and so on.

 

It looks to many people that their first impression that most of the people will also link Wanda Group and Wang Jianlin’s catchphrase together:

 

 

Wang Jianlin’s famous catchphrase, ” To be successful, you have to set up a small target first, like make a 100 million dollars for start.”

 

 

However, in 2014, the real estate market in China began to go down, Wang Jianlin decided to shift the Wanda Group into cultural/digital business. The, Wanda Group started to expand their business in different areas and began selling their real estate assets at the same time.

 

 

In the next two years, Wanda Group merged many overseas assets in the culture, sports, and tourism industries. There are many great assets that belong to The Wanda Group now, like Legendary Entertainment, Sunseeker International, Atlético Madrid and so on.

 

 

Until 2017, Wanda Group owned the largest internet financial asset in China. Meanwhile, Wanda Group was also the largest company in the world in terms of cultural/sports industries With the help of its comprehensive portfolio, The Wanda Group was ready to dominate the digital market.

 

 

The main page of FFan.com

 

In 2017, Wanda Group’s new project, FFan.com, was launched on July 15th. This website is an ultimate integration of Wanda Group’s assets. It offers users another e-commerce choice in China outside of Taobao and JD.com.

 

 

Basically, FFan.com grants access to all of Wanda Group’s businesses, users can use this website to purchase all kinds of Wanda Group’s products and services. In addition, it also provides its user with a wide variety of discounts.

 

 

At the end of 2017, Wanda Group’s digital business had an annual income of over 100 billion RMB. Needless to say, The Wanda Group had successfully transformed from a real estate company into a new digital business company.

 

 

2. Red Star Macalline

 

 

Red Star Macalline was found in 1986 by Che Jianxin(车建新) and his family. In just two decades, Red Star Macalline became the biggest house furnishing company in Jiangsu, Shanghai and Zhejiang Province.

 

 

In 2016, a year after their IPO, Red Star Macalline launched a new strategy, which declared that Red Star Macalline would go online. Within six months, Red Star Macalline’s platform for house furnishing was launched online.

 

 

Red Star Macalline’s online shop for furniture, decoration and construction materials

 

After launching its new website, it held a series of activities to promote and attract their current customers to change their consumption habits to online furniture shopping.

 

 

To guarantee the quality, Red Star Macalline formed teams of after-sales service staff in most of the big cities in China. Besides, it also made contracts with logistic companies like SF Express, FedEx, etc. for faster and safe deliveries.

 

 

Red Star Macalline is an excellent case of O2O business. On the one hand, Red Star Macalline secured the quality of its suppliers prior to its foray into the digital sphere. On the other hand, it managed to use China online shopping to attract more visitors and new users to purchase.

 

Other than Red Star Macalline’s existing brands, it also began to cooperate with some local upholsterers to showcase their products and ideas. It also allowed Red Star Macalline to provide customized services for their clients from all over China.

 

 

Besides, Red Star Macalline is also a smart content marketer, its user community has been growing rapidly. We expect this business to continue to grow in the years to come.

 

 

3. Wangfujing Department Store

 

 

The Wangfujing Department Store is an SOE(State-Owned-Enterprise) from 1955 to 1993 in Beijing. In the year 1994, after a shareholding reform, The Wangfujing Department Store became a semi-private enterprise. It soon launched several branches across China in the first decade of the 20th century.

 

 

In 2014, three companies from the online retail industry invested in The Wangfujing Department Store and took 34.7% of ownership of the company. This also pushed The WangFujing Department Store to consider expanding their business on the internet.

 

 

The building of The WangFujing Department Store in Beijing. It is one of the most famous historical landmarks of Beijing

 

 

With the help of the new blood, Wang Fujing launched their online retail website in March 2016. Notably, the style of the online retail website was quite different from its offline stores. From the very starting point of its online retail website, WangFujing Department Store decided to not list any of the existing brands from its stores.

 

 

Instead of using the existing brands The WangFujing Department Store invited all kinds of small brands to be their major sellers on the internet. It also formed a fund to support the development of smaller brands.

 

 

For example, a brand named Sakka, 帝释天, which is famous for their clothing design for teenagers was one of the first brands WangFujing Department Store invested in and developed.

 

 

But, as for their originality and creativity, The WangFujing Department Store was not that successful. Most of its business cooperation and marketing channels depended heavily on Alibaba and WeChat for business.

 

 

Yet, The WangFujing Department Store announced on March 14th this year that they will try their best to develop their own online shopping website and even their own online payment tool. Let us wait and see the future development of WangFujing Department Store.

 

 

4. China Construction Bank

 

 

As one of the five SOE banks in China, China Construction Bank ranks 5th in the world in terms of size. There is no doubt that the China Construction Bank does not have to concern itself with a shortage of capital. The only block on its way to digital business was its mindset and time.

 

 

In 2013, in a joint declaration with the Beijing local government, China Construction Bank decided to establish a new branch to research the possibility of expanding its digital business.

 

 

In 2017, after three years of discussion and planning, China Construction Bank developed its own online shopping mall. Meanwhile, except for ordinary goods, the other major products of this platform were China Construction Bank’s financial products and financial services.

 

 

The homepage of China Construction Bank’s online shopping mall

 

 

Unlike other online shopping websites, the most popular products on China Construction Bank are their financial packages. Due to the online discount and the convenience, the financial packages on China Construction Bank’s website are cheaper and easier to get.

 

 

There are three major advantages that China Construction Bank has for the development of its digital business. First of all, it has high-quality resources for digital marketing. Second of all, it has perfect technical and institutional support for related financial services. Last but not least, it has a strong brand effect.

 

 

But, we can learn from China Construction Bank’s marketing strategy that it does not seek total confrontation and competition with other companies. China Construction Bank is clear about its goal, to provide online financial service based on its user’s information.

 

 

5. Sinopec

 

 

To be honest, if someone said you can buy industrial products like metal plates and crude oil online like you purchase a book on Amazon, you might consider whether or not this person is out of their mind.

 

 

Yet, Sinopec implemented this crazy idea with a startlingly good result. In 2016, Sinopec, as an SOE with a long history, published its website called EPEC.com for staple industrial commodities trade. Buyers can purchase everything from industrial materials to different kinds of patent technologies on this website.

 

In fact, the idea of creating an online shopping website for their own started in 2014. In 2014, in order to participate in the One Belt One Road strategy of China, Sinopec was required by the Ministry of Industry and Information Technology of China to develop an independent and effective digital presence to expand their business

 

 

You can actually buy a petroleum drilling machine on EPEC.com

 

 

After a few years of study, Sinopec decided to choose e-commerce as their best way to fulfill the quest. Surprisingly, in 2017, just a half year after EPEC.com launched, the volume of trade of EPEC.com has reached 50 billion RMB.

 

Of course, most of Sinopec’s success owes to the characteristics of staple commodities. But their success also depends on their innovative and creative mindset.

 

Sinopec has proved that as long as an online shopping website can constantly provide high-quality products and accurate information, this website will be successful.

 

Unfortunately, because some of their products are closely linked with China’s economy, it is not easy for individuals to sign up for an account and purchase goods on their website.

 

 

6. JAC Motors

 

 

Speaking of large metal objects for sale online, car trading online has become incredibly popular as well.

 

 

JAC Motors’s online shopping center is one of a kind when comes to online car selling. It is the biggest car-selling website in China nowadays. Some types of cars made by JAC Motors sell more online than offline, a trend not yet seen in many advanced economies.

 

 

The main page of JAC Motors online shopping center

 

 

The birth of JAC Motors’s online shopping center is quite coincidental. In 2014, the CEO of JAC Motors, An Jin 安进, joined the World Internet Conference in Wuzhen as a guest speaker. During the dinner after the opening ceremony, An Jin and Jack Ma sit at the same table.

 

 

After a talk with Jack Ma, An Jin realized that in-store sales will eventually come to an end and online sales will take the place of it in just a few years. Thus, in the annual report of JAC Motors in 2015, the board of JAC Motors decided their new strategic direction, the digital business.

 

 

At the end of 2015, the online shopping website of JAC Motors finally launched. As a new-born website, it adopted a series of new technologies for a better user experience, like VR test driving, display of manufacturing factories and so on. Needless to say, this website get famous in just a few months.

 

 

There are three major reasons for JAC Motors’s success. First of all, it is the early bird of the industry. In 2015, when other carmakers were obsessed about in-store sales, JAC Motors took the lead to expand their business to the internet. Second of all, it provides a comprehensive service, including financial support, online test driving and so on. Last but not least, it offers customers the ability to obtain discounts and bargain.

 

But, the future of JAC Motors’s digital business is also facing a lot of challenges. Other automakers realized the business opportunity presented by a digital business too. Maintaining their advantage in the future will be the most concerning question for JAC Motors to answer.

 

 

7. Yiwu Go

 

 

Yiwu is a medium-size city in Zhejiang Province. But, in most of the Chinese peoples’ mind, Yiwu has another name, the Center of Miscellaneous Goods. Yiwu’s miscellaneous goods trading center is the biggest miscellaneous goods trading center in the world!

 

 

The miscellaneous goods trading center in Yiwu

 

 

In December 26th of 2014, after four years of planning, a new SOE call Zhejiang China Commodities City Group Co. Ltd was formed and their website, Yiwugo.com was launched the next day.

 

 

The goal of Yiwugo.com is to copy the whole business model of the miscellaneous goods trading center in Yiwu and move it online. Even the items on this website are divided exactly the same as the miscellaneous goods trading center in Yiwu.

 

 

All kinds of small commodities are included in Yiwugo.com. Towels, iPhone cases, Snacks, Souvenirs, etc. You name it!

 

 

However, the advantage of Yiwugo.com is its flexibility and efficiency. Yiwugo.com allows users to combine purchases and deliveries with different items. Besides, it has its own logistics channels to deliver customers’ goods quickly and safely.

 

 

Moreover, Yiwugo.com also developed a Russian version and a Japanese version of their website, in order to attract foreign users. They are also considering entering the European and the North America markets too.

 

 

Yiwugo.com is an excellent second undertaking project. The idea is to expand what Yiwu had already achieved online. There are more than 30,000 categories on Yiwugo.com. It provides both high and low quality goods and with excellent service.

 

 

Yiwugo.com also provides different kinds of logistic services, including flight freighters, cargo ship, trains, and trucks. Whether a small number or wholesale are types are welcomed on the platform.

 

 

 

Digital Business in China

 

 

With the standing development of internet technology, the scale of the digital businesses in China is becoming larger and larger. The total amount of turnover of online retail in 2017 has reached 7 trillion RMB.

 

 

Furthermore, except the number, the category and style of digital business in China is also getting more diverse. In the foreseeable future, this trend will continue. There is a report also predicts that in 2020, half of the market share of retail business will also be taken by digital businesses.

 

 

 

The chart of online retail growth in China, from 2015 to 2018

 

 

But, there is also some bad news for small businesses who want to enter China’s digital market now. For example, as it was stated above, there are more and more big enterprises expanding their own digital businesses now. The businesses in the digital market will become more competitive.

 

 

Thus, how to keep an advantage in this competition will be the major problem for small businesses to consider in the next years. Besides, it is also highly recommended for small businesses to learn from previously successful cases.

 

 

 

How to be Successful Like These 7 Companies

 

 

So, how can your digital business be successful in the China market? We have three important pieces of advice for you:

 

1. Be an early bird. Start your digital business NOW! The story of Red Star Macalline and JAC Motors told us that the earlier you expand your business into digital, the easier you can take market share.

 

 

2. Be creative, the marketing strategy of digital businesses is very different from traditional businesses. How to produce interesting and creative products is the key to be successful in China’s digital market. Even if your business is mainly a traditional one, you can still transform into a digital business through brilliant strategy.

 

 

3. Integrate with other businesses. Build a comprehensive and competitive business model is the most important method to attract users and attention. Once your business attracts a massive number of users, it is the halfway to success.

 

 

Conclusion

 

 

Naturally, it is extremely difficult for companies to develop their business in China without any help and guidance. We understand the difficulty and we are here to help! Dragon social has the best strategy and the most professional teams to help you anytime, anywhere. Please do not hesitate to contact us and tell us what you need!

 

 

Dragon Social can do all of these and even more! If you would like to know more about what we can do for you, visit our services page!

 

 

Also, please visit our website for more information and professional analyze about marketing in China market! We are welcome to interact with us, tell us in comments what kind of topic you would like to watch in our next article. Thanks for your reading!

 

 

Dragon Social stays are up-to-date with any trends in China social media marketing.  Contact us or read more to know how to be a successful short video celebrity in China? Check them it out here:

 

 

 

The Best Marketing Campaigns of China in April 2018

 

 

4 Reasons Why You Will Fail in China B2B Marketing

 

 

3 Tips People Miss about China Social Media Marketing

 

 

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Wilson Li
Wilson Li

Acquired Master of Arts degree at The Chinese University of Hong Kong. A native of Mainland China with a strong passion for marketing and the high-tech industry in China. Currently working for the Dragon Social as a content marketer.

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