China has undergone one of the fastest digital transformations in the world in recent years, creating unique technology ecosystems that are in many ways ahead of the solutions used in Europe.
This profound digitization of social and economic life offers European companies valuable lessons that they can use to build their competitiveness. Let's take a look at the most important aspects of China's digital transformation and the lessons European companies can learn from it.
I. The scale and pace of China's digital revolution
China's digital economy now accounts for 43% of the country's GDP, showing a huge jump from just 15% in 2008. With more than 1.1 billion Internet users, China offers the world's largest market of digital consumers, with mobile penetration reaching almost every aspect of daily life.
China ranks 11th in the 2024 Global Innovation Index, moving up 23 positions since 2012. This jump is no accident - it's due to consistent state policies and massive investment in research and development, which has tripled from 1 trillion yuan to more than 3.6 trillion yuan over the period.
A lesson for European business: The scale of investment matters. European companies often take an overly conservative approach to digital transformation, while Chinese companies are investing heavily in new technologies. Instead of focusing on incremental improvements, European companies should consider more bold, transformative digital investments.
II. Digital ecosystems instead of individual services
Chinese tech giants like Alibaba, Tencent and ByteDance are not creating single applications, but are building comprehensive ecosystems that cater to multiple user needs within a single platform.
For example, the Alibaba ecosystem includes:
- E-commerce (Taobao, Tmall).
- Mobile payments (Alipay)
- Digital entertainment
- Cloud computing
- Logistics
- Financial services
These ecosystems are distinguished by three key characteristics:
- Driving technology: investments in AI, cloud and big data are not add-ons, but central to the business
- Human focus: Building a detailed understanding of consumer behavior through data
- Cross-sector impact: Going beyond traditional industry boundaries
Lesson for European business: Instead of developing single, isolated digital solutions, European companies should aim to build more comprehensive ecosystems of services that keep users in their environment and provide a consistent experience. Cross-industry collaboration and strategic partnerships can help achieve this scale.
III. User-centered business model
China has shifted its focus from the traditional product-centered model to one in which the user is at the center. Chinese companies have developed a three-tier model:
- User cognition: Collecting and analyzing data on preferences and behaviors
- User service: Creating products and services tailored to specific needs
- Anticipating user needs: Using AI to anticipate consumer needs
In practice, this means, for example, using extensive advertising networks that exchange user preference data between platforms, enabling precise targeting. Another example is the "Ren Dan He Yi" model used by Haier, where employees organize themselves into micro-companies to better respond to customer needs.
A lesson for European business: European companies should move from thinking solely in terms of product to a deeper understanding of their users. This requires investment in advanced data analytics, but with European privacy standards (RODO). The key is a balance between personalization and privacy.
IV. E-commerce at a new level
China's e-commerce goes far beyond simple online stores. Key innovations include:
- Live streaming e-commerce: In 2024, the value of trade transactions via live streaming in China exceeded 5.3 trillion yuan (about $722 billion). Douyin (China's TikTok), Kuaishou and Taobao Live dominate this market, combining entertainment with shopping.
- The social dimension of shopping: Platforms like Pinduoduo use mechanisms for group buying and recommending products to friends, which lowers prices and increases engagement.
- Online-offline (OMO) integration: China's physical stores are fully integrated into the digital experience, using customer data, facial recognition and unmanned checkouts to create seamless shopping experiences.
A lesson for European business: European companies should view e-commerce not just as a sales channel, but as a comprehensive social and entertainment experience. Integrating social elements, live streaming and blurring the boundaries between online and offline shopping are directions worth considering.
V. Mobile payments and digital currency
China has skipped the credit card era, moving directly from cash to mobile payments. Apps like Alipay, WeChat Pay and UnionPay handle more than 70% of all mobile transactions in China.
Additionally, China is leading the way in developing a digital central bank currency (e-CNY). The digital yuan is being tested in a number of cities and aims to further improve digital payments while increasing state control over the financial system.
A lesson for European business: European companies should pay attention to the rapid development of mobile payments and prepare for the coming changes in the field of digital currencies. It is worth investing in infrastructure that will be ready for these innovations, especially in the context of the development of the digital euro.
VI. Digitization of public services
China has developed advanced digital public service systems, where apps like WeChat serve as a unified gateway to various government services. As of September 2024, some 954 million users were using WeChat mini-gateways.
A lesson for European business: European companies, especially those working with the public sector, should pay attention to China's model for digitizing public services. Integration with digital government systems can open up new business opportunities.
VII. Artificial intelligence as a driving force
China has ambitions to become the world leader in AI by 2030. By 2024, 230 million users were already using generative AI, and models like DeepSeek, Ernie Bot (Baidu) and Kimi have gained widespread adoption.
The value of China's AI market in 2024 has reached 747 billion yuan (about $102.8 billion), a 41% year-on-year increase. The technology is being heavily deployed in sectors such as:
- Medicine (e.g., the DAMO Academy tool for detecting early signs of pancreatic cancer)
- Education (e.g., iFlytek's personalized learning systems)
- Agriculture (e.g., the Tencent goose recognition system)
- Financial services, manufacturing and logistics
Lesson for European business: European companies should treat AI not just as an add-on to existing processes, but as a transformative technology that can fundamentally change their business models. It is worth investing in AI research and its practical applications, but with European values related to AI ethics.
VIII. Innovative leadership and management models
Chinese technology companies have developed unique management models that foster innovation and rapid growth:
- Autonomy of teams: Delegate decision-making authority to the level of the teams directly dealing with the customer
- Digital support: replacing traditional bureaucracy with digital platforms that centralize data and shared services
- Clearly defined business objectives: Assigning clearly defined tasks, budgets and schedules
- Matrix management: Simultaneous reporting to functional and project manager
- Agile leadership: An approach based on continuous adaptation to changing conditions
A lesson for European business: European companies can take inspiration from Chinese management models, especially in increasing team autonomy and using digital platforms for decision support. At the same time, it is worth maintaining European standards for working conditions and work-life balance.
IX. Challenges of China's digitization model
While China's digitization model offers many inspiring solutions, it also comes with challenges that European companies must consider:
- Data privacy: China's model relies on the collection and use of massive amounts of personal data, which conflicts with European privacy standards.
- State control: The strong role of the state in shaping digital ecosystems can lead to business independence issues.
- Uneven development: There are significant differences in the level of digitization between different regions of China.
Lesson for European business: European companies should adapt Chinese digital innovations to the European context, taking into account local cultural, legal and ethical norms. The European digitization model can draw inspiration from China while reinforcing its unique values, such as privacy protection and sustainability.
X. Strategies for working with China's digital ecosystems
For European companies interested in working with Chinese technology partners, key strategies include:
- Building relationships and trust: Invest time in making personal contacts with potential partners
- Leveraging digital platforms: Partnering with China's digital platforms to reach a wider audience
- Continuous learning and adaptation: Open to learning from Chinese partners and adapting strategies to changing market conditions
- Long-term partnerships: Strive to build lasting relationships and mutual growth
An example of successful cooperation is Audi's partnership with Tencent, through which Audi cars in China offer integrated WeChat services and other Tencent solutions such as QQ Music and Tencent Map.
Summary and conclusions
China's digital transformation provides a fascinating case study for European companies. Its scale, speed and comprehensive approach to digitization offer valuable lessons that can help European companies design their own digital strategies.
The most important lessons for European business are:
- The need for more bold and transformational digital investments.
- Building digital ecosystems instead of individual solutions.
- Putting the user at the center of the business strategy.
- Integrating social and entertainment elements into e-commerce.
- Preparing for the digital payments revolution.
- Using AI as a transformative technology to change business models.
- Adapting innovative management models to support digitization.
At the same time, European companies should adapt these lessons to the local context, preserving European values related to data privacy, AI ethics and sustainability. In this way, they can create unique European digitization models that will be competitive in the global digital economy.
The article uses data from China Mega Report 2025.
