Digital-Real Integration Enters Third Wave, Driven by AI, Says AlibabaInstitute
BEIJING, Feb. 21, 2023 – The digital-real integration, a key strategy for China’s economic development, is entering its third wave, driven by artificial intelligence (AI), according to Gao Hongbing, Vice President of Alibaba Group and Director of Alibaba Institute. This wave will see a deeper integration of digital technologies into various industries, leading to profound innovation and a shift towards high-quality economic growth.
Gao, speaking at the Third Wave of Digital-Real Integration – 2023 New Economy Think Tank Conference, hosted by Alibaba Institute and broadcaston Xinhua.com, emphasized that the digital-real integration is not a simple concept but a strategic approach that involves the deep fusion of digital technologies with the real economy.
The real economy and the digital economy are not opposites, hestated. There are digitalized and non-digitalized entities in the real economy, and digitalized entities are the driving force behind high-quality economic development.
Gao outlined four key characteristics of this integration:
- Digital Elements: It relies on digital technologies, including the internet, 5G,cloud computing, data resources, and digital talent.
- Innovation and Upgrading: It follows a path of innovation-driven structural upgrading.
- Industrial Digitalization: It focuses on transforming industries through digitalization.
- ITization, Networkization, and Intelligence: It progresses through stages marked by increasinglevels of ITization, networkization, and intelligence.
He illustrated these stages using examples from the automotive, textile and apparel, and supply chain industries.
From ITization to AI-Driven Integration
Gao categorized the digital-real integration into three waves:
- First Wave (ITization):This wave, driven by IT technologies like IBM and Microsoft, saw the penetration of information technology into factories, offices, and homes.
- Second Wave (Internet Plus): This wave, driven by the widespread adoption of the internet and mobile apps, saw the rapid development of cloud computing and its integration into areas likeconsumption, commerce, payments, and logistics.
- Third Wave (AI-Driven Integration): This wave, driven by AI, will see the deep integration of digital technologies into sectors like transportation, energy, manufacturing, healthcare, and finance.
Gao emphasized that the third wave builds upon the previous two waves anddoes not discard them. Each wave deepens the penetration of digital technologies into real-world businesses, driving innovation and industrial upgrading.
The Importance of Two Materials and One Talent
Peng Xinyu, Vice President of Alibaba Group and CEO of DingTalk, highlighted the challenges faced by Chinese companies inachieving digital-real integration. These challenges include the three flows – business flow, workflow, and data flow – being disconnected.
He emphasized that the key to achieving digital-real integration lies in two materials and one talent:
- Materials: Digital technology tools and data.
- Talent:Digitalized personnel.
Peng explained that companies need to possess and effectively utilize these two materials and one talent to achieve three flows in one, enabling successful digital transformation.
Alibaba’s Role in Digital-Real Integration
Alibaba, from its inception, has been a strong advocate for theintegration of digital technologies with the real economy. Through its offerings like Alibaba Cloud and DingTalk, the company has helped businesses achieve digital transformation.
For example, FAW Hongqi, a leading Chinese car manufacturer, has leveraged Alibaba Cloud and DingTalk to integrate its online and offline operations and create a unified marketing ecosystem.This has resulted in a 30% increase in lead conversion rates, breaking through marketing efficiency bottlenecks.
Minsheng Group, a leading automotive parts manufacturer, has built a unified data platform across its entire business, enabling integrated data management for research and development and production. This has led to a 90% improvementin efficiency.
As the third wave of digital-real integration unfolds, the adoption of AI will drive profound innovation and transform industries. This will ultimately lead to a shift towards high-quality economic growth, with businesses that embrace digital transformation becoming the third wave enterprises of the future.
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