How Chinese Companies Successfully Adapted to COVID-19

When a department store in China realized customers would not be able to access its brick-and-mortar location during the COVID-19 quarantine, it partnered with an outside organization to focus on a new channel — social marketing. Using its own employees and sales clerks to host, the organization reported that one livestream event generated the same revenue as pre-coronavirus weekly in-store sales.

Essentially all businesses were affected by the COVID-19 outbreak. Those that demonstrated innovation increased business model resilience and adapted to the new business environment.

“Under such challenging circumstances, China provides some great examples of business model resilience among companies within traditional industries,” said Daniel Sun, VP Analyst, during his presentation at virtual Gartner IT Symposium/Xpo® 2020.

Read more: Reset Your Business Strategy in COVID-19 Recovery

Two types of Chinese organizations demonstrated strong business model resilience: Those that leveraged digital giants in their business plan successfully and those with a strong automation foundation. 

Partner with digital giants 

With movie theaters closed during the coronavirus outbreak, a media company risked losing millions of dollars on a soon-to-premiere movie. The company partnered with a digital media platform to distribute the movie. As a result, the media company earned $91 million and a share of advertising.

More than 40% of CIOs and IT leaders consider their relationship with digital dragons to be tactical and view them solely as technology providers. Less than 2% of businesses think of the digital giants as strategic business partners. These large enterprises can help scale cloud or provide payment and digital business platforms, but CIOs must first identify how they can be used to modify current business models.

It’s likely CIOs might shy away from partnering with their competition, but the reality is that many of these partnerships have proven successful for both parties.

Organizations can partner with digital dragons in five different ways:

1. No relationship: Organizations may choose to have no relationship with digital dragons for a number of reasons, including that the dragons are direct competitors, they don’t see the need for the benefits the dragons can provide or they deem the risk too high. 
2. Customer-supplier relationship: This is the most common type of relationship. The organization is a customer of the dragon’s products and services. 
3. Channel/platform relationship: Organizations use the dragon’s demand-side platforms and ecosystems, marketplaces and connections to the customer to increase reach.
4. New customer value partnership: The organization works with a dragon, each partner contributing specific assets and capabilities to provide new disruptive value to customers that neither could easily deliver alone. 
5. Investment partnership: The organization invests alongside a dragon in researching and building new opportunities.