The astounding growth of China’s e-commerce market over the past decade has proved the ability of digital ecosystems to transform an economy. Since their launch as simple online shopping vehicles two decades ago, China’s leading ecosystems have converted 800 million consumers to mobile online payment and have evolved into full-service platforms that transact nearly $2 trillion in business a year across every sector. They have also become innovation machines that can accurately predict consumer demand and create new services with remarkable speed.
Now the COVID-19 epidemic is demonstrating the power of digital ecosystems to swiftly and creatively respond to a national crisis. The following examples demonstrate just how quickly they mobilized and innovated after China’s government first confirmed on January 20, 2020, that a novel coronavirus had spread from animals to humans:
Governments, health authorities, and technology companies around the world have been collaborating to contain the COVID-19 pandemic and racing to address the staggering needs of their societies and economies. But the speed, scale, and scope of the response of China’s digital ecosystems have been unmatched.
The rapid response of Chinese ecosystems was enabled by operating models that facilitate rapid innovation and delivery across a wide network of private and public partners. As a result, leading Chinese e-commerce, social media, and technology companies such as Alibaba, Meituan-Dianping, Tencent, and Baidu—along with business partners within their networks—were able to release custom COVID-19 offerings and interfaces in record time. They opened their ecosystems to new partners and rapidly brought them aboard. (See the exhibit.)
Digital ecosystems rolled out everything from AI-enabled chatbots and telemedicine services to diagnostic tools. They raced to help countless brick-and-mortar companies make the transition to the online world, resolved supply chain bottlenecks, and redeployed hundreds of thousands of workers—moves that helped mitigate COVID-19’s economic damage.
Owing to technological, infrastracture, and regulatory constraints, not everything that digital ecosystems accomplished in China can be easily replicated elsewhere. But our analysis of the responses of Chinese digital ecosystems to the pandemic revealed many examples of innovative solutions that can be applied outside of China. In many cases, all that’s needed is the addition of new features to existing e-commerce platforms through application programming interfaces (APIs), the leveraging of open-source AI tools and public data, and an openness to collaboration.
To understand how Chinese digital ecosystems were able to respond to the COVID-19 crisis so quickly and effectively, we studied ten companies that together launched hundreds of online initiatives. We identified the following key strategies: they rapidly introduced COVID-19 offerings, they created new platforms, they broadened existing digital ecosystems, they accelerated the rollout of nascent technologies, they helped businesses make the transition to online, and they leveraged the power of public-private partnerships.
Rapid Introduction of COVID-19 Offerings
By mobilizing their immense financial, human, and technological resources—as well as their ecosystem partners—China’s leading tech companies were able to introduce new features and services with remarkable speed.
At the outset of the outbreak, for example, Alipay worked with AliHealth, another company in the Alibaba ecosystem, to launch a free online consultation service that enlisted the help of volunteer doctors. The service has since hosted up to 100,000 medical consultations a day. Working with another third-party partner, Alipay hosted its pandemic map, which consolidated all publicly disclosed information on confirmed and suspected cases and deaths into a homepage available to the public.
In the following weeks, Alipay provided free insurance coverage for medical staff fighting the virus and introduced a service that enabled users to get through rail and highway checkpoints faster by registering key information in advance. Other Alipay COVID-19 services and features include remote-learning courses, online career events for new graduates and the unemployed, and coupons issued by the government to encourage consumer spending. The company also crowdsourced help from more than 4,000 independent developers and software vendors to create special COVID-related programs.
In some cases, Chinese digital ecoystems mobilized to quickly set up entirely new platforms in response to the outbreak. On April 13, for example, Tencent—the technology company best known for its WeChat social media app—launched an international platform to help companies, medical institutions, and governments tackle pandemic-related challenges. The services include a handbook for protecting the public, an AI-powered “symptoms self-checker,” online health consultations and psychological support, and Tencent Medipedia, which offers articles and videos on disease prevention.
A number of Chinese companies were able to rapidly adapt by opening their ecosystems to new partners and linking new services to their platforms through APIs. Alibaba’s agile ecosystem model, for example, allowed it to quickly bring new partners onto its e-commerce, local services, and other platforms.
Alibaba’s open ecosystem enabled its FreshHema grocery chain, which has more than 200 retail stores in major Chinese cities, to temporarily hire employees furloughed by businesses affected by the pandemic, such as movie theaters, department stores, and companies in the hospitality and dining sectors. Similarly, Alibaba’s local services platforms, Ele.me and Koubei, gave restaurant employees the opportunity to work as temporary couriers or convenience store clerks.
Food delivery platform Meituan-Dianping, with around 450 million annual transactions, likewise found a creative way to adapt to the new reality by broadening its ecosystem. Initially, food orders dropped by around one-third during the outbreak, in part because customers were wary of interacting with delivery workers. In response, the company deployed fleets of self-driving vehicles to transport deliveries and a system that allowed customers to pick up their orders from lockers. By February, around 80% of deliveries were fulfilled via this “contactless” model. Meituan-Dianping also diversified its delivery business to include goods such as consumer electronics.
The urgent needs created by the COVID-19 outbreak prompted many Chinese digital ecosystems to deploy technologies still under experimentation more quickly than planned—and then to rapidly scale them up. Beijing-based Internet and AI giant Baidu, for instance, has disseminated a number of emerging technologies in the fight against the pandemic.
Baidu has shared its deep-learning platform, PaddlePaddle, and its semantic segmentation toolkit, PaddleSeg, with developers of COVID-19 diagnostic tools. By customizing PaddlePaddle, the Beijing-based oncology data platform and medical data analysis company LinkingMed was able to develop an open-source, AI-powered model for analyzing CT images that allows the disease to be detected in less than a minute. Baidu has also made its LinearFold algorithm available to scientific and medical teams, including those at LinkingMed. The algorithm, published in 2019 in partnership with Oregon State University and the University of Rochester, is used to analyze secondary RNA structures, which provide insights into how viruses jump between species. Scientists have used the algorithm to predict the secondary structure of the COVID-19 RNA sequence.
In addition to these initiatives, Baidu has deployed an AI-powered, noncontact, infrared sensor system that can monitor the temperature of multiple individuals simultaneously and rapidly detect fevers. The system is being used at Bejing’s Qinghe railway station, where it can test up to 200 people per minute without disrupting passenger flow. Finally, by mid-March, Baidu’s intelligent robocall platform had made more than 3 million automated phone calls—1,500 calls per second—requesting people to voluntarily provide their recent travel history, close contacts, and current health conditions.
Helping Businesses Make the Transition to Online
Lockdowns and stay-at-home orders have had catastrophic consequences for businesses around the world. Chinese digital ecosystems have helped mitigate the economic damage by making it easier for offline businesses to migrate online.
Forest Cabin Cosmetics is one company that saved its business by moving more of it online and harnessing the digital ecosystems of its partners. Known mainly for its camellia oil products, the company had to shut half its 337 stores in China and saw revenues dive by 90% early in the pandemic. But then beauty consultants at its retail stores went about becoming online influencers through their DingTalk and WeChat social media contacts. Forest Cabin also streamed sales events through Alibaba’s Taobao platform, one of which was viewed by 60,000 customers. These strategies were so successful that Forest Cabin’s revenue rose 120% in March over the same period last year.
Similarly, instant-noodle manufacturer and distributor Master Kong overcame a sharp drop in sales at supermarkets—where it was difficult to keep its products stocked because of hoarding and disruptions to ground transportation—in part by shifting much of its sales to JD.com’s online channels. And in March, to help manufacturers that lacked a strong connection with consumers, Alibaba introduced an app called Taobao Deals, which offers shoppers direct-from-the-factory goods at highly competitive prices. Alibaba anticipates that Taobao Deals will bring 10 billion new orders to factories across China over the next three years.
Leveraging the Power of Public-Private Partnerships
The rapid development and ramp-up of China’s “close contact detector” illustrates the power of collaboration among digital ecosystems and government organizations to meet an urgent public need. Introduced in mid-February, the app was developed by leading Chinese social media and e-commerce platforms—including WeChat, Alipay, and QQ—in partnership with the China Electronics Technology Group, a diversified state-owned technology company, as well as with health and transit authorities around the country. Users download the app by scanning a QR code and then register their name, phone number, and national ID number. The system draws on data collected by the National Health Commission, the National Railway Group, the Civil Aviation Administration, and other agencies on the location of infected persons and informs users if they have recently been in close contact with someone known to be carrying the virus.
In addition, the detector helps prevent the spread of the virus by controlling people’s movements. Upon swiping a QR code on their phone before entering a public place such as a train, taxi, restaurant, or office, users are either granted entry if a green signal appears or instructed to quarantine if the app flashes red.
Key Questions to Ask When Assessing Digital Ecosystems
The giant tech companies that orchestrate China’s largest digital ecosystems have rich financial, technological, and human resources to throw at new challenges. But increased resilience to external shocks isn’t just about specialized resources. The more valuable lesson to learn from these ecosystems in the COVID-19 crisis is the importance of quickly grasping the many implications of disruptive change, devising strategies to respond, and mobilizing the organization.
To jump-start their crisis response, companies should ask themselves the following questions regarding three essential factors:
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