New economy, new momentum: Alibaba Research Institute interprets the government work report

1. “New Economy” thinking guides economic development practice

On March 5, at the opening ceremony of the 4th Session of the 12th National People's Congress, the Government Work Report was released to the public and attracted worldwide attention. People from all walks of life hope to learn about the future trends of China's economic and social development from it. The term "new economy", which appeared for the first time in the Government Work Report, became a hot topic. When discussing the focus of achieving the goal of a well-off society during the 13th Five-Year Plan period, the report pointed out that "economic development will inevitably involve a process of iterative replacement of old and new drivers... At present, my country's development is at such a critical period, and we must cultivate and strengthen new drivers and accelerate the development of the new economy."

At the critical moment when the "13th Five-Year Plan" begins, "accelerating the development of the new economy" is obviously not a local consideration, but a major strategic choice under the situation of "new economic normal". It is an action call to implement the five development concepts of "innovation, coordination, greenness, openness and sharing" put forward by the Fifth Plenary Session of the 18th CPC Central Committee.

At the 2014 International Conference on Engineering and Technology, President Xi Jinping pointed out that "information technology has become a leading technology that has first penetrated into all areas of economic and social life. It will promote the transformation of an economic development model based on material production and material services to an economic development model based on information production and information services. The world is entering a new economic development period dominated by the information industry."

This time, the Government Work Report does not simply mention the concept of "new economy" in words, but highlights the "new economy" thinking as a whole, which is worthy of in-depth understanding.

2. Prominent Features of the “New Economy”

From the pulse of global economic and social development, we can feel the power of the booming "new economy".

1. The new information infrastructure of “cloud, network, and terminal” is gradually taking shape

The government work report reflects that while attaching importance to the construction of traditional industrial and agricultural infrastructure, special attention is paid to the widespread application of new information technologies including the Internet, the Internet of Things, cloud computing and big data.

"Cloud" refers to cloud computing and big data infrastructure; "Network" includes not only the original "Internet", but also extends to the field of "Internet of Things"; "End" refers to personal computers, mobile devices, wearable devices, sensors, and even software applications that users directly contact, which are the source of data and the interface for service provision. The new information infrastructure is being superimposed on the original agricultural infrastructure (land, water conservancy, etc.) and industrial infrastructure (transportation, energy, etc.), and its role is becoming increasingly important.

In 2015, cloud computing services matured: Amazon AWS revenue increased by 78% in the third quarter, Microsoft Azure revenue doubled; Alibaba Cloud revenue increased by 106% in the second quarter and 128% in the third quarter. However, the performance of traditional IT companies continued to decline. In 2020, the amount of data in China will increase from 909EB in 2014 to 8.06ZB (about 8 trillion GB), and the global share will increase to 18%. As of the end of June 2015, the number of Internet users and mobile Internet users in China reached 668 million and 594 million respectively, and the Internet user group has penetrated more widely. In 2020, China will have 5.4 billion devices connected to the Internet of Things, accounting for 20% of the world.

Figure 1: Size of Chinese Internet users (as of the end of June 2015)

On the 2015 Double 11 shopping festival, the system created a peak of 140,000 transactions per second, and the payment peak reached 85,900 transactions per second. This greatly exceeded the actual processing capacity of Visa and MasterCard, and was much higher than the laboratory data of both. The supporting technology comes from a number of technological innovations of Alibaba Cloud Computing: the world's largest hybrid cloud architecture; the world's first core transaction system on the cloud; "multi-site active" transaction payment 1,000 kilometers away; and the world's first distributed relational database OceanBase applied to financial services.

2. Continuous investment in the new production factor of “data”

The Government Work Report reflects the emphasis on improving the efficiency of the use of input factors, relying on innovation to improve total factor productivity, and advocating green production and living styles and ecological environmental protection.

Data has become an independent production factor like capital and labor. After nearly half a century of informatization, the extraordinary development of information technology has led to an explosive growth in data volume and processing capacity, and human society has entered the "big data era."

In addition to being a necessary component to drive business (such as financial transaction data and e-commerce transaction data), the development of data products (creating new value through the expansion of data usage, such as targeted online advertising) has opened up new sources for capturing data value. The accumulation, exchange, analysis and application of massive data in the economic and social fields have produced unprecedented insights and knowledge, greatly promoted the improvement of production efficiency, and provided extraordinary innovation power.

With the rise of cloud computing and big data technology and applications, computing resources are becoming extremely low-cost and available everywhere. Data is breaking free from its original constraints and accelerating its flow and sharing. We can continue to increase data input from a quantitative perspective, dig deep into the data rich mine from a qualitative perspective to obtain new knowledge models, and technological progress will occur. New space will be gained for productivity improvement, and cross-border innovation and integration will continue. IT (information technology) marked by centralized control has been replaced by DT (data technology) aimed at activating productivity.

Figure 2 Four stages of information technology development

3. "Platform economy", "sharing economy" and "micro-economy" are a trinity that complement each other

The Government Work Report reflects: continuing to highlight strong support for the development of innovative leading enterprises; clearly deploying tasks to promote the development of the sharing economy and advance the construction of sharing platforms; and continuing to unleash the vitality and energy of mass entrepreneurship and innovation through "Internet +".

"Platform economy" is the foundation, "sharing economy" is the essence, and "micro economy" is the soil. The three closely linked will constitute the basic form of China's new economy.

(1) The contribution of “platform economy” is becoming more significant

Platforms bring together different interdependent groups and create unique value by promoting efficient interaction between groups. In recent years, the rise of platform economy is the result of the strong penetration of Internet technology and applications. The "2015 Global Internet Trends Report" released by Mary Meeker pointed out that as of May 2015, the world's top 15 Internet companies calculated by market value were all platform companies, including 11 in the United States and 4 in China. The market value of these 15 Internet companies is close to 2.5 trillion US dollars, which is 144 times that of 20 years ago. The power of Internet platforms is evident.

The Internet platform is leading the creation of a new business ecosystem. As a pioneer of innovative business, it has formed "co-innovation" with many partners.

Internet platforms are driving the emergence of a large number of new types of employment. According to the BCG report, "traditional employment" employed by specific companies is transforming into "platform employment" connected to the market through Internet platforms. According to statistics from the Ministry of Human Resources and Social Security, the online shopping platforms Tmall and Taobao alone have directly created 10 million new jobs.

Internet platforms bring together essential resources, bridge regional gaps, and accelerate the flow of ideas. At the 2015 Alibaba Cloud Computing Conference, more than 20,000 young entrepreneurs gave people a taste of the wave of innovation brought about by Internet platforms.

Internet platforms release the potential of the sharing economy and micro-economy. Internet platforms significantly reduce the communication costs of all parties, directly support the formation of large-scale collaboration, and share capabilities with the whole society, thereby stimulating the vitality of the micro-economy.

Internet platforms empower the transformation and upgrading of traditional industries. Before 2015, Internet companies were in the "incremental rise" stage of rapid development. The next ten years will be the "stock transformation" stage where Internet platforms help traditional enterprises embrace the Internet and achieve online migration.

The competition and cooperation between Internet platforms has achieved outstanding results. Positive network externalities have enabled Internet platforms to grow rapidly. Their businesses involve multiple stakeholders, and users can freely choose between different platforms, forming a healthy competition and cooperation atmosphere. The market has gradually expanded, and service innovations have been continuously launched.

(2) The value of the “sharing economy” continues to be reflected

"Sharing behavior" has quietly emerged. Its enablers are Internet platforms, and its participants are individuals, enterprises, non-profit organizations and government departments. Its purpose is to circulate, share and reuse excess goods and services. However, the vision of "sharing behavior" is still limited to the scope of resources - excess goods and services, which is obviously too narrow. To support the development of the new economy, the scope of capabilities - strong commercial infrastructure capabilities, and the key to achieving large-scale output through "sharing platforms" facing a large number of people is the key. In this sense, the "sharing economy" is larger in scale and more transformative in shaping human production and lifestyles. From "sharing behavior to sharing economy", it is not only an expansion of ideas, but also a powerful release of supply-side capabilities.

The profound impact of the "sharing economy" is reflected in its overall penetration of economic development, involving multiple levels of entities and providing expansive access to other levels in terms of services, products, talents, and systems beyond single ownership. New formats such as modern agriculture, modern manufacturing, and modern circulation are all built on this basis. Taking Taobao Village in Cao County, Shandong as an example, small performing arts clothing companies, with the help of many service providers (logistics, marketing, operations, design, etc.), relying on the Taobao e-commerce platform, and supported by a capable telecommunications network, have stimulated their entrepreneurial enthusiasm and significantly increased their wealth. The release of the energy of the "sharing economy" is based on the flow of data and a good social environment (including systems, laws, policies, etc.).

Figure 3 Global penetration of the sharing economy

(3) The “micro-economy” model emerges strongly

The emergence of micro-economy has become an important economic development trend in terms of production, employment, consumption, market and distribution.

There is a clear trend of fragmentation in production, with the number of medium and large enterprises gradually decreasing.

·The employment characteristics are prominent, and a large number of workers will realize self-employment in the new service industry.

There is an urgent need for diversified consumption, not only in physical consumption, but also in virtual consumption such as investment and financial management.

The transparency effect in the market is significant. Time, region and scene cannot become obstacles to exchange, and information asymmetry becomes history.

The improvement of the welfare distribution will not only increase the overall benefits, but also make the distribution more equitable.

Figure 5 Changes in the size of Chinese enterprises

According to survey data and forecasts, the total number of small businesses in China will increase significantly and the density of businesses will increase, that is, there is a clear trend towards miniaturization of businesses.

Consumers are increasingly showing new characteristics, namely, personalized demands, more knowledgeable, more interconnected and more proactive. Their transformation has forced business organizations to evolve in the direction of "platform + small enterprises (individuals)", so that they can "take on" a large number of "small, fast" demands. Therefore, the characteristics of "micro-economy" are also reflected within large enterprises. Enterprises will regard themselves as platforms, and internal employees will form small innovative groups similar to small and medium-sized enterprises. The task of the enterprise is to serve these employee groups and individuals, mobilize these "creative elites", and better meet market demand. Since the information of employees is open and transparent to the society, the competition between enterprises has turned into competition between "platform + innovative small groups (individuals)". Extending to the outside of the organization, around the Internet platform, many combinations of "platform + small enterprises (individuals)" will be formed.

4. “Cross-border economy” reshapes the global trade pattern

The government work report reflects: earnestly promoting high-level opening up to the outside world and promoting the development of cross-border e-commerce and comprehensive foreign trade services.

In recent years, the practice of information economy, represented by e-commerce, has fully demonstrated the trend of the rise of "cross-border economy" in reshaping the global trade pattern.

The advancement of information technology, the improvement of communication efficiency and the expansion of business functions have made transaction matching, cross-border payments and international logistics more data-driven, breaking the limitations of geographical space and gradually extending from the domestic unified market to the "borderless" global market. Currently, the world's leading platform companies have become important hubs of the "cross-border economy" by strengthening their coverage of countries and regions.

Taking my country's e-commerce as an example, through third-party trading platforms (wholesale and retail platforms), not only has the goal of "selling globally" been achieved, that is, promoting the export of outward-oriented enterprises, but also the effect of "buying globally", that is, expanding imports, boosting consumption, and balancing foreign exchange, has been achieved. By "selling globally", my country's production capacity can be more fully utilized, and by "buying globally", foreign companies can discover the huge value of my country's market. More importantly, it has established a link between domestic and foreign companies. Foreign companies have a better understanding of local needs. From exporting goods to my country, and then developing into importing goods from my country to that country or region, imports and exports will achieve a benign positive feedback.

Platform companies with advantages can help small and medium-sized enterprises in other developing countries grow together by sharing and exporting new information infrastructure and e-commerce platform services, thus achieving "inclusive" growth in the global economy. The "cross-border economy" based on information technology changes will reshape global trade rules and demonstrate vigorous vitality.

Figure 7 “Cross-border economy” reshapes the global trade pattern

5. “C2B” operations are becoming more mainstream

The government work report reflects the following: focusing on optimizing the structure of manufacturing and service industries, improving the quality and level of products and services, boosting consumption, meeting demand, and promoting personalized customization and flexible production.

C2B is not only about personalized customization, nor is it limited to the field of consumer goods production. It represents a technological-economic paradigm shift driven by the Internet. Its core components are reflected in the following aspects:

Customer-defined value: The value of products and services can only be determined by the end user. Although traditional enterprises claim to be consumer-centric, there is no technical means to guarantee this. The Internet and social networks provide a platform for dialogue and communication with customers. For example, by establishing a "consumer community", customers can give feedback and even be encouraged to participate in product R&D, design, production and brand communication.

Capturing fragmented and diversified customer needs: Social network marketing achieves precision marketing based on social relationships and specific scenarios; and online advertising networks, based on big data technology, accurately deliver product information to the audience, achieving mutual consent between brands and consumers.

Pull-type operation mechanism: C2B requires full data sharing and close coordination between production, supply and marketing. The retail end meets market demand with multiple varieties, small batches and fast delivery. The supply chain completes continuous replenishment according to the actual demand level of different categories to ensure continuous supply and no redundant inventory. This also places high demands on warehousing and logistics.

Flexible production: small batches can be produced, and large batch reorders and replenishment can be quickly realized, and both large and small orders can be controlled in quality and cost. This requires overcoming the traditional concept of "mass production" and carrying out a thorough transformation in information collaboration, category planning, material preparation, production line transformation and management methods.

Figure 6 The core structure of “C2B” operation

6. The “collaborative governance” mechanism has become a consensus

The government work report reflects: effectively improving the level of modernization in government governance and steadily improving people's well-being.

With the rapid development of the Internet and the booming platform economy, we are facing unprecedented challenges in domestic and international Internet economic governance. "Multi-stakeholder collaborative governance" is a response approach recognized by all parties.

The Internet has broken the original industrial system and magnified the "simple" transaction system into a "complex" transaction scenario. Unlike traditional enterprises, Internet platforms connect a large number of stakeholders. The original regulatory policies, regulatory measures and even regulatory teams are no longer competent for the management of platform economy.

In order to cope with new situations and solve new problems, platforms should be required to exercise full self-discipline, give full play to the role of "Internet regulations" that have been tested by practice and conform to the laws of development of the new economy, and achieve coordinated governance together with industry supervision, government management and social supervision.

The same principle is also followed in international Internet governance. ICANN, the Brazilian Internet Steering Committee and the World Economic Forum jointly initiated the establishment of the Global Internet Governance Alliance. The Alliance is committed to establishing an open online Internet governance solution discussion platform to facilitate the global community to discuss Internet governance issues, showcase governance projects, and study solutions to Internet problems. In December 2015, at the Second World Internet Conference held in Wuzhen, President Xi Jinping proposed that "international cyberspace governance should adhere to multilateral participation and multi-party participation, and be discussed by everyone, giving full play to the role of various subjects such as governments, international organizations, Internet companies, technology communities, non-governmental organizations, and individual citizens, and not engage in unilateralism, or dominance by one party or a few parties together." That is, advocating a multi-subject governance model, which reflects the active exploration and responsibility for future global Internet governance under the background of the mutual integration of the physical world, the digital world and the biological world.

3. New driving force: the release of value of the “new economy”

In recent years, China's economic growth rate has slowed down and entered a "new normal" of low-speed growth. A series of problems need to be solved: the original economic growth momentum has failed, the products or services of some industries have low added value and weak competitiveness, the development between regions is unbalanced, and the ecological environment cost is too high.

As the original growth momentum faces challenges, promoting the upgrading of production factors and optimizing the division of labor structure, achieving continuous improvement in productivity, seizing the rare opportunities brought about by the information technology revolution, and comprehensively promoting the development of the "new economy" have become the keys to China's economic growth in the new era.

The "new economy" based on the Internet will bring about continuous technological progress and business innovation, and play an important role in the following six aspects, thus injecting new impetus into China's economic development.

1. Promote the effective input of traditional factors

For a period of time, the input of traditional factors such as labor, capital and natural resources has continued to expand, but the utilization efficiency has been far from satisfactory - local labor shortages, limited land space, difficulties in corporate financing, high logistics costs, serious inventory backlogs, and excess low-quality production capacity.

Through e-commerce and other means, the limitations of "time" and "space" have been eliminated, the boundaries between regions and the barriers between industries have been broken, and the flow and optimal allocation of these production factors have been achieved.

E-commerce has formed an ecological development of the business system based on the platform. The design, production, sales and service links can achieve "distributed collaboration" to utilize the comparative advantages of various regions in labor, land space, manufacturing capabilities and service levels; online loans reduce the cost of capital use for small and micro enterprises to promote their expanded reproduction; the logistics system based on online orders has replaced long-distance and large-scale ineffective circulation; the "production based on sales" and "small batch, multiple batches" model avoids blind production and inventory; companies that directly reach users and meet their individual needs can obtain better profits, and the survival of the fittest is also achieved in terms of production capacity.

In addition, relying on the platform, the networked production system of numerous small businesses (individuals) interacting with each other has replaced the old chain production system centered on a few large enterprises, stimulating "open collaborative innovation" that no one party can complete independently, and reducing the risk of large-scale economic fluctuations.

2. Accelerate the release of domestic consumption potential

Since the beginning of the new century, many Chinese companies have grown rapidly, and the "WTO + foreign demand" model has contributed greatly to this. However, its drawbacks have also become increasingly prominent, such as "over-reliance on overseas markets leading to unstable demand", "low-tech content and low-end industries leading to companies without brands and channels", etc. In order to meet this challenge, it has been raised to the national strategic level to establish a long-term mechanism to expand consumer demand and release the consumption potential of residents.

The Internet is playing an increasingly important role in driving domestic demand growth.

According to the National Bureau of Statistics, my country’s online retail sales increased by 49.7% year-on-year in 2014 to RMB 2.8 trillion, accounting for 10.6% of the total retail sales of consumer goods in the same period.

McKinsey report shows that about 61% of online consumption is a substitute for offline retail, and the remaining 39% is new consumption that would not have occurred without online retail. This proportion is as high as 57% in third- and fourth-tier cities.

The BCG report predicts that by 2020, the scale of online shopping will reach approximately US$1.9 trillion, and 42% of private consumption growth will come from online consumption.

The "Internet + domestic demand" model is helping a large number of Chinese companies achieve the transformation from "external" to "internal". Traditional business processes will be changed by data, and new business models and division of labor and cooperation systems will be established. China's economic transformation will face a rare opportunity.

3. Achieve the upgrading of production factors

The new information infrastructure of "cloud, network, and terminal" and the new production factor of "data" are emerging, which will bring unprecedented opportunities for China's economic development.

my country has a vast market and a wide range of application scenarios. The Internet is fully integrated with various industries, and the "data" resources accumulated and continuously generated are very rich. Chinese Internet companies have tens of millions or even hundreds of millions of users, which is unimaginable for other countries. Foreign development economists once pointed out: Does the direction of information technology evolution reflect the will of developed countries, and scientific research activities in developing countries are also serving developed countries? Now that we have rich "data" scenarios and a large number of users, our technological strength has great potential for growth (such as Alibaba Cloud, which is now one of the few companies in the world that can provide super-capable general cloud computing services), and foreign companies are also developing around the needs of the Chinese market (such as well-known foreign payment institutions, which are also helping Chinese commercial banks develop loan systems for small and medium-sized enterprises).

Taking China's manufacturing industry as an example, after long-term development, it has accumulated rich experience in product quality, production management and infrastructure, and is a trustworthy and cost-effective manufacturing cluster. Relying on cloud computing and big data platforms, the recording, analysis and sharing of user preference data will form the overall advantages of China's manufacturing cluster; by working together to form de facto standards, many manufacturers can further gain advantages in the production of high-end information equipment such as wearable devices and mobile terminals. At the same time, e-commerce platforms can form organizational advantages in the supply chain with the accumulation of data from the entire foreign trade process, and export strong manufacturing capabilities to foreign buyers.

4. Achieve the goal of structural optimization

New industrialization - The development of "industrialization" has entered a new stage worldwide. Whether it is the "third industrial revolution", "industrial Internet", or the concept and practice of "Industry 4.0", they are inseparable from the emphasis on the Internet and the reliance on the new generation of information technology. It is the core pursuit of all countries to give full play to the deep utilization value of data, promote the improvement of industrial production capacity, increase product added value, accelerate innovation and reduce energy consumption. Customization, flexibility and intelligence should be the development direction of China's new industrialization. Only by strengthening the content of Internet-oriented information technology in industry can China's manufacturing industry "advantages" be transformed into the "winning advantage" of the future world manufacturing infrastructure.

New urbanization and regional integration - On the one hand, the construction of "smart cities" based on cloud computing, big data, and the Internet of Things provides unprecedented management and control capabilities for the expansion of centralized towns and even regional integration; on the other hand, through the popularization of e-commerce transactions and the deepening of the division of labor in e-commerce services, rural areas can achieve distributed, industry-supported, and another form of urbanization. The Internet provides an optional path for new urbanization.

Internationalization - As mentioned above, e-commerce has triggered the growth of the "cross-border economy", and the Chinese economy is more closely integrated with the world, and the pace of internationalization will also accelerate. In the new economic era, Chinese companies represented by platforms will also transform from passive recipients of trade rules to active leaders.

5. Promote the reform of economic management system

The new information infrastructure has provided a new way to improve the government's governance capabilities. Data-driven scientific decision-making, social management and public services have achieved fruitful results. From "centralized control" to "service empowerment", the promotion of the "collaborative governance" mechanism that adapts to the characteristics of the new economy has created a good environment for economic development in the new era. It has also provided an example for gathering the forces of all parties to solve public problems, such as achieving targeted poverty alleviation through e-commerce and using "cloud network terminals" to achieve real-time environmental monitoring.

In addition to government departments, the providers of systems also include innovative enterprises at the forefront of economic development. This is also true in the development of the new economy. Faced with this new economic form, enterprises have been constantly trying to create new rules and systems through trial and error, solving problems that were difficult to overcome in the old governance system, and ultimately reaching a general consensus in society.

Take the rules of Internet governance as an example: the business ecosystem dominated by platform enterprises has promoted the practice of Internet rules. There are adaptations and adjustments, as well as interactions and frictions. The evolution of Internet rules is also quietly happening, from transactions to payments, from online merchants to platforms, from credit to consumer protection, from quantitative changes to qualitative changes, forming a set of effective endogenous and autonomous rules.

Take the credit system as an example: E-commerce platform companies have established a reliable credit system “from the bottom up” by establishing an evaluation system for buyers and sellers and a third-party payment method, creating a good credit environment for the explosive growth of China's e-commerce.

Take the micro-loan business for small and micro enterprises as an example: Internet companies rely on the large amount of real transaction data they have and can control risks at a reasonable level through calculations, thereby activating the entire micro-loan market.

The "new economy" not only innovates the social and economic landscape from a technological level, but also continuously meets the needs for changes in the economic management system in the new era.

6. Cultivate a hotbed for innovation and development

As a follower, backward countries can improve their own development speed by trading with leading countries and taking advantage of the opportunities brought by the gap. This is exactly what China has achieved in its long-term economic growth and catch-up. China has become a leading country in the world economy. The old methods are obviously not feasible, and continuous innovation is the fundamental way.

The new economy plays a significant role in cultivating innovative entities, developing new technologies, forming new industries, spawning new business forms, developing new regions, incubating new models, and creating new brands.

New entities: The Internet provides an excellent environment for innovative entities to grow through low-cost trial and error. For example, in the Tianchi Big Data Competition, Alibaba provided the participating young talents with powerful cloud computing capabilities, data development tools, and 570 million pieces of desensitized transaction data from Tmall through the "Data Factory". The winning team's algorithm was directly applied to the "My Double Eleven" column of the Tmall APP, and the transaction volume increased significantly, demonstrating the value of data and the power of the platform.

New industries: The Internet provides a rare opportunity for the formation of new industries. After removing unnecessary links in the circulation, e-commerce has emerged with the support of e-commerce platforms, namely "re-intermediation", which deepens the division of labor and improves the operation level. E-commerce services have gradually expanded from the initial material network services to financial network services, information network services, IT services, advertising and marketing services, consumer services, human resources services, consulting services and other types, better supporting online transactions. The big data service industry, which focuses on data collection, transaction, analysis, processing and auditing, is also booming.

New business model: The Internet has also promoted the integration of offline and online, and the O2O business has great potential. It has realized the digitization of "people, goods, and venues" in the physical retail industry, that is, people are identifiable, connectable, and interactive, goods are visible in inventory, and venues are omni-channel marketing such as online, physical, and mobile. Various service capabilities such as taxi-hailing, house rental, and task outsourcing based on the platform are fully shared.

New regions: The Internet has provided new options for regional innovation. Industrial clusters across China are actively seeking transformation, and e-commerce has become the best choice. From enterprises within industrial clusters spontaneously "touching electricity" to transform into online merchants, to the entire industrial clusters joining forces to go online with the support of the government and service providers, and turning into "online industrial belts", China is setting off a wave of "online industrial belts". For example, Alibaba and Zhili Town, a "famous children's clothing town" in Huzhou, Zhejiang, have reached a cooperation intention, and the two sides will jointly build a "China Children's Clothing Industry Demonstration Base". By the beginning of 2015, 34% of the merchants in Zhili Town had settled in Alibaba, and more than 2,000 sellers were registered in the "industrial belt".

New model: The Internet provides a good platform for business model innovation, making it easier to realize ideas and more convenient to collaborate. For example, in 2012, five young people from Shenzhen who came to Xinjiang to help, together with Uyghur youth Amu, organized an agricultural cooperative to open a Taobao online store called "Weijidani" to help Uyghur farmers sell high-quality agricultural products all over the country. Weijidani organizes agricultural technology training through cooperatives and signs contracts with farmers. Their purchase price is higher than the market price, and they also have higher requirements for product quality. By joining Weijidani, Uyghur farmers have increased their income.

New brands: The Internet has greatly increased the chances of new brands to stand out: online marketing and promotion costs are not only low but also efficient; online distribution has a wide range and fewer levels, which can effectively lock in scattered customers; establishing brand stores online saves more costs than offline. The Bain report pointed out that from 2011 to 2014, the "branding rate" of goods sold on Alibaba's retail platform increased by 7 percentage points, generating RMB 1 trillion in new brand sales. In addition to big brands, the compound annual growth rate of regional brands and Taobao brands was 74%, and non-famous brands reached 69%, with market shares increasing by 6% and 4% respectively.

7. Facilitate the comprehensive transformation to C2B

Premier Li Keqiang pointed out at the State Council Executive Meeting in January 2016 that "the so-called C2B means that consumers put forward requirements and manufacturers design consumer goods and equipment products accordingly. This is a real revolution: an enterprise is no longer a single closed enterprise. It is closely connected with the market through the Internet and can communicate flexibly with consumers at any time."

The C2B model is the business model of the DT era and the right direction for the transformation and upgrading of traditional industries. The comprehensive transformation to C2B is an effective way for traditional industries to embrace the new economy.

On the front end, they either provide relatively standardized modules for consumers to combine, or attract consumers to participate in the design and production process;

Internally, they improve their organizational capabilities and use platforms + front-ends to meet personalized needs;

At the back end, they actively adjust the supply chain to make it more flexible. The ultimate vision: customize a supply chain for each personalized demand of consumers.

Hongling, Haier, Shangpin Home Delivery, Sofia and others have achieved outstanding results on the C2B road. Based on this new concept, new method and new practice, Chinese companies will stand out in the new economic era.

The key to "strengthening new momentum and developing a new economy" is to thoroughly implement the innovation-driven strategy.

President Xi Jinping pointed out that "innovation has always been an important force in driving a country and a nation forward. my country is a large developing country that is vigorously promoting the transformation of its economic development model and the adjustment of its economic structure. It must implement the innovation-driven development strategy well. To implement the innovation-driven development strategy is to promote comprehensive innovation with scientific and technological innovation as the core, adhere to demand orientation and industrialization direction, adhere to the dominant position of enterprises in innovation, give play to the decisive role of the market in resource allocation and the advantages of the socialist system, enhance the contribution of scientific and technological progress to economic growth, form a new source of growth momentum, and promote sustained and healthy economic development."

By integrating innovative thinking into our blood, being bold in exploration and forging ahead, making good use of the "new momentum" and seizing the rare historical opportunities brought by the "new economy", China's economy will usher in a better future.