Home » China’s Digital Procurement Market Shows Strong Growth According to 2023 Development Report

China’s Digital Procurement Market Shows Strong Growth According to 2023 Development Report

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China’s Digital Procurement Market Shows Strong Development Momentum: Report

The China Federation of Logistics and Purchasing has released its “2023 Digital Procurement Development Report” today, highlighting the significant growth and potential of China’s digital procurement market. According to the report, the country’s digital procurement rate is expected to rise to 8.26% in 2022, with the national enterprise procurement scale exceeding 173 trillion yuan and the total amount of e-commerce procurement reaching 14.32 trillion yuan.

The report reveals that the total purchases by enterprises across the country will reach over 173 trillion yuan in 2022, remaining relatively stable compared to the previous year. Notably, industrial production purchases are projected to reach 103.78 trillion yuan, representing a 3.62% increase year-on-year. Additionally, construction industry purchases are expected to reach 9.36 trillion yuan, reflecting a year-on-year growth of 6.48%. However, retail and wholesale purchases are predicted to decline by 7.43%, reaching 60.29 trillion yuan.

When examining procurement categories, the report emphasizes the significant increase in the purchase amount of production materials, which is estimated to reach 104.06 trillion yuan in 2022. Conversely, the purchase amount of non-production materials is expected to decline.

In terms of procurement methods, the report highlights the growing prominence of e-commerce procurement in China. In 2022, the total amount of e-commerce procurement is projected to reach approximately 14.32 trillion yuan, reflecting a year-on-year increase of 13.7%. This accounts for 8.26% of the total national enterprise procurement, representing a 1 percentage point increase compared to 2021.

Hu Dajian, Assistant President of China Federation of Logistics and Purchasing, commented on the acceleration of digital procurement transformation among enterprises. He stressed the importance of improving transparency and compliance in procurement procedures, which ultimately leads to increased efficiency and specialization.

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The report also sheds light on the leading role of central enterprises and state-owned enterprises in driving digital innovation and transformation across the supply chain. In 2022, the online procurement rate of central enterprises is expected to reach 89%, which is a 9 percentage point increase compared to the previous year. Furthermore, over 40% of state-owned enterprises reported a digital procurement rate exceeding 50%, indicating the initial formation of a digital procurement trend among these enterprises.

Peng Xinliang, Secretary-General of the Public Procurement Branch of the China Federation of Logistics and Purchasing, highlighted China’s potential for latecomer advantages and corner overtaking in digital technology applications. He emphasized the country’s position at the forefront of the world in terms of smart supply chain and digital supply chain.

The report concludes by identifying new trends in the digital procurement landscape, such as predictable digital intelligent supply chains, full-cycle green and low-carbon supply chains, and the emergence of ecological supply chains built and shared by multiple parties. These trends are supported by the rapid implementation of digital technologies like artificial intelligence and digital twins.

To further standardize and evaluate the digitalization level of procurement supply chains, the China Federation of Logistics and Purchasing introduced the “Enterprise Procurement Supply Chain Digital Maturity Model” group standard. This standard, set to be implemented on July 15, provides a unified framework for enterprises to measure their digitalization progress. It outlines the structure, indicators, and maturity level standards necessary for comprehensive evaluations of digital procurement supply chains.

According to Peng Xinliang, enterprises can use this recommended industry standard to conduct self-assessments on their digitalization process. They can also opt for third-party evaluations to obtain objective judgments and develop strategies for improvement.

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The implementation of the “Enterprise Procurement Supply Chain Digital Maturity Model” group standard aims to promote the continuous growth and advancement of China’s digital economy. As statistics indicate, the scale of China’s digital economy is projected to reach 50.2 trillion yuan in 2022, solidifying its position as the second-largest digital economy in the world.

With the release of this standard, enterprises can navigate the evolving digital landscape with a clearer roadmap for enhancing their procurement supply chains, ultimately contributing to the country’s economic growth and transformation.

[Responsible editor: Sun Ke]

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