China’s Digital Procurement Market to Witness Strong Growth, According to New Report
The China Federation of Logistics and Purchasing has released its “2023 Digital Procurement Development Report,” highlighting the robust development momentum of the country’s digital procurement market. The report states that in 2022, the national enterprise procurement scale is expected to exceed 173 trillion yuan, with the total amount of e-commerce procurement reaching 14.32 trillion yuan, and the digital procurement rate rising to 8.26%.
The report further reveals that in 2022, the total purchases of enterprises across the country will surpass 173 trillion yuan, a figure similar to the previous year. Industrial production purchases are predicted to reach 103.78 trillion yuan, marking a year-on-year increase of 3.62%. Meanwhile, the construction industry is experiencing a year-on-year increase of 6.48%, with purchases amounting to 9.36 trillion yuan. However, retail and wholesale purchases recorded a year-on-year decrease of 7.43%, totaling 60.29 trillion yuan.
Regarding procurement categories, the report notes a significant increase in the purchase amount of production materials, which is projected to reach 104.06 trillion yuan in 2022. On the other hand, the purchase amount of non-production materials has declined.
In terms of procurement methods, the total amount of e-commerce procurement in China is expected to reach about 14.32 trillion yuan in 2022, marking a year-on-year increase of 13.7%. This amount accounts for 8.26% of the total national enterprise procurement, indicating a 1 percentage point increase compared to 2021.
Hu Dajian, Assistant President of the China Federation of Logistics and Purchasing, highlights the accelerated pace of digital procurement transformation among enterprises. The implementation of digital technology has improved the transparency, compliance, and efficiency of procurement procedures, as well as the degree of specialization in procurement.
The report also emphasizes the leading effects of central enterprises and state-owned enterprises in digitizing enterprise procurement. Central enterprises are expected to achieve an online procurement rate of 89% in 2022, a 9 percentage point increase compared to the previous year. A sample survey indicates that over 40% of state-owned enterprises have stated that their digital procurement rate exceeds 50%. This suggests that central enterprises and state-owned enterprises are playing a significant role in digital innovation and transformation throughout the entire supply chain.
Peng Xinliang, Secretary-General of the Public Procurement Branch of the China Federation of Logistics and Purchasing, highlights China’s advantage in digital technology applications, stating that Chinese companies can achieve latecomer advantages and excel in the digital supply chain. He suggests that in recent years, many Chinese companies have been at the forefront of the global smart supply chain industry.
The report further highlights emerging trends in the procurement supply chain, including the development of predictable digital intelligent supply chains, full-cycle green and low-carbon supply chains, and ecologically shared supply chains. It also notes the rapid adoption of digital technologies such as artificial intelligence and digital twins in digital procurement supply chains.
The scale of China’s digital economy is predicted to reach 50.2 trillion yuan in 2022, ranking second in the world. This indicates the increasingly significant role of the digital economy in the country’s steady growth and transformation.
To facilitate the measurement of the digitalization level of procurement supply chains, the China Federation of Logistics and Purchasing has released the group standard “Digital Maturity Model of Enterprise Procurement Supply Chain.” This standard provides a unified framework for enterprises to evaluate the digital level of their procurement supply chains. It proposes a structure, indicators, and maturity level standards, enabling enterprises to comprehensively assess their digitalization process and development stage. The implementation of this standard will begin on July 15, and it will be utilized for model application evaluation pilot programs in enterprises.
Peng Xinliang encourages enterprises to conduct self-assessments using the standard, enabling them to have an objective judgment of their digitalization process. Alternatively, enterprises can entrust third-party evaluations to gain valuable insights and identify areas for improvement.
The “Digital Maturity Model of Enterprise Procurement Supply Chain” is a recommended industry standard that aims to drive the continuous improvement of digital procurement practices. Its implementation is expected to yield substantial benefits for enterprises and further accelerate the digital transformation of the procurement supply chain sector.