Strategically Engaging with China's Relational Digital Ecosystem

Abstract

Western firms are recognizing that digitization is transforming the way business is conducted in China, the world’s largest online market, just as much if not more than in their home markets. However, the importance of what we call the “Relational Digital Ecosystem” – a fundamental determinant of online competition in China – remains overlooked by many Western firms. By applying the concept of the Relational Digital Ecosystem to understand the workings of the “wanghong” economy in China – a sweeping recent digital phenomenon still largely unheard of in the West – we illustrate how digital competition is different in China than in the West. We then discuss how Western firms can respond to this ecosystem by more strategically engaging Chinese consumers in five ways.