Sustainability and Digital Transformation: The Case of Strategic Management in China

Introduction

China's role in the international economy is important and influential because it is the world's second largest economy. The last two decades have seen unprecedented economic progress, changing the country from an agricultural backwater into a thriving center of industry and manufacturing (Zreik, 2022). China's economy surpassed Japan's in 2010, making it the world's second largest behind the United States' (Cai, 2010).

China's industrial might stems from the country's enormous output. It has so much manufacturing and exporting capacity that it is often called “the world's factory.” Products as diverse as computers, textiles, and transportation equipment are all made there. Because of this, China has been able to build up a sizable trade surplus and has become central to many supply networks throughout the world.

The country is a manufacturing giant, but it is also diversifying into industries with higher added value. The rise of Chinese tech giants like Huawei, Tencent, and Alibaba on the international arena is indicative of the country's shift toward a knowledge-based economy (Chorev & Ball, 2022).

China's impact can also be seen in international banking. It has the highest foreign exchange reserves in the world, giving it significant sway over international currency markets (Liu, 2023). To further spread its economic influence, it has leveraged its economic might to establish international infrastructural schemes like the Belt and Road Initiative (Zreik, 2020).

However, China's rising influence in the global economy is not without its share of difficulties. China faces a number of challenges, including economic inequality inside the country, environmental degradation, and complicated relations with other global economic powers. However, its economic might makes it a pivotal actor on the international arena, allowing it to shape economic trends and policies around the world.

The policy and regulatory landscape significantly influence sustainability and digital transformation in China. For instance, the government's recent 'Green New Deal' policy encourages businesses to adopt more sustainable practices, significantly influencing strategic management.

Due to a shifting corporate climate and shifting societal expectations, sustainability and digital transformation have become critical components of modern strategic management. Integrating economic, environmental, and social goals (the “triple bottom line”) is at the heart of sustainability in strategic management (Wilson, 2015). It is becoming increasingly common for people to demand businesses to improve society and the environment in addition to making a profit. Regulatory pressure, consumer demand for environmentally friendly and socially responsible products, and the realization that sustainable practices can lead to innovation, competitive advantage, and long-term business resilience have all contributed to the current focus on sustainability in strategic management. Incorporating sustainability into strategic management also aids businesses in protecting themselves against natural and societal disasters (Bocken et al., 2014).

However, digital transformation is radically altering organizational frameworks and tactics. Artificial intelligence (AI), big data analytics (BDA), the Internet of Things (IoT), and blockchain are just some of the technologies that businesses are using to adapt to the era of Industry 4.0, which is characterized by data exchange and automation in manufacturing technologies, improve customer experiences, and create new products and services (Ivanov et al., 2021). The implementation of digital transformation can boost productivity, open up new revenue opportunities, and facilitate better decision-making. It is also changing the nature of competitiveness, with businesses who are slow to adopt digital technologies potentially falling behind their rivals.