Ⅰ. Editor’s Note

The "Survey on the Digital Transformation of Small and Micro Enterprises," as a major economic and social research project by the Institute of Financial Studies, Chinese Academy of Social Sciences, aims to comprehensively understand the current status, challenges, and needs of digital transformation among small and micro enterprises in China. It delves into issues like "difficulties and high costs of financing," continuously advancing the digital transformation of these enterprises, and summarizing successful case experiences to provide decision-making references for supporting high-quality development of private and small enterprises in China. On July 30, 2024, the research team continued their investigation in Shenzhen, visiting Kinghelm Electronics Co., Ltd. (www.kinghelm.net) and Starfly Technology Co., Ltd., while concurrently collecting data on corporate digital transformation. The surveyors gained valuable insights into the basic conditions, primary demands, and future digital directions of these enterprises. The research provided a deeper understanding of the digital transformation of small and micro enterprises and offered a more profound micro-enterprise perspective on advancing the high-quality development of the digital economy in China, laying a solid foundation for future related academic research. The specifics are as follows:

Shenzhen Kinghelm Electronics Co., Ltd.: The research team engaged in an in-depth discussion with General Manager Song Shiqiang of Kinghelm Electronics (www.kinghelm.net) regarding policies, corporate management, and market environment. This highlighted the complexity and challenges faced by small and micro enterprises in the digital transformation process, including difficulties such as a shortage of professional talent, financing issues, heavy tax burdens, and lack of policy support. Mr. Song emphasized the importance of digital transformation for the company, noting that Kinghelm and Slkor (www.slkormicro.com) benchmark against advanced practices of companies like Huawei, adapting rather than directly copying these methods to enhance management levels and production efficiency. Entrepreneurs play a crucial role in the development of enterprises, but they face challenges in balancing survival, innovation, and digital development in the current environment.

Shenzhen Starfly Technology Co., Ltd.: The research team engaged in a deep discussion with General Manager Chen of Starfly Technology regarding the path of digital transformation, selection and utilization of information systems, and the direction and strategy for corporate development. This provided a successful example for the development of small and micro enterprises. Mr. Chen highlighted that Starfly began its digital transformation early, adopting a strategy where financial management drives business development, implementing reward and evaluation mechanisms, and leading the finance department in adopting a digital financial system. Additionally, the company uses its financial system for data analysis and quantifying metrics to inform future development strategies. Mr. Chen’s approach to digital transformation, based on business considerations, serves as a valuable model for other small and micro enterprises facing challenges. This research collected a wealth of valuable information and opinions, laying a solid foundation for future academic studies.

Ⅱ. Daily Activities of Researchers

First Company – Shenzhen Kinghelm Electronics Co., Ltd.

Song Shiqiang of Kinghelm Electronics (center) with the researchers 

Second Company – Shenzhen Starfly Technology Co., Ltd. 

Researchers from the University of the Chinese Academy of Sciences ask General Manager Chen questions

This research has prompted the researchers to engage in deep reflection on the concept of "digital transformation" for enterprises. Below is a summary of some of the researchers' insights and reflections.

Ⅲ. Insights from the Researchers

In the practice of digital transformation, enterprises face the challenge of balancing survival with innovation and even digital development. Mr. Song Shiqiang, General Manager of Kinghelm Electronics (www.kinghelm.net), provides representative insights. For small and medium-sized enterprises, addressing survival issues is currently the most critical, followed by digital transformation and upgrading. SMEs can address these challenges through several strategies: First, define strategic goals. Enterprises should clearly outline the goals of digital transformation, aligning them with the overall strategy and market demands. Second, focus on customer needs. During innovation, companies should closely monitor customer requirements to ensure that digital transformation solves real problems and delivers value. Third, adopt incremental progress. By using agile development methods, enterprises can implement digital projects in phases, iterating quickly and refining gradually to minimize risks. Fourth, involve customers. Engage customers in testing and feedback during the innovation process to ensure that solutions meet market needs. By applying these strategies, enterprises can progressively drive digital transformation while securing their survival and achieving long-term sustainable development. Additionally, companies need to balance short-term gains with long-term growth in digital transformation, creating a strategic plan that considers both immediate objectives and future vision, ensuring coordination between daily operations and future development. Detailed cost-benefit analyses of digital projects are also necessary to ensure that short-term investments lead to long-term returns.

— Haimeihong, University of the Chinese Academy of Social Sciences

The recent research on Starfly Technology Co., Ltd. has left a profound impression on me. I believe Starfly has provided a feasible pathway for the digital transformation of small and medium-sized enterprises (SMEs), which is worth emulating by other companies.

Firstly, digital transformation requires managers to have a clear awareness of its importance. In previous studies of various companies, either the management lacked a clear understanding and was merely influenced by the operating environment and competition, or they recognized the potential benefits of digital transformation but remained in a wait-and-see attitude. In contrast, Mr. Chen from Starfly has a clear understanding of digital transformation. He realized early on that as a company grows to a certain scale, the costs of operations and management will significantly increase, and digital transformation can help managers achieve cost reduction, efficiency improvement, and quality enhancement.

Secondly, there must be a strong determination to push forward with digital transformation. Many companies purchase relevant software and systems, but some business processes and tasks still rely on traditional methods. This is partly due to the lack of proactive implementation of digital systems and partly because employees initially resist using new systems. Mr. Chen also mentioned the issue of "difficulties at the beginning." However, he led his team to actively promote the system by establishing a series of incentives and assessment mechanisms related to the digital system, which reflects the team's strong commitment to advancing digital transformation.

Finally, it is essential to learn how to effectively utilize digital software and systems. Digital transformation is a long-term process; it is not simply about purchasing and using software or systems. Software and systems are just tools in the digital transformation process; the critical aspect is how to leverage these tools. Over 60% of Starfly’s business is based on international markets, so fluctuations in foreign exchange rates have a significant impact on the company. Mr. Chen mentioned that the finance department has integrated exchange rate fluctuations into their system to analyze the company's operational status, which is just one example of how the company effectively utilizes the system to enhance efficiency. Therefore, for other SMEs, the key is not only to learn how to use the system but also to integrate it thoroughly into all aspects of production and operation to achieve a transformation towards digital management.

— Hou Yukun, University of the Chinese Academy of Social Sciences