McKinsey & Company: The Key Period for Chinese Enterprises to Win in the Next Decade

The explosion of Chat GPT is like the ripples caused by a stone thrown into the water, directly triggering a wave of innovation in the entire industry, and marking 2023 as a year of business restructuring.

On September 7th, at the 2023 INCLUSION·Bund Summit, Ni Yili, Chairman of McKinsey China, believed that generative AI will have a significant impact on all industries, which is a critical period for Chinese companies to win.

According to Ni Yili's calculations, generative AI can create $9 trillion in overall global economic benefits in the future. However, how to get a larger share of this big cake is a question that companies should consider.

Looking back at the past twenty years, Ni Yili concluded that the most important thing is to "choose the right track and market." "If you choose a market with poor soil, whether it is a leader or a follower, there is actually not much you can do, and the return on equity (ROE) will not be high."

So, in the AI era, how can we judge the market for selection? Ni Yili predicts that the top three industries to benefit from generative AI are high technology, retail, and banking.

Breaking it down, he believes that in different generative AI applications, the areas with the greatest potential impact are sales and channels, marketing, product development, and software engineering.

Therefore, in Ni Yili's view, jobs that are based on a foundation and involve repetitive labor are more likely to be replaced by machine automation. And the impact of this wave of generative AI will mainly affect industries with "low potential for automation," such as doctors, executives, and teachers.

"AI accelerates some collaborative, managerial, judgment-based, and highly interactive work that could not be replaced in the past, and brings forward the potential of productivity by about 10 years." This is not difficult to understand. Ni Yili pointed out that the demographic dividend is no longer the main driving force for China's GDP growth, and it is imperative to improve productivity.

However, there are also bottlenecks in the implementation of AI transformation. Ni Yili frankly stated that the bottleneck lies not in technology or AI, but in the enterprises themselves. How to make them accept the changes is the key.

"In the past, many successful companies habitually followed established strategies, and some self-made executives lacked a mindset for making changes for the future. Previous advantages have become burdens for the future."

In order to adapt to the business restructuring brought by AI, Ni Yili proposed that Chinese companies must reconstruct their business models in the next 10-20 years, transitioning from beta to alpha. They need to move away from the era of going with the flow, fast replication, and pursuing scale, and enter an era of cultivating internal strength, refining operations, and targeted strategies. At the same time, they need to enhance their R&D capabilities and build true technological advantages and differentiation capabilities.

Ni Yili firmly believes that technology and AI will lead the way for enterprises, and the era of AI creating trillions of value has just begun.

As Ni Yili said, the next decade is a critical period for Chinese companies to win, but any transformation requires courage and profound changes in corporate culture. The ability to choose the right market and embrace reform is the biggest opportunity and challenge for companies in the AI era.