Smart tech key to growth along New Silk Road, WEF says

Significant investment in new technologies could help small and medium-sized enterprises along the route of China’s Belt and Road Initiative boost the GDP of their countries and regions by as much as 7 percent, according to a World Economic Forum report.

A lack of access to global markets is the main impediment to growth for SMEs in the region, which struggle to establish affiliates in foreign markets, have difficulty receiving or processing payments, and face high shipping costs, the study says.

Instead, they should focus on new technologies that improve infrastructure efficiency.

“This would help them understand product supply and demand dynamics and quickly adjust production plans, track pricing, predict future price trends based on historical behaviour, and identify and react to new market demands that are not fully satisfied,” the WEF report says. IT infrastructure advances and innovative digital capabilities could also “significantly lower labour and other direct costs,” it adds.

Initiated by President Xi Jinping in 2013, the Belt and Road Initiative is aimed at supporting the construction of railways, ports, airports, roads and other infrastructure projects in 60 countries and regions neighbouring China and in other parts of Asia, the Middle East and Europe. Its goal is to boost trade flow and economic growth. China has already invested more than $51 billion and in excess of 100 economies have signed on – with free trade, collaboration agreements or other partnerships – in a project that involves more than 12,000 engineering contracts.

“Everything from the planning of services to the execution of supply-chain operations can be improved by providing countries with new IT infrastructure able to manage small and big data for a steady flow of goods across this vast region,” said Wolfgang Lehmacher, director of Supply Chain and Transport Industries at the WEF and one of the report’s authors. The WEF paper – titled How Technology Can Unlock the Growth Potential along the New Silk Road – concludes that revived trade corridors, if combined with smart technology investments, alongside additional traditional industrial infrastructure, “can create exciting economic gains and social benefits for its participants”.

“Having the right technology in place is the only way that the New Silk Road will define the future of trade between East and West,” said Gerry Mattios,an expert principal with Bain & Company, based in Beijing, who contributed to the report.