A McKinsey report of July 2014 shows that China's internet economy at 4.4% % of 2013 GDP ranks fifth in the world, ahead of the United States (4.3%), France (4.2%) and Germany (4.2%) but behind the United Kingdom (6.7%), Korea (5.9%), Japan (5.6%), and Sweden (5.0%).

China has 632 million internet users, compared with 277 million in the United States. However, China's smart phone penetration is 54% (US 69%), social netwodrking penetration 60% (US 73%), enterprise cloud adotpion 21% (US up to 63%), and SME adoption only at 20-25% (US up to 85%).

So far, China's internet has been largely consumer rather than enterprise driven. The Report shows that internet adoption will have huge potential in six sectors –

Consumer electronics – connected devices, digital media

Automotive – supply-chain logistics, connectivity-enabled services

Chemicals – demand forecasting and production planning, customized systems, Internet of Things, precision farming

Financial Services – non-performing loans, marketing and customer services

Real Estate – material sourcing and sales marketing

Healthcare – remote diagnosis and e-commerce of across-the-counter treatment and pharmaceuticals

In particular, there is much room for adoption by SMEs.

When fully utilized, enterprise-driven internet adoption is forecast to contribute up to 22% of GDP and productivity growth by 2025, according to the McKinsey Report. It is expected to generate 46 million new jobs, more than enough to offset any job losses due to enhanced efficiency, and will be a key driver for the country's trajectory towards greater innovation, productivity and consumption.

Download Chinas Digital Transformation Executive Summary, McKinsey & Co, July 2014

Download Chinas Digital Transformation – Full Report, McKinsey & Co, July 2014