Companies Do Not Resist Digital Transformation. They Resist Being Changed First.
The most interesting question about digital transformation in Chinese companies is no longer whether it matters. Almost everyone agrees that it does.
Owners want lower cost and higher efficiency. Business teams want faster processes. Finance wants cleaner numbers. IT teams want to stop holding together old systems with patches and manual workarounds. At the policy level, the direction is also clear: digital economy planning, Digital China construction, and the official guidance for SME digital transformation all point in the same direction. Digital capability is no longer a side project for the IT department. It is becoming part of how companies compete and operate.
Yet inside many companies, execution still slows down.
My judgment is simple: many companies do not resist digital transformation. They resist being changed first.
The real target is the operating model, not the software stack
Many companies still treat digital transformation as buying a new system, replacing an ERP, moving workloads to the cloud, or building dashboards. These moves can be necessary, but they are not the transformation itself.
ERP, or enterprise resource planning, is not just a piece of software. In practical terms, it gives purchasing, inventory, production, sales, and finance one shared operating language. It is less about whether a company owns a system, and more about whether everyone can discuss orders, stock, cost, delivery, and cash collection with the same definitions.
That is why ERP migration is rarely difficult only because of data migration or interfaces. The real question is whether the business is willing to admit that old processes built on personal experience, informal approvals, and temporary coordination now have to be redesigned.
Once the system makes the process explicit, many grey areas disappear.
Sales can no longer casually say that one order is special and procedures can be completed later. Warehousing can no longer rely on delayed stock numbers and experience alone. Finance can no longer wait until month-end to reconcile definitions that should have been aligned from the beginning.
In an early-stage company, some of that flexibility may help survival. At scale, it becomes management risk.
Digital transformation shines light into these grey areas. That is why companies may support it verbally while hesitating operationally. What changes is not only the system. Work habits, departmental boundaries, and management routines all get touched.
The hardest part is not spending money. It is accepting transparency.
In many digital programs, budget is not the biggest obstacle. If leadership truly wants to buy a system, money can often be found. The harder part comes after the system starts making problems visible.
For example, delivery delays used to be explained as “supply chain complexity.” But when procurement lead time, inventory turnover, production scheduling, customer changes, and shipping milestones appear in one flow, the conversation changes. Who owns the delay? Which step slows the company down repeatedly? Which department's promise cannot survive data transparency?
At that point, digital transformation is no longer an IT project. It becomes an organizational governance project.
Process reengineering does not mean drawing a prettier flowchart. It means redefining how work moves, who makes decisions, and who is accountable for outcomes. It solves responsibility and efficiency problems, not diagram problems.
Many companies delay execution because they know what will happen once the work becomes real.
Responsibilities become clearer. Cross-functional ambiguity becomes harder to hide behind meetings.
Management becomes more transparent. Sales, finance, warehousing, and production have to face the same facts instead of maintaining separate versions of the truth.
The operating rhythm becomes faster. Problems that used to surface at month-end may become visible on the same day. Faster visibility demands faster and better management decisions.
So the hesitation is not irrational. Companies know digital transformation has value. They also know it will turn issues that used to be delayed, explained away, or negotiated privately into issues that must be solved.
“Unwilling, afraid, and unsure” are three versions of the same problem
In the policy language around SME digital transformation, Chinese authorities have long recognized patterns that can be summarized as companies being unwilling to transform, afraid to transform, or unsure how to transform. I find that framing useful, but inside an enterprise it usually shows up in more concrete forms.
Unwilling does not always mean anti-technology. It often means the return is uncertain. A business team may ask: if the current process still works, why should we absorb the pain first?
Afraid usually means the project feels too large. What happens to historical data? What happens to old processes? What if employees cannot use the new system? Who is responsible if business continuity is affected?
Unsure often means the technology team and the business team do not share a language. IT talks about architecture, interfaces, master data, and integration. Business talks about customers, orders, delivery, and cash collection. Both sides may be right, but if no one translates technology into business outcomes, the program becomes a long negotiation between two vocabularies.
This is where a CTO has to step forward.
If the CTO only acts as the head of technology, the program easily becomes system construction. If the CTO can stand in the operating model, the questions change: which business flow must improve? Which metric must move? Which department's responsibility will be redefined? Which legacy customizations are real competitive capabilities, and which are just historical debt?
The hard part of digital transformation is not the absence of tools. It is the lack of capability to embed those tools into operating responsibility.
Execution should start from one business flow, not a grand slogan
If I were the CTO inside such a company, I would not begin with a grand “full digital transformation” blueprint.
I would choose one business flow that can be verified.
Order to cash is a good example. It crosses sales, contracts, inventory, delivery, invoicing, and collection. It naturally exposes coordination problems. If this flow does not work, more dashboards will only help the company observe disorder more clearly.
Inventory to production is another example. It exposes definition problems across planning, procurement, warehousing, and manufacturing. If inventory data is not trusted, forecasting, scheduling, and cost analysis will all be distorted.
Digital programs fail when they become too grand too early. The larger the slogan, the easier it is for no one to be accountable. A concrete business flow forces the company to ask whether anything has actually improved.
For that reason, I would require the program to answer four questions before system procurement:
- What is the biggest operating bottleneck in this flow?
- Which data definitions must be unified?
- Which process responsibilities must be reassigned?
- Which business metric must improve after go-live?
If these questions cannot be answered, the company is not ready to buy another system.
Why some companies keep postponing
There is also a practical reason. Some companies are not unwilling to transform; they are under heavy short-term operating pressure.
When cash flow is tight, orders fluctuate, and teams are exhausted, digital transformation can look like something that is right but not urgent. In many traditional industries, leadership is focused on this month's collection, next quarter's orders, and current inventory pressure rather than a three-year data capability roadmap.
This should not be dismissed as simple short-termism.
The management contradiction is real: the benefits of digital transformation usually appear after process adjustment, employee adoption, and data governance. But the cost and disruption appear first.
Data governance does not mean putting data into a platform. It means giving the company a shared factual basis for customers, orders, inventory, cost, and cash collection. It solves the problem of whether management discussions are based on the same truth.
If a company cannot manage the transition period, digital transformation becomes a project that is strategically correct but operationally dangerous. Leadership then chooses to wait: observe first, patch first, ask IT to handle surface problems first, and avoid turning the work into organizational change.
The delay does not remove the problem. It compounds it.
Systems multiply. Data fragments. Processes depend even more on individual people. When the company grows to the next level, yesterday's flexibility becomes tomorrow's management cost. Transforming later often costs more.
How I would judge whether a company is truly ready
I would not judge readiness by whether the company has a digital roadmap. I would not judge it by budget size either.
I would look for three signals.
First, are business leaders willing to make process responsibility explicit? If every department wants the system to improve its own efficiency but refuses to adjust cross-functional collaboration, the result will likely be local optimization.
Second, is management willing to accept data transparency? Digital systems expose problems. If leaders only want good-looking dashboards and do not want hard facts, the data platform will become a presentation project.
Third, can the CTO translate the technology roadmap into an operating path? Cloud, ERP, data platforms, and AI may all be useful, but they must be connected to cost, efficiency, risk, delivery, and cash flow.
A company is not ready for digital transformation because it has adopted the right slogan. It is ready when it is willing to let technology change the way it operates.
The real question is who changes first
Why should domestic companies embrace digital transformation? Because market competition, policy direction, cost pressure, customer expectations, and organizational scale are all forcing companies to improve the quality of operations. Relying on experience, manual supervision, and temporary coordination becomes less sustainable as business complexity grows.
Why does execution still stall? Because digital transformation is not a gentle tool upgrade. It reallocates responsibility, exposes process problems, reduces management ambiguity, and asks the organization to absorb discomfort before seeing the full return.
So I would put the contradiction plainly:
Companies do not resist digital transformation. They resist being changed first.
The value of a CTO is not only to build systems. It is to help the company convert technology investment into operating action, and operating action into organizational accountability. Only then does digital transformation stop being a loud project and become a new way of running the business.