How Digital Platforms Empower Small Businesses in the Service Economy

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In an era defined by rapid digital transformation, small and medium-sized enterprises (SMEs) in the service sector are discovering new pathways to growth through innovative online platforms. A recent report released by the Institute of Economics at the Chinese Academy of Social Sciences—titled Seeing: The Lifestyle Services Era in the Age of Short Video—New Growth Paths for SMEs on Short Video and Live Streaming Platforms—highlights how digital tools like short-form video and live streaming are reshaping the landscape for micro and small service businesses.

The study reveals that these technologies help SMEs overcome traditional barriers such as geographic limitations, information asymmetry, and rising labor costs. By becoming more visible online, businesses are not only expanding their customer base but also creating new consumption scenarios and unlocking opportunities for professionalization and scale.

Transforming Local Services into National Opportunities

Lifestyle services—encompassing dining, home care, repairs, beauty, and tourism—are essential to meeting everyday consumer needs. As one of the largest employment sectors in China, this industry plays a critical role in economic stability and high-quality development.

However, many service providers have long struggled with scalability due to the necessity of face-to-face interactions. Unlike manufacturing, where automation can boost efficiency, service delivery has traditionally been bound by time and space. For SMEs, which make up over 95% of the sector, rising labor costs and stagnant productivity have created a persistent challenge.

👉 Discover how digital platforms are turning local services into nationwide trends.

The report identifies a breakthrough: digital platforms like TikTok (Douyin) Lifestyle Services are enabling a fundamental shift. Through short videos and live streams, businesses can now reach audiences far beyond their physical locations. What was once confined to a “three-kilometer business circle” is now expanding across cities and provinces.

Take, for example, niche experiences like Quanzhou’s traditional hairpin-wearing culture or Zibo’s famous barbecue trend. These local phenomena gained national attention through viral content, transforming small vendors into regional attractions. This ripple effect has sparked new business models, services, and consumer interests—proving that digital visibility can turn hidden gems into market leaders.

From Passive Waiting to Active Engagement

One of the most significant changes brought by digital platforms is the shift from passive to proactive customer acquisition. In the past, small businesses relied on foot traffic or word-of-mouth referrals. Today, they can use algorithm-driven content distribution to connect directly with interested users.

As Professor Yang Hutao from the Institute of Economics explained during the seminar, “The digital ecosystem created by platforms like Douyin isn't just improving operational efficiency—it's driving a qualitative transformation in business models.”

This transformation spans multiple dimensions:

This new model empowers businesses across categories—from restaurants and hotels to fashion boutiques and beauty salons—to innovate content strategies that turn slow seasons into peak periods. Some have even used increased demand to upgrade their supply chains, sourcing higher-quality ingredients or materials to meet growing expectations.

Lowering Costs and Creating Digital Jobs

Beyond market expansion, digital platforms significantly reduce marketing and operational costs for SMEs. Traditional advertising—flyers, billboards, or paid ads—can be expensive and imprecise. In contrast, short videos offer a low-cost, high-reach alternative with measurable results.

Moreover, video content carries a unique advantage: authenticity. Unlike text or audio, video conveys emotion, personality, and environment—all crucial elements in building trust for service-based businesses. As Yang Hutao noted, “Video content allows businesses to showcase their unique skills, service style, and human touch at a speed and depth unmatched by offline methods.”

This ability to build social capital quickly is especially valuable for small operators without established brands.

The rise of video-centric platforms has also led to the emergence of new digital job roles:

These positions form a growing ecosystem of digital labor that supports not only the platforms themselves but also the broader service economy. According to the report, the production and sharing of personalized service content continuously reshape consumer interest patterns, helping users discover new experiences while reducing search costs.

For businesses, this means faster user acquisition and stronger potential for economies of scale. Aggregated demand across niche markets can even stimulate localized supply chain development—fostering regional economic resilience.

Data-Driven Growth: The Numbers Speak

The impact is not just theoretical. According to Douyin Lifestyle Services data:

These figures underscore a powerful trend: digital engagement translates directly into real-world economic activity.

Experts like Jia Lijun, Deputy Dean of the School of Economics at Beijing Institute of Technology, emphasize that such platforms are redefining service delivery. By breaking spatial and temporal constraints through vivid audiovisual storytelling, they expand market access and support domestic consumption—a key driver for China’s internal economic cycle.

👉 See how real-time engagement is reshaping customer relationships for small businesses.

Core Keywords Integration

Throughout this transformation, several core keywords naturally emerge:

These terms reflect both the technological infrastructure and the human-centered outcomes driving change in today’s service landscape.

Frequently Asked Questions (FAQ)

Q: How do short videos help small service businesses grow?
A: Short videos increase visibility by matching content with user interests via algorithms. This helps small businesses attract customers beyond their local area, reduce marketing costs, and build trust through authentic storytelling.

Q: Can live streaming really boost offline sales?
A: Yes. Live streaming creates immersive experiences that drive immediate action. Many consumers discover services online through live streams and then visit physical locations to redeem vouchers or experience the service firsthand.

Q: What types of services benefit most from digital platforms?
A: Categories like food & beverage, tourism, beauty & wellness, home services, and cultural experiences see strong growth due to their visual appeal and experiential nature.

Q: Do businesses need professional equipment to succeed?
A: Not necessarily. Many successful creators use smartphones and simple editing apps. Authenticity often matters more than production quality.

Q: Is there a learning curve for older or less tech-savvy owners?
A: While there is an initial adjustment period, many platforms offer tutorials, templates, and community support. Some businesses partner with local influencers or hire freelancers to manage content.

Q: How does this trend support national economic goals?
A: By boosting domestic consumption, creating digital jobs, and enhancing SME competitiveness, these platforms contribute to inclusive growth and economic resilience.

The Road Ahead

As digital adoption deepens, the integration of technology and lifestyle services will continue to evolve. Policymakers, platform operators, and business owners must work together to build more convenient, intelligent, personalized, and regulated omnichannel experiences.

The message is clear: in the age of short video and live streaming, being “seen” is no longer a matter of luck—it’s a strategic opportunity. For millions of small businesses, digital platforms are not just tools for survival—they are engines of innovation and growth.

👉 Learn how digital visibility is creating new economic opportunities worldwide.