INTELLIGENT INTEGRATION

Industrial Internet receives new push for innovation-oriented growth

While many Chinese enterprises were forced to suspend business during the novel coronavirus epidemic over the past few months, ASPOP Costumes Group Inc. in Shandong Province, east China, resumed production within just three days in February. Thanks to the equipment, materials and production plans provided by COSMOPLAT, an industrial Internet platform jointly developed by the local government and home appliance giant Haier Group, ASPOP quickly shifted from making clothes to producing medical supplies, meeting urgent demands.

The industrial Internet refers to the Internet-based infrastructure that connects people, devices and things based on the integration of information technology and the manufacturing industry. As China pushes to resume work and production amid the waning epidemic and boost new growth drivers, the development of the industrial Internet has entered the fast lane.

According to a circular released by the Ministry of Industry and Information Technology (MIIT) on March 20, the infrastructure of the industrial Internet will be upgraded with 5G technology. It also says new initiatives will be launched to accelerate building a national big data center and advance the utilization of new technologies such as artificial intelligence and virtual reality.

To drive the resumption of work and production, the ministry encourages enterprises to make full use of the industrial Internet to share information, technologies, production capacity and orders, and turn to cloud service platforms for digital operation. Other highlights of the document include promoting the industrial Internet in key industries such as machinery and automobile, enhancing supporting policies, developing a platform to monitor and evaluate the operation of the industrial Internet, and improving management systems for cybersecurity.

“Since the industrial Internet plays a key role in ensuring supply and supporting the resumption of work and production, the newly unveiled measures can boost the sector, which will ease the epidemic’s impact and contribute to China’s digital transformation,” Xin Yongfei, Director of the Policy and Economic Research Institute of the China Academy of Information and Communications Technology (CAICT), told Beijing Review.

Notable role

With a long industrial chain, the industrial Internet enables traditional industrial enterprises to connect with equipment providers and Internet-based platforms, which collect, analyze and stock data. The sector covers both the upgrading of industrial enterprises and the development of Internet-based platforms connecting different entities, Xin explained. He said it can significantly promote the intelligent transformation of industrial enterprises, help reduce costs, improve output and enhance production efficiency.

China has seen growing integration of the industrial Internet and the real economy in recent years. As the industrial Internet expands to over 30 key industries, including mining, transportation and medical care, it has helped improve intelligent production and digital management of both large and small and medium-sized enterprises (SMES).

China has a wide range of industrial sectors with large production output. Thus, the connection among industrial equipment through the industrial Internet will generate considerable economic benefits, according to the MIIT.

The industrial Internet has made remarkable contributions to the resumption of work and production in China during the novel coronavirus epidemic, mainly through addressing the mismatch between supply and demand, reducing face-to-face contact in production and improving the efficiency of monitoring during resumption, Han Xia, an MIIT official, told a press conference on March 25.

The industrial Internet has allowed enterprises to manage the supply chain in a smarter way and reduce operation risks, Chi Cheng, an expert on the industrial Internet and Internet of Things with the CAICT, told Beijing Review. Through monitoring production, local governments can also identify problems such as insufficient labor and materials, and provide timely support, he said.

Many regions have introduced measures to tap into the potential of the industrial Internet to ease the epidemic’s impact on local industries. For example, Beijing has provided vouchers to SMES to encourage them to purchase industrial Internet services amid business resumption.

While Internet giants such as Tencent and Alibaba have provided services for remote work and personal safety protection, cloud service platforms have also introduced solutions to help enterprises resume operation. MIIT statistics showed that 52 percent of some 2.2 million SMES that use cloud platforms had resumed work as of March 5.

Yonyou Network Technology Co. Ltd., a Beijing-based software company, is offering cloud services on personnel and financial management, marketing and purchasing to several enterprises. “We have developed a platform for enterprises to interact with suppliers of goods and services that are essential to their reopening,” Guo Jintong, Vice President of Yonyou, told China Daily.

Enterprises had ordered more than 19.83 million units of goods on the platform as of March 10, with 18.53 million units ready to be supplied, according to Guo.

Foundation of growth

According to Xin, a solid manufacturing foundation and a large market have driven the development of China’s industrial Internet sector. In 2019, its value-added output was 2.13 trillion yuan ($300 billion), contributing 9.9 percent to the country’s economic growth and 2.2 percent to GDP.

Moreover, the value-added output of the sector is expected to reach 3.1 trillion yuan ($443 billion) in 2020, which will account for 2.9 percent of GDP and contribute over 11 percent to domestic economic growth. The

expansion of the industry will also boost employment by creating about 2.55 million new jobs this year, Xin said.

While traditional manufacturing companies such as Haier have developed industrial Internet platforms for intelligent transformation, Alibaba, Tencent and many innovationoriented enterprises have also stepped up efforts to participate in this promising sector. In 2018, Alibaba Cloud, the cloud computing arm of Alibaba, introduced an industrial Internet platform based in Guangdong Province, a manufacturing hub in south China, to provide digital services for SMES.

These companies have also expanded cooperation with local governments to increase their services. Last year, Tencent launched an industrial Internet demonstration zone in Shenzhen, Guangdong. It will further its cooperation with enterprises in the zone this year to develop industrial Internet platforms and digitalize the industrial chains of consumer electronics and new materials. In March, Alibaba signed a strategic cooperation agreement with Yuhang District in Hangzhou, Zhejiang Province in east China, to build digital infrastructure projects.

Since the MIIT circular encourages large enterprises and platforms as well as digital service providers to empower the transformation and upgrading of SMES, the latter is expected to see a greater boon. Xu Xiaolan, President of the China Academy of Industrial

Internet (CAII), wrote in an article published on China.org.cn that the development of Chinese SMES is still restricted by extensive production modes, poor supply chain management, low financing capacity and lack of talent pools. The industrial Internet can help ease these problems.

Improvements coming

Although the industrial Internet has seen robust growth in the battle against the novel coronavirus epidemic, the MIIT circular also highlights challenges that remain in the sector and urges further efforts on data sharing and security issues. Tian Ye, an engineer with the CAII, told Legal Daily that the research, sharing and utilization of industrial Internet data can considerably improve productivity and generate new industrial modes. But currently these valuable resources are still poorly connected and ineffectively used in different industries and regions in China.

According to Tian, the government needs to introduce evaluation standards for industrial Internet platforms, coordinate resources of upstream and downstream enterprises to build data-sharing platforms and make the market more transparent to encourage cooperation.

The circular also pledges to formulate standards and develop a security management system, since the industrial Internet touches on the safety of the real economy. Chinese enterprises need to move faster to improve their defense, Tang Rong, an expert with the Beijing-based cybersecurity solution provider Qihoo 360, told Xinhua News Agency, warning that cyberattacks may lead to the shutdown of the production network connected with industrial equipment, causing severe accidents and economic losses.

Industrial Internet enterprises need to set up security management teams, improve the accountability system, take precautionary measures and develop monitoring platforms, Chi said, adding that it is also necessary to make regular risk assessments and establish emergency response mechanisms.

According to the MIIT, 5G technology will play a key role in the development of the industrial Internet, while its utilization is still in the initial phase. To boost the integration of 5G and the industrial Internet and further commercialize the new-generation communication technology, the ministry said telecom carriers should improve technological support and speed up building demonstration zones in line with the conditions of different regions.