Industrial Internet Transformation, Three Weaknesses of Chinese Enterprises

"Internet thinking" is probably the most popular word in Chinese business circles in the past two years. Similarly, "Industrial Internet" and "Industry 4.0" are also being hyped by many people.

But when we calm down, especially the entrepreneurs and managers who face various challenges in the industry every day, when we look at reality calmly, we have to evaluate: we really Does the need for industrial Internet transformation? How far are we from the Industrial Internet? Should we really be involved?

According to the standards of the United Nations Industrial Statistics, China is already one of the countries with the most complete industrial system in the world. The scale of China's industrial production capacity is only comparable to that of the United States. However, in the global competition towards the Industrial Internet, the United States, Germany, and Japan Dou hope to use this new competitive weapon to throw off emerging countries that are catching up and establish their own new sustainable advantages.

In my opinion, the vast majority of Chinese companies have three biggest weaknesses in the transformation of the Industrial Internet.

The first weakness is time. The so-called time is the accumulation of technology in key technologies. The research and development of material technology, engineering technology, basic technology, and even production technology and process design in the middle of the industrial industry is not as simple as writing software codes. It takes a long time to accumulate and practice tests to form. These are the huge advantages of companies represented by Germany and Japan. The modernization development of Chinese enterprises has only accumulated in less than 30 years. In this regard, Chinese enterprises have no shortcuts. We can speed up the pace, but we cannot replace this process with the so-called Internet thinking or the concept of the Industrial Internet. Many companies I know that hope to move from low-end manufacturing to high-end manufacturing are experiencing the pain of this transformation. Without core technology and weak basic research and development, these companies need to settle down and complete this accumulation step by step. process to achieve a real breakthrough.

The second weakness is software technology. This software is not the popular APP software of today's Internet companies, or dating software, or e-commerce software. In industrial systems, the most critical software systems are product and production process design software, product database software, control software and production management software, including our commonly used 3D design system PLM and production execution system MES, etc. Everyone who is engaged in industry knows that the most critical software technologies and capabilities in these fields are in the hands of American, German or Japanese companies. Without the support of these software, modern industry would not exist at all. In fact, in the coming era of the Industrial Internet, whether it is a German company or an American company, the starting point they rely on is the core software related to the production process, product design and research and development. Based on this, these companies are rapidly developing to move towards cloud computing and big data.

In today's China, there are a lot of young people's ingenuity, in my opinion wasted on a lot of low-end business software. So far, no Chinese software company has established core capabilities comparable to world-class industrial engineering and control software. This capability will become a huge shortcoming for Chinese companies to move towards the Industrial Internet. In addition, traditional enterprise resource planning software (ERP), supply chain management software, and even big data technology, China's software capabilities are also very weak. These breakthroughs in software technology are not without opportunities. In the era of the Industrial Internet, Chinese enterprises will generate huge demands, which may provide ambitious software companies with a huge new market and experimental platform.

The third weakness lies in chip technology and sensor technology. These VLSI or chip-related breakthroughs are also important industrial pillars that must be formed in the process of realizing the development of the Industrial Internet.

I am not optimistic about the gap between China's industry and the industrial Internet today, but I am not pessimistic either. The reason is that this is a rapidly changing market with various possibilities for technological development. Only when we are aware of these gaps, conduct basic research and practice in a solid and in-depth manner, throw away fantasies and empty talk, and catch up with developed countries. possible. In fact, what Germans and Americans are most worried about is the development of Chinese companies in this regard, especially the development of software technology. If the first industrial revolution and the second industrial revolution are the revolutions of physical products, then the third industrial revolution in the industrial Internet era is the revolution of information and software products. Only a clear understanding of this will allow us to take the right strategic move.

This article is based on part of Xu Zheng's new book "Industrial Internet - Industrial Transformation in the Internet + Era".

About the author:

Xu Zheng

Founder of Zhifang Innovation Center. Former Vice President of GE China Co., Ltd., Founding General Manager of GE China Innovation Center (Xi'an). Former Deputy General Manager of Shaangu Group. He has worked in IBM for 10 years and has extensive experience in marketing, strategy, innovation and management. Author of the best-selling books "Dancing with Elephants: Transforming to IBM Learning" and "Six Practices of Enterprise Transformation".