Selling to Made in China 2025: Opportunities & Challenges
Selling to Made in China 2025 Opportunities and challenges presented by China’s initiative to become a global leader in quality manufacturing
October 2018
Accelerating Adoption of the IoT ONE Limited | www.iotone.com | Accelerating the Industrial Internet of Things Industrial Internet of Things0 Selling to Made in China 2025: Opportunities & ChallengesChallenges
Table of Contents
Industrial IoT market potential in China ...... 2
Digitized manufacturing in China: Why now? ...... 3
Current climate of Industrial IoT in China ...... 4
Industrial IoT trends in China ...... 5
China’s 13th Five-Year Plan ...... 6
Made in China 2025
Overview ...... 7
Priorities by region ...... 8
Pilot projects (2015 – 16) ...... 9
China Intelligent Manufacturing Solutions Vendor Alliance ...... 12
Evaluating Made in China 2025 ...... 14
Organizations supporting industrial upgrading ...... 15
Industrial IoT companies in China ...... 16
Featured Case Studies ...... 17
Summary ...... 22
About IoT ONE ...... 23
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Industrial IoT market potential in China
The Government of China was the first to launch a China is already the world’s second largest market for Industrial comprehensive Industrial Internet of Things (IoT) strategy, IoT technologies, despite initially-low adoption rates compared announced in the ‘12th Five-Year Plan’ in 2011. According to IoT to North America and Europe. Deloitte reports that China Analytics, the industry will start to see some of the early outnumbers the amount of Smart City projects being piloted investments pay-off in 2018. than all other countries combined.
China’s IoT market has been growing at an annual rate of 20%. Pilot projects will be scaled on the back of an expansive IoT The market exceeded 900 billion RMB in 2016 and is expected infrastructure roll-out that aims to meet market demand and to exceed 1.5 trillion RMB by 2020. IDC forecasts overall deliver on national strategic priorities, such as innovation, market in China for IoT equipment will increase from 193 billion efficient water management, urban mobility and cyber security. USD in 2015 to 361 billion USD in 2020 – with Chinese Such projects are being complemented by the ‘Made in China manufacturers spending $128 billion on industrial IoT alone. 2025’ manufacturing and ‘Internet+’ strategies. As opposed to prior investment in Chinese industry, software and services will be the key driver, contributing to over 60% of the market value. Figure 1: China IoT Overall Kit and $361 bn IIoT Manufacturing Market Sizes in Accenture reports that by embracing IoT in manufacturing, 2020 $128 bn China could add up to $736 billion to it’s GDP by 2030.
Sources: IoT Analytics (2018), CEIS (2017), The Economist (2016), China Daily (2018)
An important step in the future IoT ecosystem development in China will be an accelerating shift from “ market fragmentation to market integration, and from vertical industry convergence to horizontal platform agglomeration. - Antonio Liu, Senior Market Analyst, IDC China ” Market demand for Industrial IoT applications in the Chinese Manufacturing Industry
Figure 3: Biggest Painpoints for Companies Figure 4: How Companies Applying Industrial IoT Technologies Intend to Increase Revenue (% of companies) (no. of companies) 0 10 20 30 40 50 0 20 40 60 80 100
Lack of interoperability/standards CX improvement Ownership/security of data New products/services Underqualified operators New biz models Data quality New markets Lack of capability to carry out data…
Coordination inside the company Improvement in core biz
Cyber security Better pricing Inadequate budget
Sources: Deloitte Research (2016)
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Digitalized manufacturing in China: Why now?
Since 1990, China’s global manufacturing output has Figure 5: Robot-to-Employee Ratio in surged from less than 4% of global value to more than Manufacturing 631 25% today. It has become the ‘World’s Factory’. 600
However, China’s manufacturing sector has exhausted Robot Density 488 the growth strategies of the last three decades. China 500 World Average has saturated the market for low quality and low cost goods, and many industries are overcapitalized yet 400 inefficient due to limited adoption of industrial software. Furthermore, China’s competitiveness on the global 309 303 300 arena is weakened by labor costs that are rising faster than labor productivity. Today, China’s robot density 223 189 ranks 23rd worldwide but the government intends to 200
Robots per 10,000 employees 10,000 per Robots 145 make it into the top 10 most intensively automated 132 nations by 2020. 100 71 74 58 34 To overcome these challenges, an industry-wide move 0 towards digitalization and industrial automation has been prioritized by the national government. China must increase both productivity and output quality in order to sustain GDP growth and move up the value chain. Source: International Federation of Robotics (2017)
Chinese manufacturing value-add is not keeping pace with labor costs Figure 6: Labor Cost vs Industry Value-add in Manufacturing 70,000 30,000
60,000 14% CAGR 25,000
50,000 20,000
12.7% RMB)* (billion add - 40,000 CAGR 15,000 30,000
Average Annual Wage (RMB)* Wage Annual Average 10,000
20,000 Manufacturing value Manufacturing
5,000 10,000
0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Average manufacturing worker annual wage Manufacturing value-add
*2015 prices Source: China Statistical Yearbook 2017
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Current climate of Industrial IoT in China
Figure 7: Industrialization Status of Chinese Companies, by Use Case
Figure 8: Barriers to Industrial IoT Adoption for Chinese Companies Many Chinese manufacturers have yet to begin investing in Industry 4.0 technology, and many Uncertain ROI (business case) continue to use Industry 2.0 technologies (labor employed on simple production lines). They Legacy equipment possess huge potential to improve operational efficiencies through implementing smart Lack of interoperability or standards manufacturing techniques in their processes.
Security concerns However, many Chinese companies also note: uncertainty in ROI, legacy equipment, technology Technology immaturity immaturity, and the lack of skilled labor as key factors that significantly hinder their adoption of Lack of skilled workers smart manufacturing technologies. Much needs to North America be done to address these obstacles, which the Privacy concerns Europe Chinese Government has recognized and China implemented strategic measures that aim to boost Societal concerns the development of smart capabilities in the 0% 20% 40% 60% 80% 100% manufacturing sector.
Source: World Economic Forum Industrial Internet Survey, IoT ONE Industrial Survey (2016)
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Industrial IoT trends in China
China is rapidly catching up in smart manufacturing Chinese companies are ramping up efforts to innovation and ownership of key intellectual properties in acquire foreign know-how smart manufacturing. There is rapid growth in both the rate of innovation in technology fields and in the Figure 9: Chinese Outbound M&A acquisition of foreign enterprises. Despite a slowdown of 250 20 activity in 2017, due to government restrictions aimed at managing financial risk, Chinese M&A grew 33% on average for 5 years and accounts for 39% market share 200 16 of all M&A activity in countries along the New Silk Road, known as the Belt and Road Initiative (BRI). 150 12
Innovation activities are more intensive for traditional hardware, given that there is strong political support. 100 8
Conversely, high-tech innovation in the areas of cloud M&A global of% computing, big data, and advanced robotics are
relatively weak. Chinese companies generally acquire 50 4 Outbound M&A Value (billion USD) (billionValue M&A Outbound such technologies through M&A of foreign companies with inherent advantages in high technology and 0 0 expertise.
However, as government policy rewards the registration Outbound M&A Value % of Global M&A of patents regardless of its quality, the actual value that these patents bring remain questionable. Source: Thomson Reuters (2018)
Domestic R&D is heavily concentrated in robotics and sensor technologies Figure 10: National Patent Families (Priority Applications) by Technology (Process and Use Patents Not Included)
0 200 400 600 800 1000 1200 1400
Traditional industrial robots
Wireless sensor networks
Smart sensors, embedded systems
Information security China United States Cloud & big data Germany
Advanced robots
Source: Mercator Institute for China Studies (2016)
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China’s 13th Five-Year Plan
Since 1957, China has based its social and 5-Year Goals 2015 2020 economic development planning on a series of Growth th Five-Year initiatives. The 13 and latest 5-year GDP >6.5 67.7 >92.7 plan was laid out for the period of 2016-2020 (trillion RMB, %) (YOY) and focuses on seven development priorities, Services sector value-add including the acceleration of industrial upgrading (% of GDP) 50.5 56 5.5 and transformation in both the emerging R&D spending/GDP industries and advanced services, as well as (%) 2.1 2.5 0.4 traditional industrial and service sectors. Internet penetration: 40 70 30 Fixed broadband (% households) In particular, the plan encourages the integration Internet penetration: 77 85 28 between initiatives such as ‘Made in China Mobile broadband (% households) 2025’, ‘Internet+’, the BRI, and mass Invention patents entrepreneurship and innovation, with an (per 10,000 people) 6.3 12 5.7 emphasis on craftsmanship.
The strategy of ‘Made in China 2025’ and The following is a summary of the plan, with “ relevance to the Industrial IoT space in China. ‘Internet+’ are inseparable, as we must upgrade the manufacturing industry and boost smart manufacturing,
- China Premier Li Keqiang ”
Initiatives Led by IIoT-related Projects and Programmes
Science and Technology • Ministry of Science and Technology • Quantum communications and computing Innovation 2030 (Department of Innovation and • Smart grids Development) • Big data • Smart manufacturing and robotics • Key new materials R&D and application Made In China 2025 • Ministry of Industry and Information • Manufacturing innovation Technology (MIIT) • Advanced manufacturing capabilities • IT and manufacturing technology integration Internet +, • Ministry of Science and Technology • Intelligent agriculture Internet Power • Ministry of Agriculture • 5G mobile telecom • National Development and Reform • Internet of Things Commission • Cloud computing • Big data New-model Urbanization • Ministry of Housing and Urban- • Smart cities Construction Rural Development
Healthy China 2030 • National Health and Family • Electronic health records Planning Commission • Big data in healthcare • Regional population health information platforms
Source: The 13th Five-Year Plan For Economic and Social Development of the People’s Republic of China (2016-2020)
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Made in China 2025: Overview
Made in China 2025 is an initiative to comprehensively upgrade Chinese industry that is inspired by Germany's "Industry 4.0" plan. With the help of smart manufacturing technology, China aims to transform the country into a highly capable manufacturing superpower in the coming decades. The Chinese effort is broader in scope, due to highly uneven efficiency and quality of Chinese producers. Multiple challenges must be rapidly overcome if China is to avoid being squeezed between emerging low-cost 10 Aerospace & Agricultural Advanced producers and advanced economies. Strategic Industries Aeronautical Equipment IT
The initiative focuses on: Maritime New-energy • Improving innovative capabilities in the New Equipment Vehicles & Materials manufacturing sector; & Shipping Equipment • Enhancing quality, industry value-add, and labor
productivity; Biopharma Automated Rail Power • Integrating IT and manufacturing technology; and & Medical Machines & Transport Equipment • Reducing environmental impact. Products Robotics Equipment
Made in China 2025 is unique in scope and scale. It focuses on the entire manufacturing process, promotes the development of both traditional and advanced industries and relies heavily on market incentives. Despite its market-orientation, the plan is guided by government agencies and supported by well financed state-led projects aimed at increasing R&D spending and incentivizing multinational companies to shift R&D resources to China. Pilot programs started in 2015 as a measure to promote intelligent manufacturing and launched more than 60 projects in 2016 and 97 in 2017.
9 Support Mechanisms 9 Strategic Priorities
Institutional Mechanism Reform Manufacturing Innovation Capability
Fair Market Environment Integration of IT & Industry
Financial Support Policies Fundamental Industrial Capabilities
Fiscal & Taxation Policy Quality & Branding
Multi-level Talent Cultivation Systems Green Production
SME Enterprise Policy Breakthroughs in Major Areas
Manufacturing Openness Manufacturing Structural Adjustment
Organization & Implementation System Service-oriented Manufacturing
State Council Oversight & Support Manufacturing Internationalization
Source: China Daily (2018)
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Made in China 2025: Priorities by region
energy Vehicles & & Vehicles energy
-
Biopharma & Medical & Biopharma ICT MaterialsNew Robotics Agricultural Equipment Agricultural Aeronautical & Aerospace New Equipment Products & Machines Automated & Equipment Maritime Shipping Equipment Power Equipment Transport Rail
Beijing ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔
Shenyang ✔ ✔ ✔ ✔ ✔ North China Tianjin ✔ ✔ ✔ ✔
Changchun ✔ ✔ ✔
Shanghai ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔
Suzhou ✔ ✔ ✔ ✔ ✔ East Nanjing ✔ ✔ ✔ ✔ China
Qingdao* ✔ ✔ ✔ ✔
Ningbo ✔
Wuhan ✔ ✔ ✔ ✔ ✔ Central Changsha ✔ ✔ ✔ ✔ China
Xi’an ✔ ✔ ✔
Shenzhen ✔ ✔ ✔ ✔ ✔ South China Guangzhou ✔ ✔ ✔
Chongqing ✔ ✔ ✔ ✔ ✔ West China Chengdu ✔ ✔
*Qingdao and other major manufacturing cities in Shandong Source: UK Trade & Investment, China-Britain Business Council (2016)
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Made in China 2025: Pilot projects (2015 – 16)
Under the Made in China 2025 initiative, the Ministry of Industry and Information Technology (MIIT) has funded a total of 46 smart manufacturing pilot projects in 2015 and 64 projects in 2016 across the 10 strategic industries.
Made in China 2025 – Funded Pilot Projects in 2015
No. Pilot Project Name Company / Institute Province 1 Industrial Cloud Manufacturing For Aerospace Products Beijing Aerospace Science & Tech Company Beijing 2 Smart Fertilizer Manufacturing And Services Sinochem Fertilizer Company Beijing 3 Intelligence Service Cloud For Mining And Metallurgical Industry General Research Institute of Mining & Metallurgy Beijing 4 Intelligent Control Systems Beijing Advantage Systems Engineering Company Beijing 5 Microelectronics Intelligent Assembly China Electronics Technology Group Corporation Shanxi 6 Smart Aluminum Production United Aluminium Company Inner Mongolia North 7 Smart Dairy Production Yili Industrial Group Company Inner Mongolia China 8 Metallurgical Digital Mines Anshan Iron & Steel Group Mining Company Liaoning (13) 9 Intelligent Machine Tools Shenyang Machine Tool Group Liaoning 10 Intelligent Medical Imaging Equipment Shenyang Neusoft Medical Systems Company Liaoning 11 Intelligent Power Equipment Service Cloud Platform Xi’an, Shaanxi Drum Power Company Shaanxi 12 Collaborative Development & Regional Aircraft Manufacturing Xi’an Aircraft Industry Group Shaanxi 13 Smart Car Foundry Sharing Group Company Ningxia 14 Intelligent Hot-Rolled Steel Plant Baoshan Iron & Steel Company Shanghai 15 Intelligent Coal-Mining Mechanical Equipment World Technology Company Shanghai 16 Intelligent Network For Automotive Production Shanghai International Automobile City Group Shanghai 17 Smart Factory For Household Products Meike International Houseware Company Jiangsu 18 Smart Factory For Shipbuilding Nantong COSCO KHI Ship Engineering Company Jiangsu 19 Smart Production For TCM Jiangsu Kang Edge Pharmaceutical Company Jiangsu 20 Smart Factory For Food & Beverage Production Hangzhou Wahaha Group Zhejiang 21 Intelligent Manufacturing For Communications Equipment Eastern Communications Company Zhejiang 22 Intelligent Manufacturing For Electronic Glass Rainbow Hefei Company Anhui East 23 Smart Petrochemical Plant China Petroleum & Chemical Corporation Jiangxi China 24 Intelligent Manufacturing For Helicopter Rotor Systems Changhe Aircraft Industry Group Jiangxi (19) 25 Intelligent Manufacturing For Tire Production Racewheel Jinyu Group Shandong 26 Intelligent Manufacturing For Cement China United Cement Group Co., Ltd. Shandong 27 Intelligent Manufacturing For Glass Fibre Taishan Glass Fiber Co., Ltd. Shandong 28 Intelligent Manufacturing And Integration For Diesel Production Weichai Power Co., Ltd. Shandong 29 Intelligent Manufacturing For Home Appliances Haier Group Company Shandong 30 Intelligent Manufacturing For Dyeing Of Tins Shandong Kangping Group Shandong 31 Clothing Customization Qingdao Red Link Group Shandong 32 Industrial Innovation In Cloud Services Platforms Application of Science & Technology Company Shandong 33 Intelligent Manufacturing For Optic Fibre Optical Fiber & Cable Company Hubei 34 Integrated Intelligent Manufacturing For Engineering Machinery Sany Group Hunan Central China 35 Industrial 3D Printing Systems Hunan Huasheng Shu-Tech Company Hunan (4) 36 Intelligent Hydraulic Parts Manufacturing Plant AVIC Liyuan Hydraulic Guizhou 37 Intelligent Injection Molding Equipment And Services Borch Machinery Company Guangdong 38 Intelligent Manufacturing For TV Equipment Shenzhen Skyworth - RGB Electronics Guangdong 39 Intelligent Manufacturing For Mobile Terminals Dongguan Jin Sheng Precision Components Guangdong South 40 Intelligent Manufacturing For Keyboard Integration Shenzhen Pennefather Science and Technology Guangdong China 41 Laser Cutting Machine Intelligent Manufacturing Hans Laser Technology Industry Group Guangdong (7) 42 Smart Smelting Plant CHALCO Guangxi Guosheng Rare Earth Co. Guangxi 43 Intelligent Manufacturing For Pharmaceutical Products Plymouth Hainan Pharmaceutical Company Hainan 44 Intelligent Manufacturing For Automotives Chongqing Changan Automobile Chongqing West 45 Intelligent Manufacturing For TV Equipment Sichuan Changhong Electric Sichuan China 46 Integrated Intelligent Manufacturing For Transformers TBEA Company Xinjiang (3)
Source: Ministry of Industry and Information Technology (2015)
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Made in China 2025 – Funded Pilot Projects in 2016
No. Pilot Project Name Company / Institute Province 1 Remote Operation And Maintenance For Sewing Equipment Beijing Dahao Technology Corp.,LTD Beijing 2 Intelligent Manufacturing For Pressure Calibration Devices Beijing ConST Instruments Technology Inc. Beijing 3 Intelligent Servo Motor Digital Workshop Beijing CTB servo Co., Ltd Beijing 4 Intelligent Manufacturing For Modern TCM TASLY PHARM. Tianjin 5 Intelligent Factory For Iron And Steel Production Enterprises HBIS Group Tangsteel Company Hebei 6 Smart Factory For Cement Production Tangshan Jidong Cement Co., Ltd. Hebei 7 Smart Workshop For LCD Glass Production Shijiazhuang Xuxin Optoelectronic Technology Co., Ltd. Hebei 8 Intelligent Manufacturing For Alumina Shanxi Fu Sheng Aluminum Co. Ltd. Shanxi North 9 Intelligent Manufacturing For Dairy Products China Mengniu Dairy Company Limited Inner Inner Mongolia China 10 Remote Operation And Maintenance For Industrial Blowers Shenyang Blower Works Group Corporation Liaoning (17) 11 Intelligent Manufacturing For CNC Machine Tools Dalian Machine (Numerical Control) Tools Group Liaoning 12 Remote Operation And Maintenance For Power Generation Equipment Haerbin Electric Machinery China Heilongjiang 13 Intelligent Manufacturing For Small Inertial Devices Avic Xi'an Automatic Control Research Institute Shaanxi 14 Intelligent Manufacturing For Energy-Saving Heavy Vehicles Shaanxi Fast Gear Co.,Ltd. Shaanxi 15 Smart Factory For Coal Processing China Coal Shaanxi Yulin Energy and Chemical Co.,Ltd. Shaanxi 16 Intelligent Manufacturing For Smart Terminals Xiaan ZET Communication Terminal Technology Co.,Ltd Shaanxi 17 Digital Factory For Intelligent Control Valves Wuzhong Yibiao Ningxia 18 Collaborative Manufacturing Network For C919 Aircraft Commercial Aircraft Corporation of China Ltd Shanghai 19 Smart Manufacturing For Air Conditioning Compressors Shanghai Highly (Group) Co., Ltd Shanghai 20 Intelligent Manufacturing For IoT Modules Shanghai Chenxing Ximutong Electronic Technology Shanghai 21 Smart Workshop For Color Filters Manufacturing INESA (Group) Co., Ltd. Shanghai 22 Intelligent Manufacturing Of Heavy Vehicles Faw Jiefang Automotive Co. Jiangsu 23 Intelligent Manufacturing Of High-Performance Lithium Batteries ZTT Energy Co.,LTD. Jiangsu 24 Smart Chemical Refinery Plant In Zhenhai Sinopec Zhenhai Refining & Chemical Company Zhejiang 25 Intelligent Capabilities For Knitwear Customization Ningbo Cixing Co.,Ltd. Zhejiang 26 Mass Customization For Clothing And Costumes Zhejiang SAINT ANGELO Clothing co., LTD, Zhejiang 27 Intelligent Manufacturing For Kitchen Appliances Hangzhou Robam Industrial Group Co.,Ltd Zhejiang 28 Smart Factory For Glass Displays Wuhu Dongxu Optoelectronic Technology Co., Ltd. Anhui 29 Intelligent Manufacturing Of Industrial Powdered Explosives Anhui Jiangnan Chemical Industry Co., Ltd Anhui 30 Smart Factory For Automotive Windscreens And Windows Fujian Fuyao Group Fujian East China 31 Collaborative Manufacturing Network For Textile Production Quanzhou Haitian Material Technology Corporation Fujian (26) 32 Intelligent Manufacturing For Paper Tissue Fujian Hengan Group Fujian 33 Smart Factory For Printed Circuit Boards Production Xiamen Hongxin Electron-tech Co., Ltd. Fujian 34 Intelligent Manufacturing For LED Lighting Zhangzhou Leedarson Lighting Fujian 35 Intelligent Copper Smelting Plant Jiangxi Cooper Co.,Ltd. Jiangxi 36 Intelligent Manufacturing For Chinese Health Products Jiangzhong Pharmaceutical Co.,Ltd. Jiangxi 37 Intelligent Manufacturing For High-Speed Rail Components CRRC Qingdao Sifang Co.,Ltd. Shandong 38 Digital Workshop For Precision Machinery Parts And Components Shandong Weida Machinery Co., Ltd. Shandong 39 Intelligent Manufacturing For Environmentally Friendly Tires Doublestrar Group Shandong 40 Smart Fluorine Chemical Factory Dongyue Group Ltd. Shandong 41 Smart Fertilizer Production Plant LUXI Group CO., LTD. Shandong 42 Remote Operation And Maintenance For Healthy Eating Appliances Joyoung Co.,Ltd Shandong 43 Intelligent Manufacturing For Wearables Goertek Inc. Shandong 44 Intelligent Manufacturing For Buses Zhengzhou Yutong Group Co.,Ltd Henan 45 Digital Workshop For Engineering And Electrical Equipment For Ships Wuhan Marine Machinery Plant Co.,Ltd Hubei 46 Intelligent Manufacturing For Industrial Detonators Hubei Weidong Chemical Industry Stock Co.,LTd Hubei 47 Intelligent Manufacturing For Smart HVAC Systems Midea Group Wuhan Refrigeration Equipment Co.,Ltd Hubei Central China 48 Intelligent Manufacturing For Alcoholic Tonic Jingpai Company Hubei (8) 49 Intelligent Manufacturing For Smart Power Management Terminal Wasion Group Ltd Hunan 50 Smart Phosphorus Chemical Factory Fuwen Group LTd. Guizhou 51 Intelligent Manufacturing For Smart TVs Hisens Group Guiyang Hisens Electrical Co.,Ltd Guizhou 52 Mass Customization For Home Furniture Foshan Wision Furniture Co.,Ltd Guangdong 53 Intelligent Manufacturing For Pill-Form Medicine Livzon Pharmaceutical Group Inc., Guangdong 54 Intelligent Manufacturing For Chinese Herbal Medicine Kangmei Pharmaceutical Co.,LTd Guangdong 55 Intelligent Manufacturing For Smart Glass Dongguan Rui Da Technology Co.,Ltd Guangdong South China 56 Smart Workshop For 8.5-Generation LCD Devices Production Shenzhen China Star Optoelectronics Technology Co., Ltd Guangdong (8) 57 Intelligent Manufacturing For Self-Service Financial Kiosks GRG Banking Co.,LTd Guangdong 58 Integrated Intelligent Manufacturing Of Digging Machinery LiuGong Machinery Co.,LTd Guangxi 59 Intelligent Manufacturing For Instant Coffee Dehong Hogood Coffee Co., Ltd. Yunnan 60 Intelligent Manufacturing Of Radar Antenna Systems Chengdu Jindian Co.,LTd Sichuan 61 Remote Operation And Maintenance For Wind Power Equipment Xinjiang Goldwind Science & Technology Co.,Ltd Xinjiang West 62 Digital Oilfield In Xinjiang Xinjiang Oil Field of PetroChina Co.,Ltd Xinjiang China 63 Smart Chlor-Alkali Plant Xinjiang Tianye Co.,Ltd Xinjiang (5) 64 Intelligent Plant For High Purity Crystalline Silicon Xinte Energy Co.,Ltd. Xinjiang Source: Ministry of Industry and Information Technology (2016) IoT ONE Limited | www.iotone.com | Accelerating the Industrial Internet of Things 10 Selling to Made in China 2025: Opportunities & Challenges
Made in China 2025: Pilot projects (2015 – 16) (by region)
Digital oil field Sewing equipment remote operation Xinjiang Oil Field of PetroChina and maintenance service - Beijing Dahao Technology
Energy-saving transmission of heavy truck intelligent manufacturing - Shaanxi Fast Gear
Number of Pilot Projects
1-3 4-6 7-9 10+ Air-conditioner compressor intelligent manufacturing - Shanghai Highly (Group) Source: Ministry of Industry and Information Technology (2016)
Supporting Initiatives: Internet+
The ‘Internet+’ initiative plans to integrate the mobile Internet, cloud computing, big data and the Internet of Things with traditional industries as a means to encourage the healthy development of e-commerce, industrial networks, Internet banking, and to enable Internet companies to increase their international presence.
The Chinese government has set up a 40 billion RMB investment fund to promote new industry innovation and entrepreneurship under the ‘Internet+’ initiative.
China is seeking leadership in new industries and technologies that they’re not yet incumbent market leaders in. By 2025, ‘Internet+’ is intended to become a driving force for economic innovation and development that will accelerate the development of new economic models with Chinese market leaders at the center of value creation.
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Made in China 2025: China Smart Manufacturing Solution Vendor Alliance
On November 30, 2016, Deputy Minister of Industry and Information Technology, Xin Guobin, announced the formation of the China Intelligent Manufacturing Solution Vendor Alliance in Beijing, marking an important milestone in the development of smart manufacturing in China. This alliance aims to bring together intelligent manufacturing systems solution providers with industrial end-users and research institutes to facilitate collaboration for technology research, development of industry-specific applications, and the promotion of an integrated platform for the exchange of intelligent manufacturing system technologies and know-how.
13 41 Preferred access Management Committee Member companies & to proposed Made in China 2025 projects members organizations
Alliance Management Committee Members
Beijing Research Institute of Automation for Machinery Industry 北京机械工业自动化研究所
Baidu 北京百度网讯科技有限公司
China Industrial Aerospace Center (Jinhang Digital) 金航数码科技有限责任公司
China Telecom 中国电信集团公司
Hollysys 和利时科技集团有限公司
Huawei 华为技术有限公司
Janus 东莞劲胜精密组件股份有限公司
PCITC 石化盈科信息技术有限责任公司
Shanghai Institute of Process Automation & Instrumentation (SIPAI) 上海工业自动化仪表研究院
Shanghai MJ Intelligent System 上海明匠智能系统有限公司
Shenyang Machine Tool Group (SYMG) 沈阳机床（集团）有限责任公司
Siasun 沈阳新松机器人自动化股份有限公司
SIPPR Engineering Group 机械工业第六设计研究院有限公司
Source: Gongkong.com (2016)
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Member Companies / Organisations Aliyun Cloud Computing 阿里云计算有限公司 Aupu Maisi Technology Co. 昆明奥普迈思科技有限公司 Automotive Engineering Corporation 中国汽车工业工程有限公司 Beijing Aritime Intelligent Control Co. 北京金自天正智能控制股份有限公司 Changhong 四川长虹智能科技有限公司 China Academy of Machinery Science and Technology 机械科学研究总院 China Information Security Research Institute 中国信息安全研究院有限公司 China Sky Technology System 中天科技系统有限公司 CISDI Engineering 中冶赛迪集团有限公司 CSIC 716 Research Centre 中船重工七一六研究所 CSIC PRIDe 中船重工鹏力（南京）智能装备系统有限公司 Dahe Zhixin Technology 郑州大河智信有限公司 e-works 武汉制信科技有限公司 Gongkong 工控网（北京）信息技术有限公司 GSK CNC Equipment 广州数控设备有限公司 Haier 青岛海尔工业智能研究院有限公司 HiScene 上海亮风台科技有限公司 Hualong Xunda Technology 深圳华龙迅达科技有限公司 Huazhong CNC 武汉华中数控科技有限公司 JEE Automation Equipment 巨一自动化装备有限公司 Jike Machinery Technology Development Co. 机科发展科技股份有限公司 Kunchuan Design and Research Institute 昆船设计研究院 Kutesmart 青岛酷特智能股份有限公司 Kyland Technology 北京东土科技股份有限公司 MCC Capital Engineering and Research Incorporation (CERI) 中冶京诚工程技术有限公司 Mianyang Dingxin Intelligent Equipment Co. 四川绵阳鼎鑫智能装备有限公司 Phoenix Contact 菲尼克斯（中国）投资有限公司 Scientialia 浙江海宁辛帝亚自动化科技有限公司 Shanghai Electrical Apparatus Research Institute (Group) 上海电器科学研究院 Shenyang Institute of Automation Chinese Academy of Sciences 中国科学院沈阳自动化研究所 Shougang Automation Technology Co. 首钢自动化信息技术有限公司 Sina-Newchance New Energy Technology Corporation 上海众联能创新能源科技股份有限公司 Sugon Information Technology 曙光信息产业股份有限公司 Supcon 浙江中控技术股份公司 Tiandi-Marco Electro-Hydraulic Control System Co. 北京天地玛珂电液控制系统有限公司 Tianjin C-E Electrical Automation Co. 天津一重电气自动化有限公司 University of Science and Technology Beijing 北京科技大学高效轧制国家工程研究中心 Zeta Technology Co. 杭州哲达科技有限公司 Zhengda Intelligent Technology Co. 郑州郑大智能科技有限公司 Zhengdawulian 洛阳郑大物联有限公司 Zhenhang Intelligent Technology Co. 上海滇航智能科技有限公司
Source: Gongkong.com (2016)
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Evaluating Made in China 2025
PRO CON
The broad application of advanced manufacturing …vocational training may be China’s most systems“ and equipment, and the introduction of serious“ skill bottleneck…there is a growing smart facilities and smart products can help scarcity in many industries of well-trained and increase synergy across China’s manufacturing experienced skilled workers who can run smart sector. robots, industrial 3D printers, and Internet-based information networks. Source: KPMG (2016) ” Source: East-West Center (2016) ””
China will develop its own version of the Industrial 'Made in China 2025' is a very ambitious and Internet“ . aspirational“ goal…it smacks more of rhetorical flourish than a credible commitment. This will be characterised by scale, speed, volatility, low-cost and a strong role of the The blueprint was also unclear about who would government. implement the plan - market forces or the National Development and Reform Commission, the Source: STM Stieler (2016) powerful agency in charge of economic planning. ” Source: Stephen Roach, former chairman of Morgan Stanley Asia (2015) ” China’s manufacturing industry is poised for rapid transformation“ under digital and IIoT technologies, as many firms do not have legacy systems and The strategy’s effectiveness is limited by the are more flexible to adopt technologies that can mismatch“ between political priorities and automate processes, reducing rising labour costs. industry needs, the fixation on quantitative targets, inefficient allocation of funding and campaign-style Source: PwC (2016) overspending by local governments. The lack of bottom-up initiative and investment is a ” pronounced weakness of Made in China 2025. Source: Mercator Institute for China Studies (2016) Made in China 2025 is a reflection of China’s sophisticated“ and strategic industrial policy. The ” strategy will rapidly increase the global competitiveness of key Chinese companies, selectively targeting the most important industries of …China’s industrial relations system notoriously the future. lacks“ legal and contractual safeguards for workers…slow pace of such reforms and the Made in China 2025 is a forceful and smart potentially massive impact of automation on China’s challenge to the leading economies of today. labor markets raise fundamental questions of social stability. Source: Mercator Institute for China Studies (2016) ” Source: China Policy Institute (2016) ” IoT ONE Limited | www.iotone.com | Accelerating the Industrial Internet of Things 14 Selling to Made in China 2025: Opportunities & Challenges
Organizations supporting industrial reform
National Development and Reform Commission (NDRC) A macroeconomic management agency under the Chinese State Council with broad administrative and planning control over the Chinese economy. The NDRC's functions are to study and formulate policies for economic and social development, maintain the balance of economic development, and to guide the restructuring of China's economic system.
Key Documents & Initiatives • Plan for the Development of the Robotics Industry (2016-2020) 机器人产业发展规划（2016-2020年) • Special Programme for Innovative Development in Smart Hardware Industry (2016-2018) 智能硬件产业创新发展专项行动（2016-2018年）
Ministry of Industry and Information Technology (MIIT) The state agency of China responsible for regulation and development of the Internet, communications, production of electronic and information goods, software industry and the promotion of the national knowledge economy.
Key Documents & Initiatives • Guiding opinions on Improving the Innovation System of Manufacturing and Promoting the Establishment of Manufacturing Innovation Centers 关于完善制造业创新体系，推进制造业创新中心建设的指导意见 • Special Program for Innovative Development in Smart Hardware Industry (2016-2018) 智能硬件产业创新发展专项行动（2016-2018年） • Development Plan for Innovation Capacity in Industrial Technology 产业技术创新能力发展规划 • Guideline for Intellectual Property Rights in Manufacturing Innovation Centers 制造业创新中心知识产权指南
Alliance of Industrial Internet (AII) The AII is a quasi-governmental organization under the Ministry of Industry and Information Technology (MIIT) that enabled over 300 members from industry and academia to provide input regarding government policies related to the Industrial Internet.
Key Documents & Initiatives • Whitepaper for Industrial Internet Architecture (Version 1.0) 工业互联网体系架构（版本1.0） • Standards Framework for Industrial Internet Systems 工业互联网标准体系框架
China Association for Science China Academy of Science - and Technology (CAST) Institute of Automation (CASIA) CAST organizes academic exchanges, The leading national-level institution for collaborative research projects, and automation research. other activities.
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IoT ONE tracks >300 IIoT companies in China
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Featured China IIoT Case Studies
To view our complete database of public case studies, visit www.iotone.com/casestudies
Process Automation Predictive Maintenance
Production Automation System for Fault Analysis for Tunnel Boring Controlling and Monitoring Tobacco Machine Plants in China
Siemens’ Industrial Automation Field Device Asset Management For Production and R&D Base in Chemical Company in China Chengdu
Process & Equipment Monitoring Data Acquisition and Management
Logistics Management System For A Reliable Power Control Automation Detergent Company in Zhejiang System for a Steel Factory
Enabling Real-Time Monitoring for Data Acquisition and Remote CompAir's Air Compressors Management Platform for Texhong
IoT ONE Limited | www.iotone.com | Accelerating the Industrial Internet of Things 17 Selling to Made in China 2025: Opportunities & ChallengesChallenges
Featured Case Studies: Process Automation
A Tobacco Production Automation System for Controlling and Monitoring Tobacco Plants in China
The Challenge The Solution
• For a branded tobacco producer in China, calculating • Advantech’s PC-based monitoring machines were production volume in a tobacco plant is troublesome and installed next to manufacturing machines to error-prone without the aid of computers. collect data from existing PLCs. They transmit data up to central control room for analysis and action. • PC-based monitoring systems that automatically collect production data and keep records can greatly improve in- • The data is also shown on touchscreen monitors, factory logistics management and machinery uptime and which allows operators in the plant to identify issues in maintenance. real-time and process issues in real-time from any location in the plant.
• This solution lays the foundation for more advanced Operational Impact analytics and automation in the future by enabling data ingestion and analytics. • Reduced manual labor for cigarette counting.
• Reduced maintenance work for engineers.
• Improved overall efficiency of in-factory logistics.
• Improved operational visibility for factory management.
Siemens’ Industrial Automation Production and R&D Base in Chengdu
The Challenge The Solution
• Siemens expanded its industrial automation production • Siemens utilized their NX and Teamcenter PLM base in Chengdu and customers expected quality to software to develop a digital enterprise platform which match that of products manufactured in Germany. is based on the PROFINET protocol to interface with Siemens required a digital enterprise platform to enable the factory’s MES. quality management and continuous improvement. • The platform allowed a high degree of integration between multiple systems, such as ERP, PLM, MES, Operational Impact and TIA, to achieve complete production process monitoring and facilitate production planning and • Accelerated time-to-market for new products. logistics.
• Allowed unprecedented production flexibility for customization and small-batch production.
Quantitative Benefits
• Achieved more than 99% first time pass rate for quality assurance checks.
IoT ONE Limited | www.iotone.com | Accelerating the Industrial Internet of ThingsThings 18 Selling to Made in China 2025: Opportunities & ChallengesChallenges
Featured Case Studies: Predictive Maintenance
Fault Analysis for Tunnel Boring Machine
The Challenge The Solution
• Shanghai Tunnel Engineering Co. (STEC) is the industry • Neucloud leveraged its previous experience in industrial leader for municipal engineering in China. big data analysis to construct a virtual model for the critical components of the boring machine, as well as the • In the process of tunnel construction, there have been working conditions of the tunnel construction. multiple cases of boring machine failures due to operational faults with the blade machinery. This has led • This provided a cross-section overview of the fault for to serious errors for tunnel construction and even analysis, and engineers were able to zoom in on the incidents of spindle breakages. direct cause of failure and exact time of occurrence.
• Such failures require the machinery parts to be dragged out of the tunnel and sent to Germany for maintenance, Operational Impact which can take up to several months, resulting in massive unscheduled downtime, high maintenance • Identified root cause of failure, allowed for prevention of costs, delays in construction schedules, and negative future accidents. social impacts to the community. • Minimised unscheduled downtime by enabling forward planning to address expected maintenance issues.
Field Device Asset Management for Chemical Company
The Challenge The Solution
• Only two workers were assigned to maintain thousands • Emerson’s AMS™ Suite: Intelligent Device Manager of intelligent instruments in three production units. They predictive maintenance software is designed to alert could do little more than react to device issues as they plant personnel if performance of intelligent field devices appeared. This costly maintenance method inevitably led begins to deteriorate. to unexpected downtime from equipment failure. • By providing direct access to the predictive diagnostics • Plant management recognized the need to change from generated by smart field devices, users can respond reactive to predictive maintenance for all assets, but help quickly with corrective action to resolve instrument and was needed in implementing such a technology-based valve issues in time to prevent unexpected downtime. initiative.
Operational Impact
• Reduced costs through predictive maintenance.
• Unexpected downtime cut by concentrating maintenance on highest priority equipment.
• Equipment reliability improved through proactive asset management.
IoT ONE Limited | www.iotone.com | Accelerating the Industrial Internet of ThingsThings 19 Selling to Made in China 2025: Opportunities & ChallengesChallenges
Featured Case Studies: Process & Equipment Monitoring
Logistics Management System For Detergent Company in Zhejiang
The Challenge The Solution
• With growing production scale and market demand, a • Innotel successfully implemented a logistics tracking chemical company in Zhejiang’s detergent industry information system with anti-tampering capabilities, looked for a complete digitalized solution to monitor their which combines the use of mobile networking, sensor production lines and provide a mature process technology and IT. management and control system. This solution needed to fit their management procedures, as well as meet • This enabled a complete LMS solution providing growing demand for logistical track-and-tracing. intelligent RFID warehouse tracing and tracking, facilitating logistics and marketing management along with other integrated service platforms.
Operational Impact
• Improved logistical efficiency by reducing turnover time.
• Reduced operational costs in tagging packages.
• Eliminated need for marketing staff to manage logistical delays for product launches.
Enabling Real-Time Monitoring for CompAir's Air Compressors
The Challenge The Solution
• CompAir, an air compressor manufacturer, faced • Mixlinker provided a real-time remote monitoring problems with market saturation and growing demand for solution that allowed CompAir to access various air energy-saving solutions from customers. compressor data.
• After-sales customer support quality was worsening due • The system can also generate fault alarms whenever to the wide geographical distribution of customers and required, prompting maintenance personal to address limited capability of the customer support teams to these issues in a timely manner. Critical air compressor manage requests. components trigger alarms based on a pre-determined duration for maintenance to be done.
Operational Impact • The solution enables management to better segment different customers by anticipated need and priority. • Improved after-sales customer support and loyalty.
• Increased information transparency allowing energy- saving measures to be taken.
• Reduced operational costs through optimizing manpower allocation for maintenance efforts.
IoT ONE Limited | www.iotone.com | Accelerating the Industrial Internet of ThingsThings 20 Selling to Made in China 2025: Opportunities & ChallengesChallenges
Featured Case Studies: Data Acquisition and Management
A Reliable Power Control Automation System for a Steel Factory
The Challenge The Solution
• One of the largest steel factories in China needed proper • MOXA’s embedded computers were placed in four communication control units for data processing and different sections, mainly working as the front-end protocol conversion with the devices at remote field sites. telecommunication units for collecting the data from the remote devices, such as power meters, transceivers, • The company currently used IPCs that did not enable a and communication units. distributed system at the front-end sites or a centralized management platform at the back-end control center. • Data collected at the front-end site can be analyzed, processed, and then transmitted to the back-end control center, where another computer is also deployed.
Operational Impact • The computers’ open platform makes it easy to create a communications link between the back-end host and • Greater flexibility for multi-level open data transmission. the front-end sites. • Stability for easy integration with third-party devices.
• Ready and effective protocol conversion that facilitates data communication between legacy devices.
Data Acquisition and Remote Management Platform for Texhong
The Challenge The Solution
• Texhong, a major textile manufacturer in East China, • ForceCon’s data acquisition and remote management faced issues with communication of on-site information to platform connected 300,000 data points to obtain the operations headquarters. production data from equipment and remotely send scheduled instructions to production bases. The • Production data received were not up-to-date and was platform also provided an interface to integrate unable to give an accurate overview of the company’s seamlessly with Texhong’s existing MES. overall operations, hindering the company’s ability to effectively assess and strategize for the future. • The system notifies of any transmission failure in real- time, and automatically generates reports of production • Production equipment communicate using a variety of operations for analysis. protocols which are difficult to adapt to a common interface.
Operational Impact
• Improved operational efficiency and transparency from real-time continuous monitoring.
IoT ONE Limited | www.iotone.com | Accelerating the Industrial Internet of ThingsThings 21 Selling to Made in China 2025: Opportunities & Challenges
Summary
China’s Industrial IoT ecosystem is thriving due to strong support from the Chinese government through the Made In China 2025 and Internet+ initiatives, as well as sustained investment by Chinese and international technology leaders. Many Chinese manufacturers are now familiar with the fundamental technologies and have begun seeking to increase their quality and cost competitiveness by investing in digitalization.
However, several bottlenecks continue to slow adoption by Chinese companies. The business processes and shop floor workforces of Chinese manufacturers are often poorly suited to make use of analytics and dynamic automation, and private manufacturers continue to face liquidity shortages due to the preference of banks to loan to state-owned enterprises. Given these adoption challenges, the most significant near term opportunities lie in low complexity solutions that address specific high value business objectives, such as reducing asset downtime.
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About IoT ONE
IoT ONE provides research and advisory services to help companies manage the threats and opportunities brought by the Internet of Things.
RESEARCH PLAN BUILD
We access bottom-up We help increase the We help to design and insight about how the competitiveness of your build an organization Internet of Things is products and operations capable of implementing impacting your by evaluating and your Internet of Things customers, supply chains prioritizing opportunities. adoption strategy. and competitors.
"IoT ONE helps both vendors and end-users save time with structured case studies covering challenges, solutions, and project impact in one glance.” - Chief Commercial Officer, Urbiotica
"As an IoT enabling leader and founding member of Predix, I think IoT ONE is very informative and useful for Accelerating Digital Transformation.” - Senior Director, Technology Development, Predix (GE)
“IoT ONE has created a database for the Internet of Things that is comprehensive, informative, up-to-date, and global. It is a first-class tool to inform your IoT-business” - Business Development, AUVESY GmbH & Co. KG
"IoT ONE provides valuable insight regarding the IoT landscape on the regional and international scale. IoT is an emerging market, so identifying partners is very important." - Senior Partner Manager, ThingWorx (PTC)
"China needs more IoT execution and less hype. IoT ONE helps companies translate ideas into actions and implement IIoT solutions.” - CEO, Proudsmart
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Selling to Made in China 2025 Opportunities and challenges presented by China’s initiative to become a global leader in quality manufacturing
Accelerating Adoption of the Industrial Internet of Things
IoT ONE’s mission is to accelerate adoption of Industrial IoT technologies. We drive adoption by providing the granular information that decision makers need to make investments in new technologies and projects.
It is widely believed that adoption of Industrial IoT technologies will reshape the global economy. However, the understanding gap between technology vendors, systems integrators and end-users continues to prevent adoption. Companies use our databases to identify, assess, and prioritize the solutions and partners they need to achieve transformative business results. We focus on addressing three challenges that slow adoption:
• Executive leadership lacks sufficient understanding of the IIoT landscape to make confident strategic decisions regarding product and project planning.
• Procurement managers have limited experience assessing IIoT vendors and technologies, which slows the process of identifying the solutions that best meet their requirements.
• Operations teams lack experience implementing IIoT solutions, increasing implementation costs and risk.
We are always looking for opportunities to better serve our customers and users. To learn more about us or to begin a discussion, email [email protected].
Kind regards,
Erik Walenza-Slabe CEO, IoT ONE
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