Devott Perspectives: “The 13th Five-Year Plan” - The Six Main Trends of China’s Intelligent Industrial Development
Source: View: 210 Date: 2015-11-10

China has intelligent industrial market with biggest scale and most rapid growth, thus smart home, smart wear; smart car and intelligent equipment also are industries with huge market potentials. Since the year of 2013, intelligent industry focusing on intelligent hardware has achieved rapid development, produced more different products in different catalogues; the industry also appeared development wave with explosive growth. However, we also see that emerging intelligent hardware industry currently is in a “disorder” situation, although there are many preliminary entrepreneurship enterprises engaging with development and product producing in this field in domestic and international market; those enterprises have not formed unified equipment communication agreement and platform about intelligent hardware. It is predicted that since “the 13th Five- Year”, the third industrial revolution represented by cloud computing, big data, artificial intelligence will make us stand at the same beginning line with industrial countries in the West firstly, to participate competition in the new round of intelligent industrial revolution. In next 3-5 years, no matter in finance internet, car networking or in development and application field of intelligent products, with continually expanding demands of customers for intelligent product experiences, intelligent product market will gradually develop to be standardization, be order; the price system will be more transparent, the competition system also will be more order. Meanwhile, from some dimensions of technology, product, industrial chain, enterprises, market layout, capital, policy and carriers, it will show some main development trends below and more deeply develop:

A.      Application Technology will be more Deepened and Upgraded; Intelligent Products will Trends to Professionalization

With big data, internet of things, cloud technology, mobile internet technology, social network platform technology deep development, more and more modern science & technology industry has been defined as intelligent concept, gradually accomplished extending and upgrading of current industrial bases. Besides that from hot spots of application, intelligent products has gradually penetrated into all dimensions both in life and in work; what’s more, development of AI, 3D printing technology an voice recognition technology also make interconnectivity      to be more and more important between products, between products and human beings.

From current product forms in the field of intelligent industry, the main form is wearable equipment product; from specific application area, it mainly focuses on daily life applications with mainly directions of smart home, intelligent medical, intelligent health, vehicle intelligent products. What’s more, in aspect of intelligent manufacturing, although the practice in the field of industrial robots has achieved certain development, traditional industries and manufacturing industry also will face a long-term process of gradually deepening and transferring to intelligent industry. No matter from investment or from technology, it will have 3-5 years’ transition and development. We predict that the vertical industry of future intelligent industry will be more deepened, segmented; industrial boarder and distribution will be more clear; the business area of intelligent enterprises will be more clarified that also will make intelligent products to gradually tend to be professional.

B.      Industrial Chain will be Extended and Developed & Integration of Hardware and Software, Industrial Integration will be more Obvious

Intelligent industrial chain will be extended and developed, the crosswise of industrial chain will extend from intelligent hardware and other hot areas to intelligent service, intelligent city, intelligent tourism, intelligent manufacturing and intelligent life; the longitudinal direction will develop from R & D design, production manufacturing in the upper stream to the final customers and users in the downstream; thus, industrial chain will be more perfect. Besides that, from participating roles in each part of industrial chain, it mainly covers e-commerce platform, hardware integrators, the third-party platform, cross-funding, entrepreneurs and final customers; the co-effectiveness among them will be improved with continually improving industrial chain. Among participating roles in this perfect industrial chain, we believe that the concept of O2O will run through the whole parts of intelligent products from R & D design, demand analysis at the front-end to final product experiences and product sales. In future, product will be one part of human beings that will be the highest realm of intelligent products development. Therefore, only fully emphasize importance of client participation, meet individual demands of customers, hold the concept from users’ demands and products development based on demand chain management, can enterprises stand out in future intelligent competition.

Besides that, as above mentioned, intelligent industry is not a single and new industry, but a product boundary intersected by mobile internet and traditional manufacturing. Intelligent industry after wait-and-see period of exploring commercialization, will be the main industry in the next round and also will be only one industry can give physical properties of mobile internet in the era of mobile internet. In the ecosystem produced by intelligent industry, the cross-over industry, entrepreneurs, internet enterprises, traditional manufacturing will be supporting roles or “components”. In future, industrial boundary will be more and more vague; the most is industrial integration that not exists who subversives whom but is who can develop better products/services users. Meanwhile, for the future of intelligent area, all hardware products will gradually tend to be intelligent; in this process, hardware will not only be a carrier; the core of additional value focuses on services. Therefore, in future, the trends of integration of hardware and software, industrial integration will be more obvious.

C.      Intelligent Market Layout Mainly Concentrating on Each Intelligent Enterprise will Gradually Be Formed

The coming of each industrial era will attract a batch of entrepreneurship & innovation enterprises entering into market; therefore, the bud and starting stage of intelligent industry will be also this likes the mobile internet wave appeared in 2007 very much. Currently, the intelligent hardware industry recently raised is still “disorder” in that there are many big & medium & small-size enterprises from each industry entering into intelligent hardware industry. For example, current operation selling and after-sale channel advantages of Mi and JD rapidly make intelligent hardware manufacturers into market; Google directly develops smart home products via purchasing smart home enterprises and rapidly occupies market via building hot products. Tencent occupies threshold of mobile internet to enter into intelligent area via its own advantages in social network; Baidu improves its own technological level in aspects of big data, voice control and gesture interaction with platform or betting on router. What’s more, it also includes many entrepreneurship & innovation enterprises and traditional manufacturers focus on entering into intelligent market that makes us see in next two-three years industries and enterprises will show concentrated and explosive growth; meanwhile, it will be a process of great waves sweeping away sand that also will promote industrial line and product direction to be more clearly, promote competitive enterprises to stand out and to form certain layout and distribution.

D.      The Mode of Integration between Industry and City will Gradually Become A Main Principle Required for Intelligent Industrial Gathering

From objective angle, building physical space and soft environment required by intelligent industrial gathering and development, intelligent industrial development trend happen to have same view of development concept of industry & city integration. Intelligence is main feature to build intelligent cities and intelligent parks; while intelligent city is also a kind of form of industry & city integration. At the same time, integration of city and industry emphasizes development concept of “job integration, industry & city integration and industry & commerce happen at same time”, and carrier construction and service mode more meet concentrated demands of intelligent enterprise development for each element of industry in each stage. What’s more, with rapid development and maturity of intelligent industry, boundary between industry and city will be more indistinct and gradually tend to be integrated. Besides that, current rising and returning of city manufacturing, partly function of modern intelligent manufacturing will promote better gathering and development of intelligent industry in layout and distribution of city center, gradually promoting and trying the mode of city & industry integration.

E.       From Financing and Investment Direction of Intelligent Industry Currently, Intelligent Hardware will be Hot Spot in the Next 2-3 Years

The ten-year period of science and technology from KPCB shows that since 2014, intelligent hardware will become popular area for investment institutions and enterprises development, thus focus gathering and capital competition will be more fierce. According to statistics, there have been 123 investment transactions in front edge and hot area of hardware innovation in 2013; the explored trade amount was 1.44 billion USD. Until the June of 2014, 62 China’s intelligent hardware companies from intelligent wearable equipment, intelligent medical, smart home and other areas have been achieved financing fund. From product forms, current hot spots and direction of intelligent hardware investment mainly focus on wearable equipment field. However, current wearable productions have not clear positions, not mature and not perfect industrial chain. Developers in downstream still highly dependent on planning providers, lack of their own R & D abilities and have higher risks. Therefore, the explosion time of wearable products has been delayed; the shipments also have not met expected quantity. It needs long time for wearable intelligent equipment to develop from minority to majority.

Table 1: Investment and Financing Summary of Main Intelligent Products from 2013 to 2014

Data Source: Summarized and Counted by

F.       High-End Intelligent Industry will Become Main Cultivating Field during the period of “13th Five-Year”

In planning of “12th Five-Year” in China, as mainly cultivating area, high-end intelligent industry mainly covers some fields below: one is main and big complete sets of equipment such as saving energy and reducing consumption, automation, intelligent and other aspects to meet transformation and upgrading requirements of traditional industry including petrifaction, metallurgy and coal. The two is complete sets of equipment required by main and big engineering in saving energy, environment protection and resources development, such as nuclear power, new energy and smart grid. Three is basic components, instrument and meter. Currently, instrument and meter industry in China is very weak; more than 60% market share has been occupied by foreign medium & high-end instrument and meters, components and sensors; thus the half of domestic demands depend on import.

High-end intelligent industry will show development trend with automation, integration, information and greening. If want to ensure continuous development of high-end intelligent industry, should have strong industrial science and technology research and services to support, need government to support and build public service platform and R & D platform, and to provide financial support. Mainly focus on service added-values, and greatly develop modern manufacturing service industry. Transform from productive manufacturing to service manufacturing, from single product manufacturing to providing services at the same time.

This post is a personal or group view of Research and Advisory members and don't necessarily represent Devott's positions, strategies or opinions.

In a word, next ten-year is pan intelligent era at that time everything can be intelligent interconnected. Intelligence will enter into rapid diffusion stage; consumers will be inspired more application demands in more segmented scenes; chip, telecommunication, materials, sensors and even biological technologies will be continuously improved; thus interconnection and intercommunication of everything and intelligent wave will be irreversible. In aspect of demand, after popularization of current intelligent terminals and using behaviors, it will inspire more application demands of customers for intelligent terminals at more and more segmented scenes. At the end of supply, with better and better performance, smaller and smaller volume and power consumption, and quicker and quicker technological transmission speed of computer processing technology, the precision of sensor technology also continually improves, in future more and more hardware products will accomplish intelligence; thus pan intelligence wave is coming. “Hardware + software + service” gradually integrates, transformation among enterprises depend on speed. Software and hardware form and ecosystem of pan intelligent terminals have not been formed yet; software, hardware and internet enterprises are good at serving consumers are preparing at the same time, to inter-penetrate each other and to compete transformation speed. Strategic thinking, organization structure and original core competitiveness of each enterprise will determine their position and perspectives in competition of integration.

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