The Evolution of Industrial Internet: Past and Present

The Evolution of Industrial Internet: Past and Present

Note from Qingji:
Readers familiar with Qingji must be acquainted with “Mr. Silicon Valley”. Qingji has previously reprinted his thoughts on the development of Qingdao titled “Qingdao’s Ambition: Northern China, Vast Mountains and Seas”.
Author Garnett Ge works at a well-known incubation accelerator in Silicon Valley, USA.
In a discussion, Qingji and Garnett Ge talked about the development of Qingdao and the future of the industrial internet, and he expressed a desire to systematically outline the evolution of the industrial internet from a “different perspective”.
The article is here, after 5 months and 6 cities, he has compiled this 7000+ word reflection on the industrial internet, recommended to all readers.
From the industrial system to artificial intelligence, from traditional manufacturing to the internet of everything, this country has gradually upgraded its industry, overcoming numerous difficulties, and has finally reached the forefront of the world.Even as various countries pursue and block it, and despite overcoming countless difficulties, nothing can stop this country’s determination to move toward the future.
China’s industrial internet is a grand narrative unfolding like a poem.
Sincere, steadfast, calm, noisy, amidst the clash of swords and the sound of war drums, everything rises, and the dust settles; this is a story of a nation and a people striving to reshape their industrial strength, amidst turbulent seas.
| Origins: Great Power Games, Industrial Upgrading |
If we must find an origin for the industrial internet, it would definitely be General Electric (GE). As the world’s largest diversified service company, GE has a comprehensive product system ranging from high-end equipment like aircraft engines and power generation equipment to everyday goods like lighting and plastics, along with strong manufacturing technical strength and rich experience in IoT.
In 2012, GE released its first industrial internet white paper, defining the core elements of the industrial internet: linking the most critical equipment, people, and data in industrial production through digitization. In this groundbreaking white paper for the industrial internet, GE proposed the concept of “the Power of 1%”, explaining the value brought to global industry by reducing any core industry’s loss by 1% over 15 years: In aerospace, $30 billion; in energy and natural gas, $66 billion; in healthcare systems support, $63 billion…
GE believes that in the face of a vast market landscape, whether it is meeting the needs of efficiency and safety in factory intranets, extranets, and identification resolution, or new operational models generated by intelligent production, network collaboration, data synchronization, and AI transformation, the industrial internet is the core means of industrial upgrading.
The Evolution of Industrial Internet: Past and Present
GE’s industrial internet white paper is considered a pioneering work in the industry.
Based on GE’s work, the Industrial Internet Consortium and industry standards emerged in the USA. In response to the government’s “re-industrialization strategy”, the Industrial Internet Consortium (IIC), formed by manufacturing and IT giants, and the Digital Manufacturing and Design Innovation Institute (DMDII) organized by the Department of Defense were established, attracting a number of industrial enterprises, universities, research institutes, and business organizations, including Boeing, Lockheed Martin, General Electric, Rolls-Royce, Microsoft, Cisco, etc.
The USA leads the trend, while Germany is not far behind.In 2013, Germany proposed the Industry 4.0 strategy, aimed at helping German companies enhance product competitiveness based on CPS technology, transitioning from centralized control to decentralized enhanced control, and transforming manufacturing into intelligent manufacturing to enhance global competitiveness.
Building on Industry 4.0, the German industrial giant Siemens took further steps. In 2016, Siemens launched MindSphere, aimed at helping companies connect products, factories, machines, and systems to extract and analyze core performance and application data. In 2018, Siemens upgraded its “Digital Twin” model, integrating these elements into enterprise software, allowing users to optimize processes based on real-time information and improve system performance through real-time product data.
In 2020, MindSphere announced its landing on Alibaba Cloud, continuing to sound the horn for global layout. Behind this is Germany and the EU’s stock development and expansion in advanced manufacturing.
The Evolution of Industrial Internet: Past and Present
In Germany, Industry 4.0 and the industrial internet share the same roots.
Another notable player is Japan.The well-known lean manufacturing and craftsmanship spirit may not fully reflect Japan’s determination for new industrialization. In 2017, Japan proposed the “Connected Industries” strategy, prompting major manufacturers like Mitsubishi Electric, Fanuc, DMG Mori Seiki, and Hitachi to establish data exchange mechanisms, seeking to compete with Germany’s Industry 4.0 and America’s industrial internet.
The China Industry Information Network noted in “Lessons from Japan’s ‘Connected Industries’ Strategy” that while companies were still focusing on internal connectivity, Japan had already taken a different path, proposing a strategy of “industrial value chains”, establishing a unified ecosystem, acquiring German companies, and seizing the global demand for factory automation. In multiple fields such as big data, cloud computing, new materials, resource reuse, energy storage, and robotics, Japan is leading, while the aging population increasingly highlights the labor shortage.The industrial internet is an important lever for Japan to maintain its footing in the new industrialization wave.
Looking back at the era when the industrial internet began to take root, the idea of industrial upgrading surged alongside globalization, with multinational companies resonating in the vast space of imagination and huge market share, while the interplay of competition and cooperation among giants unfolded, and small countries with incomplete industrial systems could only look on helplessly at the massive investments and workloads.
The industrial internet is ultimately a battlefield for great powers in this era.
| China: A Call to Arms, A Thousand Ships Compete |
China first proposed the “industrial internet” in July 2015 with the release of the “Guiding Opinions on Actively Promoting the ‘Internet+’ Action”, aiming for smart factories as the development direction, conducting pilot demonstrations for smart manufacturing, accelerating the application of technologies such as cloud computing, IoT, intelligent industrial robots, and additive manufacturing in production processes, and promoting the intelligent upgrading of production equipment, process transformation, and basic data sharing.
In November 2017, the “Guiding Opinions on Deepening the ‘Internet+’ Advanced Manufacturing Industry Development of the Industrial Internet” was officially released as a programmatic document for China’s development of the industrial internet. The General Secretary has repeatedly mentioned the industrial internet at important occasions, and it has been included in the government work report for two consecutive years, elevated to a national strategic height.
At the 2019 Global Industrial Internet Summit, the General Secretary stated, “China attaches great importance to the innovative development of the industrial internet and is willing to work with the international community to continuously enhance the innovative capabilities of the industrial internet, promoting the integration of industrialization and informatization on a broader, deeper, and higher level.”
The height of national strategy and the broad market prospects have sparked fierce competition among various factions.
Shanghai has made several firsts in the industrial internet: it was the first to release relevant policies and a three-year action plan; first to collaborate with the Ministry of Industry and Information Technology to create a national-level industrial internet demonstration city; approved the country’s first industrial internet demonstration base; developed a series of related scenarios like ABB, Huizhong Automotive parts, SAIC Lingang base, Norma high-end intelligent hydraulics, Mitsubishi elevators intelligent robot warehouse, etc. It has promoted over 300 enterprises in integrated circuits, biomedicine, automotive, aerospace, etc. to innovate industrial internet applications; reducing costs by an average of 7.3%, improving quality by 6.1%, and increasing efficiency by 9.2%, while driving 100,000 small and medium-sized enterprises to go online and on platforms.
The Evolution of Industrial Internet: Past and Present
Shanghai has made several industry firsts in the industrial internet.
Shanghai has a complete advanced manufacturing industry system and a strong capital layout. In 2019, industrial investment in Shanghai grew by 11.3%, maintaining double-digit growth for 21 consecutive months. Investment in the manufacturing industry in Shanghai increased by 21.1% compared to the previous year. Investment in six key industrial sectors grew by 24.2%: biopharmaceutical manufacturing investment increased by 79.0%, automotive manufacturing investment increased by 48.5%, petrochemical and fine chemical manufacturing investment increased by 36.6%, and electronic information product manufacturing investment increased by 12.9%.
Shanghai stated that by 2022, the scale of the core industrial internet industry will be raised from 80 billion to 150 billion yuan.
Relying on a strong intelligent manufacturing industry, Shenzhen has quickly introduced several policies to cultivate the industrial internet ecosystem: establishing the “Shenzhen Industrial Internet Expert Committee”, promoting Huawei, Tencent, Foxconn, etc. to jointly establish the Shenzhen Industrial Internet Alliance, and organizing events like the “Industrial Internet Conference” and “Industrial Internet Roadshow” to create a new cross-regional production model of “headquarters (Shenzhen) + factories (Pearl River Delta)”.
Successful transformation is largely credited to private enterprises in Shenzhen: Huawei Fusion Plant serves over 24,000 enterprise users, with over 880,000 industrial devices connected and more than 2,500 industrial application software; Foxconn, improving production efficiency by 30%, reducing inventory cycles by 15%, serves over 1,100 industrial enterprise users, connecting over 680,000 industrial devices, with over 1,000 industrial software; Sujia Network, traditional mechanical parts manufacturing builds a collaborative intelligent manufacturing network, intelligently matching supply and demand information, providing free SaaS systems for transparent production; Yiguan, streamlining channel sales, data operations, product supply, and inventory control through backend quick-response production to support frontend live broadcasts.
Qingdao, which built itself as a leading city in the industrial internet in 2015, proposed to become the world capital of the industrial internet in 2019: gathering 1,833 industrial internet ecosystem enterprises. Every quarter, it releases 200 “industrial empowerment” and 50 “future city” scenarios, promoting the signing of 158 application scenario transformation and enhancement projects. “Qingdao has a solid industrial foundation and a complete industrial system, covering 39 of the 41 industrial categories, which can provide rich application scenarios for promoting the industrial internet and developing artificial intelligence.”
Qingdao’s ambition to become the “world capital of the industrial internet” is supported by its partnerships with General Electric from the USA and Siemens from Germany; among the four major international standard organizations, Haier occupies three seats in the authorization for formulating large-scale customization models and industrial internet-related standards, being the only company in the world with two lighthouse factories in the same country. In 2020, Kaos served 43,000 enterprises, with 330 million users, making it currently the only industrial internet unicorn.
The Evolution of Industrial Internet: Past and Present
Global distribution map of lighthouse factories.
In addition,
Beijing stated, “Beijing regards the industrial internet as a strategic choice for promoting the city’s high-quality development, as an important support for consolidating and enhancing the level of the real economy, aiming to empower the national digital transformation and enhance high-end supply capabilities, and work together with all parties to build a new ecosystem for innovative development of the industrial internet, contributing more to the digital transformation of the national traditional industries;”
Changzhou mentioned that its intelligent manufacturing equipment industry cluster was selected as one of the first national strategic emerging industry clusters, with a total of 16 industrial strong base engineering projects, ranking first among prefecture-level cities in the country, and 153 major equipment of the first set in Jiangsu province, ranking second in the province; a total of 15 national manufacturing single champions, ranking first in the province; over 200 industry invisible champions, and 66 listed companies at home and abroad.
Ningbo stated that in 2019, Alibaba Cloud established an industrial internet center, creating a national-level industrial internet platform based in Ningbo, serving the Yangtze River Delta, and radiating nationwide. The total investment of seven signed projects reached nearly 2 billion yuan, as part of its implementation of the digital economy “No. 1 project”. In the next 2-3 years, Ningbo will fully promote the construction of the industrial internet platform, accelerating the establishment of the industrial internet development ecosystem.
Shenyang stated that industrial internet giants like Alibaba, Huawei, and Tesla shine brightly, with renowned domestic and international academicians, experts, and scholars sharing their insights, while leading industry enterprises like Brilliance BMW and Neusoft Group delivered speeches on-site, and the “Liaoning Province Digital Economy Development Plan” was released, with typical industrial internet application scenarios like “Smart Steelmaking” built with collaborative 3D imaging and “5G + Smart Manufacturing” with Iceberg Group…
In a moment, a hundred boats compete, a thousand sails race, the scene is lively and vibrant.
| Status Quo: Long Road Ahead, Dawn Emerging |
How popular was the industrial internet in 2020? SAP’s Chief Digital Officer Peng Jun Song stated, there are 600 industrial internet platforms globally, with 500 in China. Even after the pandemic, industrial internet summits in various cities have entered a heated phase:
On August 29, 2020, the Ministry of Industry and Information Technology and Beijing held the 2020 Industrial Internet Conference; on September 16, 2020, the organizing committee of the China International Industry Fair held the 2020 International Industrial Internet Conference and Digital Industry Series Summit; on September 17, 2020, the first expert meeting in the industrial internet field successfully commenced; on September 20, 2020, the 2020 World Industrial Internet Industry Conference opened in Qingdao; on October 10, 2020, Guangzhou hosted the 2020 International Industrial Internet Technology and Application Exhibition; on October 18, 2020, the 2020 Global Industrial Internet Conference opened in Shenyang…
Behind the diverse industrial internet summits, many core issues in the industry still remain unanswered:
How to generate data from low-cost industrial equipment that does not produce data?
How to efficiently open the encrypted module of industrial equipment production data blocks?
How to unify the over 5,000 driving protocols available in the market?
How to collect data without affecting industrial production schedules?
How to coordinate hardware and software configuration issues?
How to maximize the use of data through data mining?
Which data needs to be connected to the internet? Which data does not? Which data needs to be public? Which data does not? To what extent should it be public?
The Evolution of Industrial Internet: Past and Present
The industrial internet is a transformation and upgrade of traditional industries.
Digitalization and industrial internet empowerment are not a panacea.In July 2019, Shenyang Machine Tool, once ranked first in the world and known for initiating Industry 4.0, announced a loss of over a billion yuan, with a significant drop in revenue, and was ordered to reorganize by the Shenyang Intermediate People’s Court. Traditional industries have precise and sharp doubts about industrial internet platforms: “We industry insiders can’t solve these problems, do you think it can be done just by connecting platforms? That’s too simplistic; each industry has its own difficulties, it’s not that easy.”
Overseas platform development is also full of uncertainties: In 2018, GE sold its own Predix, the industrial internet platform pioneer that established benchmark cases for British Petroleum, Australian Airlines, Renji Hospital, and Eastern Airlines, ultimately becoming a discarded asset of GE; in early 2019, Samsung quietly disbanded its Artik IoT platform team, which claimed to have 85 partners. According to IoT Analytics, the number of global IoT platforms peaked at 450, but in the last year, one-third have closed or become zombies.
From having no data to having data, from single data to multiple data, from data matrix to data network, the digital transformation of enterprises (the prerequisite for the industrial internet) is experiencing a tortuous and challenging path.
Lin Xueping wrote in “The Three Realms of Industrial Internet” that “historically, the process of industries utilizing IT technology for information and digital upgrades can be divided into three stages: internalizing the business processes of the enterprise, externalizing the integration of manufacturing services, and platforming the empowerment for industries.”
The Evolution of Industrial Internet: Past and Present
The three stages of industrial internet platform development.
Based on this logic, the public account “Wunu Xinxing” summarized three soul-searching questions for industrial internet providers:
If companies are struggling to transform into the industrial internet due to weak core businesses, how to balance selling equipment and services? With a decline in product manufacturing sales and slow growth in product service sales, how to find equilibrium? How to get old customer groups to pay for new services?
If companies are developing the industrial internet due to saturated core businesses, has the industrial internet platform been fully applied in-house? Do enterprises have the operational capability to build new business models and platforms? Does the methodology output affect the development itself?
If companies are steadily replicating the industrial internet methodology, can the unique advantages based on IP or trade secrets be reproduced? Will “platforming” reduce the competitive advantages of the core business? Will external empowerment of the technical team nourish competitors? How to balance low service revenue with the core business?
Accenture found that 73% of surveyed companies have yet to formulate practical action plans for the industrial internet, with only 7% indicating that they have developed a comprehensive strategy with corresponding investments.Ultimately, the thin top-level planning, insufficient accumulation of relevant technical talents, and lack of understanding of the industrial internet industry’s value chain lead to significant discrepancies between input-output and investment returns.
Moreover, the high costs, long cycles, and great difficulties of digital transformation projects make enterprises very cautious in their transformation efforts, and the process of the real economy transitioning from large to strong is slow and arduous.
| Aspirations: Clashing Swords and Horses, Everything Rises|
Yet the industrial internet is undoubtedly a national strategy for China, driven by the urgent need for industrial structural transformation and upgrading:

  • The growth rate of manufacturing has significantly declined, with a series of contradictions such as overcapacity, supply-demand imbalance, and slow conversion of new and old driving forces; the original growth model based on quantity, scale, and speed can no longer meet, grasp, or lead the new normal of economic development.

  • Currently, China’s manufacturing is “large but not strong”: in recent years, the added value rate of China’s manufacturing industry is about 20%, far below the level of 35% in industrialized countries. The industrial internet will promote the transformation and upgrading of manufacturing, enhancing the overall added value of the manufacturing sector.

  • At this stage, the labor population is continuously decreasing, and labor costs are rising: although the average annual salary of manufacturing in China has increased 98 times compared to 597 yuan in 1978, in some regions labor costs are approaching those of industrial robots. The competitive advantage gained by the manufacturing industry in its early stages due to labor cost advantages has gradually weakened.

Accenture and the National Industrial Information Security Development Research Center’s China Enterprise Digital Transformation Index shows that only 7% of Chinese enterprises have achieved significant transformation results, and many Chinese enterprises have yet to enjoy the economic dividends brought by digitization.
The Evolution of Industrial Internet: Past and Present
Only 7% of Chinese enterprises have achieved significant transformation results.
Fortunately, there are successful transformation cases in China, bursting with vitality under the empowerment of advanced productivity:
The traditional garment factory Kute Intelligent, after more than 10 years and an investment of hundreds of millions, has built a smart factory from industrial assembly lines to personalized customization: CAD pattern making, RFID, C2M systems, full-process garment production, zero inventory with no funds tied up. Production efficiency increased by 25%, costs decreased by 50%, profits grew by 20%, and the order-making cycle for suits was shortened from two to three months to seven days. In the first half of 2020, revenue increased by 41.66% year-on-year, and it was listed on the Growth Enterprise Market.
Xian Shangu Power, operates axial flow compressors, energy recovery turbine devices (TRT), centrifugal compressors, centrifugal blowers, and ventilation machines across nearly 2000 varieties of 80 series used in over a dozen national pillar industries such as metallurgy, petrochemicals, electricity, and environmental protection. By collaborating with the Beijing Industrial Big Data Innovation Center, it analyzes equipment operation and maintenance for remote units through the platform, achieving a reduction of over 33.3% in normal repair times and an average savings of 42% in equipment management overhead costs.
Guangzhou Diesel Engine Factory, in partnership with Root Interconnect, provides an intelligent service platform based on artificial intelligence, edge computing, and predictive maintenance for medium and low-speed marine diesel engines, ensuring equipment continuity for users of 10,000-ton vessels, forming a linkage across the industrial chain, helping Guangchai reduce equipment management costs by 30%, shorten operational management response times by 20%, and enhance the continuous operational capacity of diesel engines.
Tailong Gear Company utilizes the XCMG Information Hanyun platform to collect data from connected machine tools, improving equipment utilization by 7.65% and reducing operational costs by 20%; Shengyi Network empowered 62 small and medium enterprises to secure 4.7 million license plate production orders, revitalizing 153 idle devices, and shortening delivery cycles from 90 days to 14 days…
If digital transformation is the spearhead for enterprises to break through, the industrial internet is the macro layout under the national strategy. The industrialization capacity of the entire industry is the greatest achievement of this era, which became particularly evident under the impact of the 2020 pandemic:Looking around the world, no one can build a makeshift hospital within weeks with such a powerful industrial system; no one can quickly resume production and ensure people’s livelihoods under the shadow of a global pandemic; no one can achieve such a grand revival in just forty years of reform and opening up.
Looking at China’s industrial development, from the industrialization system to artificial intelligence, from traditional manufacturing to the internet of everything, this country has gradually upgraded its industry, overcoming numerous challenges, and has finally reached the forefront of the world. Even as various countries pursue and block it, and despite facing countless difficulties, nothing can stop this country’s determination to move toward the future.
The Evolution of Industrial Internet: Past and Present
The dawn of China’s industrial internet is emerging.
A grand narrative of China’s industrial internet is unfolding like a poem.
Sincere, steadfast, calm, noisy, amidst the clash of swords and the sound of war drums, everything rises, and the dust settles; this is a story of a nation and a people striving to reshape their industrial strength, amidst turbulent seas.
In the past five months, I have interviewed multiple industrial internet, smart manufacturing, and traditional manufacturing enterprises, witnessing the industrial dividends brought by SAIC Wuling’s fully automated production line, the semi-customized intelligent network SOP processes of Kute Intelligent, the advanced manufacturing solutions empowering small and medium enterprises by Hanchuan Intelligent, and the digital transformation of excavators by Leiwo Technology.
From Qingdao’s Kaos to Beijing’s Dongfang Guoxin, from Jinan’s Langchao to Xuzhou’s Xrea, from Shenzhen’s Huawei and Foxconn to Alibaba in Hangzhou; from R&D design to production manufacturing, from operational management to equipment maintenance, from customized products to inventory management; with the support and empowerment of platforms, and the determination and courage of enterprises, one traditional industry after another is being transformed, undergoing fission, suffering, and sublimating.
Rushing toward the tomorrow that belongs to the next era.
References and Cited Materials
Qingdao Release, “The Weight of the Ding, or Can It Be Asked – Interpreting Qingdao’s Construction of the ‘World Capital of the Industrial Internet’ with Platform Thinking”
Chen Xuanbin, “The Industrial Internet Cannot Save the Survival of Millions of Small and Medium Enterprises”
China Industry Information Network, “Lessons from Japan’s ‘Connected Industries’ Strategy”
Qilu Evening News, “Qingdao Reveals a Year of Achievements in Building ‘World Capital of the Industrial Internet'”
Xinhua News Agency, “Shanghai Concentrates on Launching Industrial Internet Projects to Create a 150 Billion Yuan Scale Industry High Ground”
Qingji, “Shanghai or Qingdao, Kaos Faces a Difficult Choice”
Peng Jun Song, “Building an Industrial Internet Ecosystem to Promote the ‘External Cycle’ of Service Trade”
Shenzhen Special Zone Daily, “Shenzhen Accelerates Industrial Internet New Infrastructure”
Lin Xueping, “The Three Realms of Industrial Internet”
Wunu Xinxing, “Industrial Internet + 5G, ‘King Bomb’ or ‘Against Three’?”
Industrial Internet Industry Alliance, “2019 Industrial Internet Platform White Paper”
All images are sourced from Unsplash
The Evolution of Industrial Internet: Past and Present
The Evolution of Industrial Internet: Past and Present

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