The Fading Demographic Dividend Spurs the Development of the Industrial Internet

China’s demographic dividend is gradually fading. Labor will become an increasingly scarce resource in the future, and surging labor costs will reshape the landscape of China’s industry and manufacturing sectors. Against this backdrop, the Industrial Internet has emerged as a viable solution. Even as the demographic dividend dwindles, the Industrial Internet can stabilize or further cut manufacturing costs.

Against this backdrop, the state has rolled out extensive policy support and founded the Alliance of Industrial Internet (AII). AII defines the Industrial Internet as an industrial and application ecosystem forged through all-round, in-depth integration of the Internet, next-generation information technologies and industrial systems, which functions as critical comprehensive information infrastructure for the intelligent upgrading of industries.

The Industrial Internet and Smart Manufacturing

AII’s definition clearly reveals the close correlation between the Industrial Internet and smart manufacturing. On the surface, the two have distinct priorities: the Industrial Internet focuses on industrial services, while smart manufacturing centers on industrial production. Fundamentally, however, both are geared toward intelligent production and intelligent services, specifically personalized customization and service extension.

The Industrial Internet relies on industrial platforms to deliver customized cloud migration services for enterprises, serving as a practical development model and feasible pathway to realize smart manufacturing. Smart manufacturing, by contrast, represents the ultimate global industrial vision, enabling full intelligent automation for factories worldwide. Driven by national supply-side structural reforms, market demand across industrial sectors has maintained steady recovery, fueling the advancement of a new round of technological and industrial revolutions. Nevertheless, enterprises face mounting pressure on profitability amid multiple headwinds: rising consumer expectations for product quality, soaring labor expenses and climbing costs of raw materials.

Such challenges compel enterprises to embrace intelligent transformation. Smart manufacturing has become the next major trend in industrial production, targeting full intelligence across the entire manufacturing value chain, while the Industrial Internet acts as the core infrastructure underpinning smart manufacturing.

Vast Market Potential of the Industrial Internet

Statistics from AII show that China’s direct industrial scale of the Industrial Internet reached approximately USD 90.3 billion (around RMB 570 billion) in 2017. The industry was projected to grow at an average annual rate of 18% from 2017 to 2019, with its output value hitting USD 225 billion (RMB 1.42 trillion) by 2020.

In addition, incomplete statistics recorded over 170 financing events related to Industrial Internet platforms in 2017, with total funding reaching roughly RMB 20 billion. Research institutions generally hold an optimistic long-term outlook for the Industrial Internet. Given its intrinsic link with smart manufacturing, the Industrial Internet centers on three core pillars: network, data and security.

Networks lay the foundation, data acts as the core driver, and security provides reliable safeguards. As stated by AII, networks underpin interconnections between industrial systems and industrial data exchange; data serves as the core engine for industrial intelligence; security guarantees the sound application of networks and data within industrial scenarios. It is vital to distinguish the two concepts: the Industrial Internet underpins smart manufacturing, and smart manufacturing in turn helps enterprises achieve their business objectives.

Driving the Transformation of Traditional Enterprises

At the current stage, the Industrial Internet remains in the initial application phase, mostly combining equipment IoT with data analysis or interconnection of business systems plus analytical functions. In the future, with continuous technological advancement, complex data analysis and optimization will be realized based on full interconnection of IoT devices and industrial platforms, thereby boosting innovations in corporate management processes, organizational structures and business models.

Judging from its current development, the Industrial Internet empowers enterprises to achieve intelligent production via its platforms, realize network-based collaboration through inter-enterprise connection, extend service businesses by connecting end products, and meet demands for personalized customization on the basis of precise demand matching.

Intelligent transformation is not limited to single machines or individual production lines; it targets intelligence across the entire production workflow. By deploying sensors backed by wireless communication technologies and building industrial cloud platforms, full-cycle data collection covering production to management can form a closed loop for scientific data analysis and utilization, thus facilitating the shift of traditional manufacturers toward production-service integrated enterprises.

The Industrial Internet revolution has already kicked off. Over the past decade, Internet technologies have been integrated into industrial production. As the Industrial Internet matures, its related industries will embrace rapid growth. It is clear that the Industrial Internet serves as the foundation for smart manufacturing. As a core driving force of the new industrial revolution, the Industrial Internet is essential to build a brand-new industrial ecosystem for smart manufacturing. Enterprises that complete intelligent transformation ahead of their peers will gain prominent competitive edges in the future.

Intelligent unmanned factories will no longer be fictional scenes in sci-fi movies, and the integration of the Industrial Internet and intelligent technologies will accelerate enterprises’ progress toward this goal.

Source: Informatization and Software Service Network