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  • IoT ONE Limited | www.iotone.com | Accelerating the Industrial Internet of Things 0

    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

    Industrial Internet of Things

  • IoT ONE Limited | www.iotone.com | Accelerating the Industrial Internet of Things 1

    Selling to Made in China 2025: Opportunities & Challenges

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    Table of Contents Industrial IoT market potential in China

    Digitized manufacturing in China: Why now?

    Current climate of Industrial IoT in China

    Industrial IoT trends in China

    China’s 13th Five-Year Plan

    Made in China 2025

    Overview

    Priorities by region

    Pilot projects (2015 – 16)

    China Intelligent Manufacturing Solutions Vendor Alliance

    Evaluating Made in China 2025

    Organizations supporting industrial upgrading

    Industrial IoT companies in China

    Featured Case Studies

    Summary

    About IoT ONE

    Selling to Made in China 2025: Opportunities & Challenges

    IoT ONE Limited | www.iotone.com | Accelerating the Industrial Internet of Things 1

  • IoT ONE Limited | www.iotone.com | Accelerating the Industrial Internet of Things 2

    Selling to Made in China 2025: Opportunities & Challenges

    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

    Industrial IoT market potential in China

    Sources: IoT Analytics (2018), CEIS (2017), The Economist (2016), China Daily (2018)

    Market demand for Industrial IoT applications in the Chinese Manufacturing Industry

    Sources: Deloitte Research (2016)

    The Government of China was the first to launch a

    comprehensive Industrial Internet of Things (IoT) strategy,

    announced in the ‘12th Five-Year Plan’ in 2011. According to IoT

    Analytics, the industry will start to see some of the early

    investments pay-off in 2018.

    China’s IoT market has been growing at an annual rate of 20%.

    The market exceeded 900 billion RMB in 2016 and is expected

    to exceed 1.5 trillion RMB by 2020. IDC forecasts overall

    market in China for IoT equipment will increase from 193 billion

    USD in 2015 to 361 billion USD in 2020 – with Chinese

    manufacturers spending $128 billion on industrial IoT alone.

    $128 bn

    $361 bn

    China is already the world’s second largest market for Industrial

    IoT technologies, despite initially-low adoption rates compared

    to North America and Europe. Deloitte reports that China

    outnumbers the amount of Smart City projects being piloted

    than all other countries combined.

    Pilot projects will be scaled on the back of an expansive IoT

    infrastructure roll-out that aims to meet market demand and

    deliver on national strategic priorities, such as innovation,

    efficient water management, urban mobility and cyber security.

    Such projects are being complemented by the ‘Made in China

    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.

    Accenture reports that by embracing IoT in manufacturing,

    China could add up to $736 billion to it’s GDP by 2030.

    0 20 40 60 80 100

    CX improvement

    New products/services

    New biz models

    New markets

    Improvement in core biz

    Better pricing

    Figure 4: How Companies Intend to Increase Revenue

    (no. of companies)

    Figure 1: China IoT Overall Kit and

    IIoT Manufacturing Market Sizes in

    2020

    0 10 20 30 40 50

    Lack of interoperability/standards

    Ownership/security of data

    Underqualified operators

    Data quality

    Lack of capability to carry out data…

    Coordination inside the company

    Cyber security

    Inadequate budget

    Figure 3: Biggest Painpoints for Companies Applying Industrial IoT Technologies

    (% of companies)

  • IoT ONE Limited | www.iotone.com | Accelerating the Industrial Internet of Things 3

    Selling to Made in China 2025: Opportunities & Challenges

    Digitalized manufacturing in China: Why now?

    Since 1990, China’s global manufacturing output has

    surged from less than 4% of global value to more than

    25% today. It has become the ‘World’s Factory’.

    However, China’s manufacturing sector has exhausted

    the growth strategies of the last three decades. China

    has saturated the market for low quality and low cost

    goods, and many industries are overcapitalized yet

    inefficient due to limited adoption of industrial software.

    Furthermore, China’s competitiveness on the global

    arena is weakened by labor costs that are rising faster

    than labor productivity. Today, China’s robot density

    ranks 23rd worldwide but the government intends to

    make it into the top 10 most intensively automated

    nations by 2020.

    To overcome these challenges, an industry-wide move

    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.

    631

    488

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    223

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    145 132

    71 58

    34

    74

    0

    100

    200

    300

    400

    500

    600

    R o b o ts

    p e r

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    0 0 e

    m p lo

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    Figure 5: Robot-to-Employee Ratio in Manufacturing

    Robot Density

    World Average

    Source: International Federation of Robotics (2017)

    *2015 prices Source: China Statistical Yearbook 2017

    0

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    10,000

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    20,000

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    30,000

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    2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

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    Figure 6: Labor Cost vs Industry Value-add in Manufacturing

    Average manufacturing worker annual wage Manufacturing value-add

    Chinese manufacturing value-add is not keeping pace with labor costs

    14% CAGR

    12.7% CAGR

  • IoT ONE Limited | www.iotone.com | Accelerating the Industrial Internet of Things 4

    Selling to Made in China 2025: Opportunities & Challenges

    Current climate of Industrial IoT in China

    Source: World Economic Forum Industrial Internet Survey, IoT ONE Industrial Survey (2016)

    Figure 8: Barriers to Industrial IoT Adoption for

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