Intelligent Internet Bonanza to Be Fully Exploited
China is embracing a revolution that splices the latest information technologies with conventional manufacturing and the service industry. Envisioned in the Internet plus action plan is a brand new system based on big data and intelligent networking that is believed to boost the quality and efficiency of the Chinese economy, hatch an array of emerging industries, and facilitate mass entrepreneurship and innovation.
Its aim is to integrate mobile Internet, cloud computing, big data, and the Internet of Things with modern manufacturing to encourage the healthy development of e-commerce, industrial networks, and Internet banking, and to help Internet companies increase their international presence.
Anyone Can Start a Business
Certain elements of the Internet plus have already materialized in Chinese life. Online shopping now prevails among young consumers, with such e-retail websites as taobao.com and jd.com often preferred over bricks-and-mortar stores. Social networking has reshaped the way people read and interact, the most popular services at present being QQ and WeChat. Taxi-hailing apps, dominated by Didi, enable passengers to order rides from the closest service providers, licensed taxi drivers or private car owners, at any time on demand via GPS and e-maps. Payment can be made online later, which has upset the conventions of the taxi industry, but is welcomed by consumers for its convenience and lower charges.
The online activities of Chinese netizens, now numbering 700 million, that cover almost all aspects of life including reading, shopping, socializing, and entertainment, constitute an ecosystem of the Chinese economy. When data on them are collected and studied, they can yield valuable information that guides the operation of varied economic sectors, such as commerce, finance, and manufacturing. A clearer picture of the demands of the people contributes to effective economic restructuring and upgrading, and boosts the growth of new types of businesses.
In the 2015 government work report, mass entrepreneurship and innovation is cited as an engine to drive development. At a press conference during this year’s session of the country’s top legislature, the National People’s Congress, Premier Li Keqiang said: “I have visited venture cafés and makerspaces and seen that the young people there all have brilliant ideas. When their ideas are put into practice and produce concrete results, they boost market demand. I believe there is a large number of such people with outstanding talent in China. We must lift restrictions so that they can put their talent to best use.”
Earlier this year China established a RMB 40 billion fund for venture capital investment in emerging industries, adding to the existing reservoir of non-governmental venture capital funds that amount to RMB 1 trillion or more. This huge cash pool offers strong financial backing for the mass entrepreneurship and innovation the Chinese government advocates. Meanwhile, there are 1,600-plus startup incubators across the country, which are at present brooding more than 80,000 newborn businesses whose employees exceed 1.75 million. These all lay a solid foundation for mass entrepreneurship and innovation.
New Businesses, New Lifestyle
The Internet is an integral part of our lives. We turn to it for new jobs, entertainment, business opportunities, and much more.
Many experts hail the Internet+ as a new information revolution that upgrades the Internet from an information transmitter to an intelligent responder that can offer better services.
The e-commerce phenomenon, which swept the globe, set off a surge in information consumption and an explosive growth in startups. Qingyanliu, a rural community of less than 2,000 residents in Yiwu City, Zhejiang Province, is nicknamed Taobao village, as all local households run online businesses on the e-retail platform taobao.com. They sell not only commodities but also a good variety of services. For these people the Internet is more than a tool for making a living; it defines modern life. Last year, the value of all e-transactions in China hit RMB 13 trillion, marking a 10-fold increase in a decade.
Internet-based finance has galvanized the conventional financial industry and delivered new and better services including mobile payments, third-party payments and P2P lending, giving customers access at a click. In 2014 alone, 1,228 P2P financing platforms were created, and the national total of their outstanding balance of loans had exceeded RMB 100 billion by the end of the year. Meanwhile, there are 128 crowdfunding online platforms across 17 Chinese provinces. Also in 2014, Chinese people made 4.524 billion payments through their handsets, valued at RMB 22.59 trillion, growing by 170 percent and 134 percent year-on-year respectively.
Another new model of e-commerce is the Internet+fund. Fund selling online has outpaced that offline. Other financial sectors such as insurance, the stock market and banking have also undergone robust development after jumping on the Internet bandwagon.
The hallmarks of the conventional Internet are freedom, openness, and sharing, while the emerging intelligent Internet has the merits of greater convenience and security, and allows for individualized management and pay-as-you-go services. It has given rise to an independent Internet industry, which will merge with and transform all other industries for the better.
In the industrial revolution sparked by the intelligent Internet revelation, medical care and health management, systems of mobile e-commerce, e-finance, and e-payment, as well as public services, will all branch off into business types and services never seen before. There is also huge potential for the intelligent Internet to bring about substantial changes in such realms as administrative management, agriculture, education, and tourism. Our high expectations for the Internet+ are justified.
From Manual to Mental Power
China became the world’s largest manufacturer in 2010, but far from a manufacturing power due to the want of internationally competitive strategic enterprises and products, and key technologies and equipment. This year, China revealed the “Made in China 2025 Planning Outline,” after 18 months of study and debate by 150 or more experts at the Chinese Academy of Engineering. It sets specific goals and outlines the measures needed to upgrade China from a manufacturer of quantity to one of quality in about 30 years. The manufacturing industry it envisions is one that is defined by strong innovation, excellent quality, green development, optimized structure, and an abundance of high-caliber professionals.
China’s Industry and Information Technology Minister, Miao Wei, said the key for the country’s manufacturing industry to shift from growth in size to growth in competitiveness lies in intelligent manufacturing that is materialized by incorporating industrialization with informatization. It is estimated that the industrial Internet can improve corporate efficiency by 20 percent and reduce costs by as much and emissions by 10 percent.
The Internet+manufacturing model will increase the technical input in Chinese products and move its enterprises into the medium to high ends of the global industrial chain. So far, China is still at the industrialization stage, leaving huge space for the mobile Internet to reform and transform conventional manufacturing and thereby beef up the strength of Chinese manufacturers.
China formerly topped the world’s processing trade, primarily owing to its low labor costs. It is now losing this edge. And what’s more, production has been further divided, resulting in the labor required to make small product components less complex and even more repetitive. This makes possible wide application of industrial robots. At the end of 2013, the Ministry of Industry and Information Technology released a document on promoting the growth of the industrial robot industry. It set out the goal of expanding the market share of domestic industrial robots to 45 percent by 2020. It also mentioned fostering three to five enterprises in the field that can compete globally.
“Industrial Internet is a priority sector in China’s development, as it is in keeping with the country’s new round of industrial revolution and industrial reforms,” said Minister Miao. “Industrial Internet is among the first applications of Internet plus and has huge growth potential. There is broad awareness among Chinese enterprises that Internet technologies can heighten their overall competitiveness.” An international agency has predicted that industrial Internet could add another US $3 trillion to China’s GDP in the coming 20 years.
Value of Individuality
Today, the majority of large-scale consumer products is still mass produced, the most economical production mode. But it runs afoul of the growing desire of contemporary consumers for individuality. With the Internet, which gives people access to all manner of materials, parts, and tools, anyone can design and produce a product. The Shenzhen-based Chaihuo Makerspace, founded in 2011, aims to provide innovators a free and open environment of collaboration. Its name means firewood in Chinese, alluding to the Chinese idiom that when more people help collect firewood the fire burns brighter. On January 4, 2015 Premier Li Keqiang was welcomed as an honorary member of the group, so contributing his bundle of firewood to the flame of innovation.
Last August, Chaihuo’s intelligent robot project Ai.Frame raised more than US $20,000 on crowdfunding website Kickstarter. This money brought to life an open-source humanoid toy robot that can make over 300 movements following commands given via Android apps on the player’s mobile phone, a game or PC controller, or a pair of robotic arms. “We hope to proliferate this innovative idea and mode, so that they will yield greater values and be integrated with real business,” said Chaihuo founder, Pan Hao.
Entrepreneurship and innovation are the calling cards of Shenzhen, which is a haven of Chinese makers. As these creative minds put their ingenious ideas into practice, which resulted in substantive products, this coastal city recast itself from a source of cheap knock-offs into a hub of ingenious designs and creations.
The Internet plus also sets the stage for smart urban management, in which average citizens play a more active role in the formulation and provision of public services. According to Fu Zhiyong, vice dean of the Information Art & Design Department of Tsinghua University’s Academy of Art and Design, his students conducted a City Care program to collect residents’ opinions, the proposals of their communities and their neighbors feedback via mobile terminal devices. Such information was then passed on to relevant authorities, whose responses and consequent corrections were also made public to residents via the same devices.
All conventional industries will be subject to the influences of the Internet in the future, and an ocean of business opportunities will crop up in this course. Department store chains, including BHG, Yintai, and New World, have entered partnership with online retailing giants Taobao, Tmall, and Tencent, and banks have rolled out a collage of Internet-based financial products. Likewise, leading Internet conglomerates like Baidu, Tencent, and Alibaba are making forays into conventional industries ranging from taxi booking, dining, mapping, video streaming, group buying, and tourism to mobile payment, in a bid to entrench their holding in the market.
“The Internet plus bears similarities to the U.S. conception of the industrial Internet,” said Dr. Huang Qian, head of the advanced technology lab of SuperMap Software Co., Ltd. “It is expected to take advantage of the Internet, which represents an advanced productive force, to expedite the upgrading of China’s manufacturing sector, which is comparatively obsolete, in terms of efficiency, product quality, innovation, cooperation, and marketing capacity. The acceleration in the flow of information will invigorate the flow of things. This plan also echoes the Belt and Road Initiatives in shoring up the global influence of Chinese industries as a whole,” the senior engineer added.
