Being developed for more than 20 years in China from 1995, the internet has passed its golden age and start-ups can rarely find new opportunity in this field. In 10 year ago, creating websites was regarded as a new industry attracting millions of people to engage in. Nowadays, website, or internet, has become infrastructure of almost every industries to promote them into digital age. In other words, internet as a new tech intelligentizes industries.
The development of internet is an typical example of many other new techs, including artificial intelligence, big data, cloud computing, IoT (internet of things), etc. Eventually, these new techs will become infrastructures to make industries more intelligent.
We believe using AI and other new techs to intelligentize industries is the trend in next decade. Many tech companies from China, USA, Germany and many other countries provide smart products and services leveraged by new techs to different industries. Under Road and Belt policy, it’s a good chance for tech companies to cooperate among nations.
On June 12, Germany-U.S.-China Intelligence Vision Forum will be held in Shanghai, China, where the experts of economy, new tech, enterprise and investment will gather, share and discuss the topic of intelligentizing industries in the forum. Click “Germany-U.S.-China Intelligence Vision Forum” for more information.
AI is transformed from a new industry to infrastructure
AI is a good tech to intelligentize industries, which is what many tech companies do today. However, AI was also regarded as a new industry and start-ups developed AI solution platforms to explore application scenarios at the beginning.
Universal AI solutions leads a new industry
AI was applied in the field with massive data accumulated at first. In the online advertising industry, many tech companies develop AI algorithm models to recommend ads accurately to their target users, which are based on historical ads recommend data and user portrait data. By using this models, the ads performance can be improved, so the ads platforms can get more earnings.
Using AI to promote precision marketing is a great business opportunity in the online advertising market, which grows in high speed. In 2017, the market size of China's online advertising reached CNY 382.87 billion (USD 56.86 billion), while this number is expected to exceed CNY 600 billion (USD 89.10 billion) by 2019, according to China Internet Development Report 2018, released by Internet Society of China.
Similarly, in digital media industry, tech companies use AI algorithm models to generate a tailored feed list of content for each user by analyzing the features of content. Leveraged by AI, a new type of content platform came out, such as Toutiao, TikTok and other products launched by ByteDance. In e-commerce industry, AI is used to recommend products to potential consumers, which is the secret weapon of Taobao and JD.com. Based on the same logic, some tech companies provide AI solutions for risk control and products recommendation to banks, insurance companies and other sets of finance industry. Typical China’s companies include 4 Paradigm (第四范式), Bairong (百融金服) and Tongdun Tech (同盾科技).
These AI applications we discussed above are mainly provided by the companies which provide universal AI solutions for many industries, rather than customized products for specific industries. In this point, AI became a new industry and was applied in the industries which is highly digitized by internet.
New techs intelligentizes traditional industries
These opportunities in internet have been occupied by some internet giants and start-ups. Intelligentizing traditional industries by new techs becomes a new trend. In security industry, the traditional surveillance cameras only have simple a function of recording videos, which increases video storage and transmission load. And the video quality is poor at night and in other conditions. With deep learning applied in computer vision studying, object recognition, especially facial recognition, was promoted a lot. A new kind of smart surveillance camera with facial recognition and edge computing abilities appeared, which met the government’s security demand exactly. In Skynet Project and Xueliang Project led by Chinese government, numerous of the smart surveillance cameras are being purchased and equipped these years. It was once the most profitable business among all the AI products.
The China’s security market size has grown from CNY 225 billion (USD 33.41 billion) in 2010 to CNY 745.2 billion (USD 110.67 billion) in 2018, with GAGR of 18.7%. Among it, the market size of the added value brought by AI increased from CNY 7.3 billion (USD 1.08 billion) in 2011 to CNY 225.2 billion (USD 33.44 billion) in 2018, with a GAGR of 63.2%. In this huge market with high-speed growth, SenseTime (商汤科技) and Megvii (旷视科技) earn the first pod of gold and grow to be the top AI companies in China, while HIKVISION (海康威视) and Dahua Technology (大华股份), the tradition surveillance camera suppliers, also leverage AI to upgrade their products.
Apart from security industry, AI is used to intelligentize many industries, including healthcare, retail, express, agriculture, manufacture, transportation and so on. However, the degrees of development among industries are different. The industries with low degree of AI development are always with low degree of digitization. Lacking in data, AI algorithm models can not be trained to provide business decision support. Jack Ma (MA Yun, 马云) said:
There are two things enterprises must do in the future. One is to record all the business by data, and another is to make data to be a business.
The essence of Intelligentization is the process of value mining and creation of economic and social production activities based one digital resources. In this point, IoT is a great tool to collect business data by multiple devices and sensors. For example, the smart camera is a typical device to record people’s behavior.
Besides, many other new techs also make contribution for industrial intelligentization. For example, cloud computing can provide computing and storage resources for massive data. Block chain can protect the security of data. 5G can raise data transmission speed a lot.
YOU Tianyu (由天宇), the director of EO Intelligence, raises a formula:
Intelligentization = big data + AI + IoT + cloud computing + block chain.
This formula reflects that industrial intelligentization relies on the coordination between different new techs, in which each of the new tech solves some specific problems.
Two types of innovation: improvement and revolution
Two types of innovation lead to Industrial intelligentization. One makes improvements for industry by adopting new business models or tech tools. Another makes great changes to the traditional industries by revolutionary tech. Let’s take a look of industry, agriculture and auto industry.
In some departments of industry, data in the production process are rarely collected, and some improvements are being made these years by industrial IoT platform and internet. By using various sensors and controllers with sensing and monitoring capabilities, the industrial production process can be recorded by data and transferred to the industrial IoT platform. Coordinated with industrial IoT platform, the industrial internet platform appeared. Connecting equipment, production lines, factories, suppliers, products, customers with one another, the internet platform can make overall analysis and give decision support, thereby greatly improving manufacturing efficiency and product quality, as well as reducing product costs and resource consumptions.
The typical American companies include GE, SISCO, PTC, AT&T, etc., German companies including Siemens, Bosch, ThyssenKrupp, etc., Japanese companies including Mitsubishi Electric, Fanuc, DMG MORI, etc., and Chinese companies including Haier, Huawei, Inspur, Foxconn, etc.
In addition, the internet also contains new business opportunities in the downstream of the industrial chain, and the typical company is Zhaogang.com (找钢网). It builds a website and uses it to connect steel suppliers with clients, as well as provides multiple services, including transportation, warehousing, machining, supply chain finance, data analysis, and so on. LANG Yongchun, the senior vice president and chief strategy officer of Zhaogang.com, said that:
If the manufacturing industry, including steel, is to be upgraded to an intelligent one, it must first improve its total factor productivity and labor productivity. Besides, it must make breakthroughs in technological innovation.
As the leading industry of the national economy, industrial development can directly reflect the productivity ability of countries. The State Council of China officially issued the document namely Made in China 2025 in May 2015, in which it gives the plan to make China to be a strong manufacturing country. In October of the same year, the Chinese and German governments announced that they would promote the Made in China 2025 and the German Industry 4.0 strategy to jointly promote industrial development. Under this background, the enterprises from China and Germany have cooperated actively in recent years.
Agriculture is another industry with low degree of digitization. Some companies develop agricultural data platform to collect data on crops, soil, pests and diseases through satellite remote sensing, drones and various sensors.
Plant protection by drones is one of the subversive innovative in agricultural industry. Carrying with smart camera and other sensors, the drones can spray medicines, seeds and powders among the plants, which can fly by ground remote control as well as autonomous navigated. The application of drones can improve agriculture working efficiency, save water and medicine. The typical Chinese companies include XAG (极飞科技), DJI (大疆创新), ZEROTECH (零度智控), Gaokexinnong (高科新农), and HIVE Robotics (蜂巢农科). Among them, XAG focuses on developing precision sprayed agricultural drone products. GONG Yuqin (龚槚钦), the co-founder of XAG, introduced in an interview that:
XAG is the first company to achieve autonomous flight in the world. Leveraged by AI, our drones can recognize crops and make decisions of the dose of pesticide to spray automatically, according to the severity of diseases.
What is the most revolutionary applications of AI? The answer must include autonomous driving undoubtedly.
After several years of exploration, a complete industrial chain of autonomous driving has formed. In this chain, the companies to develop autopilot algorithm are the core. They use high-precision maps for route planning, adopt AI chips for computing , integrate multi-sensor information, and develop autopilot algorithms to control the behavior of vehicles.
The typical American enterprises include Google, Tesla, GM, Uber, etc., German companies including Bosch, Audi, BMW, Continental, etc., and Chinese companies including Baidu, TuSimple (图森未来), Pony.ai (小马智行), Momenta, IDrivePlus (智行者科技), WeRide.ai (景驰科技), Westwell (西井科技), etc.
From 2014 to 2017, a number of autopilot parts and algorithm start-ups emerged in China, in which the number of algorithm start-ups is the most. The total financing amount of autopilot parts and algorithm companies reached CNY 779 million (USD 115.69 million) in 2016 and CNY 16.23 billion (USD 2.41 billion) in 2018, according to Qichacha.
At present, most China’s auto manufactories have the level 2 of autonomous driving capability. It is expected that the auto manufactories will expand production of the cars with level 2 autonomous driving capability from 2019 to 2020, and the cars with the level 3 and 4 autonomous driving capability will be used in some specific scenarios, such as ports, industrial parks, highways of specific sections, etc. For example, TuSimple develops level 4 autonomous driving algorithm for trucks, and focus on Chinese and American truck market. CHEN Mo (陈默), the CEO of TuSimple, said in an interview:
The truck industry has obvious problem urged to solve, and the market demand is large. The market size of the truck industry in China and USA reaches 1.5 trillion US dollars nowadays. In addition, compared with the autonomous driving algorithm of passenger car, the truck’s is less difficult to develop.
Recommend a top forum to you
The topic of industrial intelligentization is hard to give comprehensive research in one essay. So we’d like to recommend a top forum to you:
On June 12, Germany-U.S.-China Intelligence Vision Forum will be held in Shanghai, China. EqualOcean (a leading industrial tech media and investment research company in China), Axel Springer (the largest digital publishing group in Europe), and Business Insider (a financial and business news website media in USA) organize and invite experts of economy, new tech, enterprise and investment to this forum, including Finn Kydland (laureate of the 2004 Nobel Memorial Prize in Economics), Mark Schmitz (Partner of Lakestar, the top venture capital in Europe), LU Yongqing (陆永青, academician of Royal Academy of Engineering), LANG Yongchun (senior vice president and chief strategy officer of Zhaogang.com), etc. They will share and discuss the topic of intelligentizing industries in the forum.
Click “Germany-U.S.-China Intelligence Vision Forum” for more information.