Day 1 C2C - CAICT: China Strategy and Internet Development

Zhangyanbin

Industry and Planning Research Institute, CAICT

Internet+: China ICT strategy & internet development

Background of“Internet+”

Connotation of“Internet+”

Expected Tasks of“Internet+”

Support to“Internet+”

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Contents

The driving factors for Chinese economic growth include:

Demand Factor: export, investment and consumption included;

Resource Factor: labor, capital and resources included;

Innovation Factor: Factor upgrade and structural optimization brought

about by new technology renovation and system reform;

By releasing the long-term reform dividend and population dividend, we

leverage our original resource endowment in a low-cost way over the course

of globalization to unleash the huge economic energy.

However, as the global economic dynamic saw big swing, thus the growth

pattern traditionally relying on factor input turns out to be unsustainable, and

the innovation factor becomes a priority, in particular the new technology

renovation represented by Internet;

Growth is promoted by from being driven by production factor input towards

by improving productivity.

Macro-economic Background

-60

-40

-20

0

20

40

60

80

100

2013年2012年2011年2010年2009年2008年2007年2006年2005年2004年2003年2002年2001年2000年

三大需求对GDP的贡献比例

最终消费支出对国内生产总值增长贡献率(%)

资本形成总额对国内生产总值增长贡献率(%)

货物和服务净出口对国内生产总值增长贡献率(%)

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Internet Application: Consumer Internet Industrial Internet/Internet+

Inte

rnet

1970s 1980s 1990s 2000s 2010s

www.ARPANET

Raise basic concept

of InternetTCP/IP

Search

EngineE-commerce

Mobile Internet

IOT

Cloud

ComputingBig Data

Social

Networking

Internet Commercialization

200719951969

Industrial Internet Energy Internet

2012

Academic Research Production ServiceLife Service

Prior to 1995, Internet development was mainly driven by academic research.

After 1995, as Internet technology advanced rapidly, search engine, e-commerce and social networking had been profoundly changing people’s consumption like garments, food, living, traveling and entertainment. In 1995 – 2007, Internet offered life services.

After 2007, with gradual commercialization of cloud computing, SDN, IOT and big data, Internet provided production service more and more, i.e. supporting service for producers and manufactuers. Internet had been more and more closely integrating with

traditional manufacturing, energy, healthcare, education and transportation. Hence, the industry proposed the concept of “Industrial Internet”based on the combination of Interent and traditional industries.

In January 2014, Caijing magazine publicized the article From Consumer Internet to Industrial Internet, where it said that “Internet would create a new age that can change both consumers' individual behavior and all industries, the government and the whole

society as well”, which was called “age of industrial Internet”

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Internet has become the core driving force in Industrial Reform

In 2014, China’s ICT industry grew by 11.4% year on year to a total of 15.5

trillion yuan in output, still higher than GDP growth rate. If at such a rate, it

was expected to achieve the target set by the 12th Five-Year Plan, which

was 16 trillion yuan.

In 2015, China’s information and communications service sector got

revenue at 1.9 trillion yuan, up by 13.1% year on year, among which:

Internet-based business revenue stood at 1.14 trillion yuan, up by 30.5%.

The ICT manufacturing grew at a rate of 7.9% .

The industrial structure continued to optimize. The share of ICT service

revenue was expected to rise to 34.4%, 1.2 percentage points up from the

previous year; Since 2010, the annual growth rate has kept at 1 to 2

percentage points higher.

5

23.8%

20.5%

17.8%

12.8%11.4%10.40%

9.20%7.80% 7.70% 7.50%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

2010 2011 2012 2013 2014E

2010-2014年中国ICT产业发展情况

中国ICT产业产值（亿元） ICT产值增长率（%)

GDP增速（%）

China’s ICT Industrial Development in 2010-2014

High-speed Growth of ICT Industry in China





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Contents

Different

Observations

“Internet+” is a new form of economic and social development that realizes in-depth integration of innovation

achievements by Internet with various economic and social areas to promote technical advancement, efficiency,

organizational reform and innovation and productivity of real economy, and widely takes Internet as infrastructure

and innovation factor.

How to perceive“Internet+”correctly

Official

Definition

Internet Companies: The crossover integration of IT with Internet as the core and various industries creates new

products, new businesses and new models and form new ecology linking all together.

Basic Telecom Operators: Internet is widely applied in various fields of production and service, thus forming a new

form of economic development.

Traditional Manufacturers: The process of diffusion, application and in-depth integration for new-generation IT with

Internet as the core in various economic, social and life sectors.

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Inclined to traditional concept of informatization and focus on network-oriented connection and information flow to solve the problems with

efficiency and management, more taking on the physical reaction.

“Internet+” is a new phase of deepened development of IT application and a new form of development based on “+ Internet”.

——Shift from tools to infrastructure, just like the power revolution a century ago.

——Emphasize putting issues into the open and sharing concepts or crossover and innovative mentality of Internet

——Emphasize the initiative of Internet in developing new economy and creating new momentum and also platform-based data aggregation and

in-depth application to generate chemical effect and amplification effect.

How to perceive“Internet+”correctly

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“+Internet”

“Internet+”

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“Internet+” will drive the Internet reform to the core of industries

Basic

Support

In-depth

Application

Promote transformation & upgrade

of traditional industries

Foster & develop new business types

and new model

Improve social and

livelihood security

Network Service Platform of Sany Heavy Industry

Remote Monitoring

Forecast & Early Warning

Remote Diagnosis and Maintenance

Enterprise Control Center (ECC)

Remote EngineeringMachinery

Cloud Hospital,

Smart Healthcare

On-line Education

“Internet+”

Backbone Network/ MAN/Access Network

IDC CDN

Reverse Penetration:

Internet converges with different industries

in different degrees and at a different time.

Converging with the tertiary industry in the

first place and to the deepest extent,

Internet gradually integrates with and

penetrates into the 2nd and 1st industries.

Path of “Internet+”-oriented converged development

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Time of convergence

Degree of convergence

1st industry2nd industry3rd industry

Finance

Accommodation

Logistics Catering

Entertainment Tourism

Agency Culture

Retail Real Estate

Individual Consumption

& Service

Traffic Livelihood

Healthcare

Public Service

Education

Governmental Affairs

Farming, Forestry,

Animal Husbandry,

Side-line Production

and Fishery

Manufacturing

Energy

Current: Overall

Penetration of Internet

into Manufacturing

Public Service

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Contents

Guiding Opinions propose 11 dedicated campaigns and identify 40 key tasks

Urgent tasks of transformation & upgrade

Coordinate Manufacturing – Modern Agriculture

Smart Energy – Efficient Logistics

Integrate and create emerging business types

Universal Finance – E-commerce

Most concerned by the general public

Green Ecology

Basic support converged with innovation

Entrepreneurship & Innovation - AI

Key task direction

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“Internet+”

Dedicated Campaigns

Energy

Manufacturing

Agriculture

LogisticsFinance

E-commerce

Public Service

Traffic

EcologyEntrepreneurship &

Innovation

AI

Integrate &

create emerging

business types

Urgent tasks of

transformation

& upgrade

Most concerned

by the general

public

Basic support

converged with

innovation

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Improve innovation of

national manufacturing

promote in-depth

integration of

informatization and

industrialization

Smart

Manufacturing

Customization Network-based

coordination

Service-oriented

transformation

Combination

《Made in China 2025》

“Internet” Coordinated

Manufacturing

As a generic technology and a bonding tool,

Internet can realize efficient coordination btw

businesses and individual users, businesses

and corporate users and businesses and

industrial chain, which will help improve

industrial quality, efficiency and upgrade.

Industrial manufacturing is an

important pivot of national

economy and a treasured tool of

development upgrade.

Priority Interpretation: “Internet+” coordinated manufacturing

Production

Pattern

Organization

Form

Management

Method

Business

Model

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Status Quo of Domestic Manufacturing Development

Low production efficiency, 1.6, 2.3 and

2.4 times of US, Japan and Germany in

energy consumption of unit added value

for manufacturing

Improper industrial structure

Decentralized manufacturing resources

Mal-distributed manufacturing

enterprises

Growing labor pressure4

According to calculation of

manufacturing power indicator system

by CAE, our domestic

The proportion of labor aged 15-64

started to go below 70% in 2010 and

would get to the peak in 2015.

Our national labor participation rate

and labor population will turn negative

in 2030

1 Big but not strong manufacturing

Extensive Development Pattern5

3 Unbalanced Industrial Development

The wholesale price of an

Apple cellphone is $178.96,

among which China can get

only $ 6.5.

Ratio of technology-intensive industries and production-type

service sector is low

2 Absence in the high end of value chain

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Competitiveness Original Current Improvement

Capacity (10,000 unit) 100 200 One time

Plant employment 1624 476 lower by 70%

① Layout: Flow model –based and flexible layout

② Front-process: highly flexible automation line

③ Logistics: flexible and unmanned smart distribution

④ General Assembly: highly flexible custom-made general assembly

⑤ Digital & smart: Full-process integration and interconnection with

iMES as the core

Case: Shenyang Refrigerator Plant of Hai'er Group realized overall management and flexible

manufacturing by monitoring ten thousands of sensors on every production line, which can

support over 500 models of lean production. It has become a factory of fastest production pace

and widest models undertaken within the global fridge industry.

Smart InterconnectionLogisticsFront-process General Assembly

To take smart plants as the medium

to promote convergence and

application of Internet technology in

production, support smart

transformation of manufacturing and

create open, sharing and

coordinated smart manufacturing

industrial ecology.

Task 1: Vigorously develop smart manufacturing

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Support enterprises in their

innovation on service model and

business model based on

personalized products via Internet

and providing decision-making

support to enterprises in

customization.

Case: In the garment custom-made model of Red Collar Group,

consumers can directly raise their demands on the service platform,

then the flexible production line can give immediate response. This

model can not only control the production cost, but also satisfy the

users' demands to the maximum extent.

Custom-

made

Platform

Order-placing

by users

Flexible

Production

In the condition of sluggish

textile and garment industry,

Red Collar Group scored

high-speed growth in

orders and operating

revenue by over 150%.

Task 2: Develop large-scale Customization

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Case: In the 31000 components and parts of ARJ21 regional jet by

COMAC, over 77% are developed and manufactured among 104

suppliers in coordination in over 10 countries.

Fully leverage the leading role of

backbone enterprises in

manufacturing industry and the

service capability of public

platforms, promote Internet

orientation of diversified

manufacturing resources to

effectively realise industrial

coordination.

Task 3: Improve network-based coordinated manufacturing

Digital & network-coordinated R&D platform

4500 engineers and management staff

Digital

Administration of

whole-machine

digital prototype

Full 3-D

digital

simulation

Virtual rollout

of airplanes

Coordination Design, test and manufacture simultaneously

Region expansion: global coordination (26 overseas first-grade suppliers)

Application expansion: expand from R&D and production to trial voyage

and customer service

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Encourage traditional enterprises to

launch value-added business

oriented to full lifecycle of products

via Internet technology, which, on

one hand will expand the value

room of products, and on the other

hand will drive the full-link quality

and efficiency improvement of

enterprises through effective

integration of data

Task 4: Accelerate service-oriented transformation of manufacturing

The successful application of Sany's engineering

machinery networking service improves the working

efficiency greatly, enhances product differentiation and

form the core competitiveness of enterprises.

Network Service Platform of Sany Heavy Industries

Collect and store hundreds of data on various types of machines of Sany

Aanalyze the typical behavior of users in operation in a timely manner

Offer customers optimized solutions and comprehensive service

including real-time monitoring of equipment operation

Remote Monitoring and

Maintenance Platform

of Engineering

Machinery

Big Data Mining-based

Analysis System of

Working Condition

Smart Mobile APP Self-

service System

Usage

Effects

Service-based Manufacturing Model of Sany Heavy Industries Network

Host Numbering

Network Address

Remote Engineering &

Machinery

Real-time Mapping

Remote Monitoring

Prediction & Early

Warning

Remote

Diagnosis

Monitoring & Administration Platform

Network Access Center

Big Data

Storage & Processing

Active Maintenance

Access to about

100,000 devices

Smart Terminals

Mobile

Internet

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Contents

Strengthen leadership

Organize trials and pilots

Promote implementation in an

orderly way

Implementation

Create environment

Consolidate basis

Increase support

Improve network support capability

Enhance innovative development capability

Enhance talent and intelligence support

Create open and inclusive environment

Create environment for fair competition

Create environment for overseas expansion

Financial and capital support

Financing support

“Internet+” Action Supporting System

Twenty five specific support measures are proposed regarding seven aspects of consolidating development basis, strengthening driving force of innovation,

creating relaxed environment, expand overseas cooperation, enhance intelligence development, increase guidance and support and do well organization

and implementation, etc.

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Lay solid foundation — foundation for industrial development

New demands of“Internet+”

Promote the strategy of “Broadband China”, implement the requirements of State Council for speed-up and tariff cut and

accelerate the 4G network development and next-generation Internet commercial deployment

Study the industrial Internet architecture system and build an open national innovation experiment and verification platform

Consolidate network basis

Specific Development Measures

Offer people-to –people, people-to-machine, thing-to-thing

connection of contents and application

provide highly reliable, low-latency, large-capacity and

wide-covering network access

Flexible adaptation of network to application change,

interaction of cloud resource and network

Deeper and wider customization and openness of network

capability and business

More autonomous and controllable IT and equipment

support

Safer and more reliable network, data and personal

information protection

Improve platform building such as sensing network, industrial cloud service and big data system

Properly deploy data center and content distribution network

Strengthen application basis

Make more efforts to achieve breakthrough in those weak links in core chip sectors

Accelerate the promotion of R&D and application on cloud operating system and industrial control real-time operating system

Substantiate industrial basis

Enhance security protection of information network infrastructure and users’ personal information protection

Improve the network safety monitoring and evaluation system and explore to set up the certification system for data security flow

Guarantee security basis

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Create open and inclusive industrial policies

Break industrial barrier, and relax the restriction on market access for integrated products and

service

Implement Opinions on Deepening System Reform and Accelerating Innovation-driven Development Strategy

Reform the industry access system, formulate and implement the negative list of industrial access and break

improper access barriers

Currently, the regulators in various industries are carry out relevant work

Formulate and implement the negative list of Internet access in various sectors and allow

equal access by law to areas not included into the negative list management

Implement the Decision of the Third Plenary Session of 18th CPC Central Committee : launch unified market access

system, and based on the formulation of negative list, various main market players can equally get access to areas

outside the negative list

The introduction of negative list management model into domestic management is identified

Currently, the cross-border e-commerce trial is introduced only in Hangzhou

Continue to deepen telecom system reform and accelerate entry of private capital into basic

telecom business

As the basic conditions in telecom area are in place, trials can be carried out.

To adapt to market situation requires that market access system be reformed, the ongoing and ex-post oversight be

strengthened and the reform of mixed ownership system be moved forward

Currently, the reform actions are being taken on mobile resale commercialization, broadband access trial and

organization of Iron Tower Company.

Accelerate and deepen commercial system reform and promote liberalization of investment

and trade

Implement the requirements about commercial system in the Decision of the Third Plenary Session of the 18th CPC

Central Committee and Notice of State Council on Circulating the Reform Plan of Registration System for

Registered Capital

The investment and trade liberalization also requires reform and innovation in investment management system,

foreign exchange management, financial management and customization supervision.

The industry and commerce administration has realized registration of subscribed capital and the system of

license first, operating permit second.

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The amendment of Securities Law and the accelerated reform of registration system for stock issuance to lower the financing threshold

Accelerate the roll out of emerging financing section to lower the financing difficulty

Seven emerging industries of strategic significance and those identified by other national industrial plans

“Ten major enterprises of key development fields for “made in China 2025”

“Internet+”: enterprises of technical innovation type and those of business model innovation type and other innovation types

Key support

Establish a multi-level capital market

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Implementation —— by ministries and agencies

Ministries and agencies: Effectively match overall planning, platform building, information resource sharing and setting of convergence standards as well as

policies, etc.

Inter-ministry joint conference

system (office in NDRC)

“Internet+”Expert Consultation

Committee

Innovate policy trials in

different areas and by different

agencies

Implement major projects or

project pilots

Strengthen leadership Organize trials and pilots

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Local governments: Coordination in the vertical and work distribution in the horizontal guide proper allocation and efficient use of local resources.

Sign strategic cooperation agreements on “Internet” in

Shanghai, Tianjin, Chongqing, Sichuan, Guizhou,

Shenzhen and Changsha

Sign strategic cooperation agreements on “Internet” in

Shanghai, Shandong, Fujian, Yunnan and Ningbo

Local governments are

taking faster actions

Study and formulate the locally fit “Internet+” action plan

Improve service, courageously explore and draw on success experience with

each other

depend on execution capability and potency！

Implementation —— by local governments

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Thank You For Your Attention！

Technology

Day 1 C2C - CAICT: China Strategy and Internet Development