The Industrial Internet was spun off: the "outcast" or the "prince" of the manufacturing giant?

Fashionable spin-offs and listings may not be the miracle medicine of the manufacturing giants.

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The author | Yu Kuai

Editor| Wang Yafeng

If you want to select the keywords of the industrial Internet in the past three years, "unbundling and untying" is counted as one.

Splitting the industrial Internet business and promoting its independent listing has become a new trend for large industrial enterprises.

In recent years, Kaos and Meiyun Zhishu have independent listing plans, and XCMG Information is currently in the listing counseling period. Some enterprises have previously been more thoroughly separated, and the tree root interconnection, industrial Fulian and Lanzhuo have all become independent.

The story of the separation of industrial Internet companies and their rush to the market may not be as simple as it seems.

1

Side A: Helplessness and grievances

The A side of the crux of the traceability spin-off can be roughly summarized as: shareholders do not like, the group is not happy, and the new business is not enough to eat.

A brief overview of the situation of industrial Internet companies under large manufacturing groups.

The threshold is high and the profit is far away.

Industrial Internet enterprises with the platform as the core, especially the double-cross platform, have high technical thresholds, difficult construction, long ecological cycles, and long revenue and benefit cycles. Although decades of industry accumulation can eat through industrial knowledge faster, it is not overnight to build a healthy ecology.

Burn more money, the pattern is heavy.

Heavy resources, heavy funds, heavy talents, heavy knowledge. Innovative business technology must rely on huge investment over the years to occupy the head. And technology, ecology, talent, operation... Pick any one of them as a banknote shredder.

In a word, the business model path of the industrial Internet track has not yet been fully formed. The further you go, the more contradictions between the parties become apparent.

The contradiction between the enterprise and the shareholder: the shareholder does not like

"From the perspective of the whole group, it is difficult for a department that continues to invest in R&D and over-invested in research and development while continuing to lose money, and it is difficult to survive in a traditional organization. The PE value of traditional listed companies is placed there, has been burning money and market value, shareholders are not satisfied, the pressure is pushed backwards, and they have to consider separation. The CEO of a leading industrial Internet company told Leifeng Network.

Stock prices are difficult to support, PE is difficult to push, and traditional enterprises have general market value anxiety.

"The PE of high-tech labels can be dozens or even hundreds of times, and the PE of traditional manufacturing enterprises is more than ten times, and the PE of traditional manufacturing enterprises is very low, which cannot be compared with high-tech enterprises." Qin Li pointed out that traditional manufacturing enterprises are the old cannons of the industry, but in front of high-tech enterprises, dwarfs are inferior by a few points.

At the same time, the entire industrial Internet industry is in its infancy, and it is difficult to bring objective income returns to the main body during the investment period of several years.

Don't talk about income, but talk about growth rate?

If the growth rate of new business is not as fast as expected, or the growth rate of the group's main business cannot keep up with the burning speed of new business, profits shrink, and stock prices are even more inevitable.

In particular, investors in the secondary market have a keen sense of perception and different tolerance for corporate difficulties, and when they encounter negative factors, they may lead to a large sell-off.

After all, not everyone trusts your company's new business enough, and not everyone has the patience to dormant enough to pay for your years-long dreams.

For large listed enterprises, being responsible for the stock price and shareholders is one of the primary responsibilities. As a public company, they must consider the adverse effects of performance on stock prices.

Contradictions between people: internal unhappiness

Shareholders are not happy, and compatriots within the group are not necessarily smiling.

In a dialogue with Liu Zongchang, chief data officer of Industrial Fulian, and executives of Xugong Hanyun, Leifeng Network once talked about the conditions for the large-scale promotion of the industrial Internet and the elements of future industrial interconnection competition, talents are keywords.

"Plenty of talent pool. At present, there is an urgent shortage of three types of compound talents, namely high-end skilled talents, high-end research and development talents, and high-end management talents. ”

"Global competition is also the competition of core technology, the competition of innovation, around the high-end manufacturing industry chain key layout, technological breakthroughs, the accumulation of intellectual property rights will become an important competitiveness of enterprises." Liu Zongchang stressed that in the field of high-end manufacturing, talent is the first resource.

Within the group, the scientific and technological attributes of technical departments such as industrial Internet, Internet of Things, and IT are higher than those of traditional business departments.

When BATH and innovative enterprises recruit high-level talents from around the world with millions of annual salaries, in order to attract and retain talents, it is inevitable that the salaries of new business units and business personnel will be inverted.

In this way, employees in the main business department contribute most of the group's revenue, while the input of new business and market expansion are increasing costs, driving down the revenue growth rate of the entire company, and the profit performance is affected, and the latter is better treated.

"One is working hard to make money in business, one is investing huge amounts of money or even losing money, and the latter's salary is still higher than yours, and there is some imbalance in the heart." Cheng Junhe revealed.

Contradictions between departments and departments: It is difficult to unify interests

The contradiction between the two is not only between people.

For example, more expensive charges between departments.

"For example, a well-known bank, its AI department and business department are also party A and Party B relationship, the bank needs the AI department to do a risk control system, the latter's fee can reach 5-10 times the external market."

Wang Junlin said that of course, the in-house purchase is to take into account the security of data, core secrets and other security, and the second is the KPI at the group level, in other words, whether objective and subjective, in fact, there is no choice.

This is not an isolated case, it is widely present in large group companies, including large traditional manufacturing enterprises.

On the one hand, the traditional business department takes the landing as the core, hopes that the business is supreme, and the technology department serves the traditional business; on the other hand, the technology department believes that the technology itself is a long-term thing and does not want to be reduced to pure business support.

"It's hard for us (the business unit) to ask for them, I asked for 8 points, and sometimes they can only give 6 points, and they can't scold, of course, it's useless to scold." After all, they are all under the same roof, and it is a colleague relationship, not a party A relationship. Cheng Junhe told Leifeng Network.

Industrial Internet, Internet of Things technology and other departments in the daily operation, and the business department is more "partners" rather than interest communities, the new business work results are measured according to their own budget or project acceptance, not linked to the performance of the business department, resulting in low enthusiasm for cooperation.

"When I talk to you about business, you talk to me about human feelings. I talk to you about human feelings, and you are full of money. This model of cooperation is destined to be difficult to last. ”

Therefore, one seems to pay higher fees but fail to get better products and services, and one seems that the other party has raised a bunch of inexplicable needs, which makes no sense.

"Outside 500,000 you sold me 1.5 million, and scolded us at the debriefing meeting, all I need is you to take money to do things, get things done, that's all." An employee of a group business department said indignantly.

Privately spraying each other, the quarterly report and annual report meetings in front of the leaders "friendly exchange of views" became a reserved project.

In fact, the new business is also depressed.

One is that innovation is harder.

Existing within the enterprise, the core requirements of the industrial interconnection department come from the business units of the same company.

The frequency is small, the opportunity for improvement is small; there is no internal competitor, the product improvement power is insufficient; one-time delivery, personalized development, it is difficult to form a replicable product, and it is impossible to last.

Enterprises are using their own competitive products, and it is difficult to improve the ability of enterprise business products.

When it exists as a subsidiary or a public company, it has a wider coverage, a larger customer base, a richer scene, and a higher frequency of functional requirements.

On this basis, the ability to better accumulate and abstract it into generalization can be fed back to the business department of the parent company for faster growth.

Second, genes and thinking are difficult to change, and demand is difficult to meet.

Traditional manufacturing enterprises have been deeply engaged in the industry for decades, the understanding of manufacturing system architecture has basically been deeply rooted, and the huge difference in the thinking concept of new things is not easy to break the original shackles.

This has led to the rapid increase in the speed of business iteration and expansion in the Era of Industry 4.0, and under the existing and huge positioning and system of traditional enterprises, it is difficult to effectively meet the organizational structure, capital structure, talent introduction and other needs of the Industrial Internet, and the Group cannot meet them one by one.

Taking the automotive industry as an example, an industry insider who works in a traditional main engine factory once told Leifeng Network:

Strategy determines the talent gathered in the environment. These "talents" think that 1+1 constitutes 2; while those who support informatization and intelligence are more in favor of the uncertainty of the world, they think that 1+1 > 2, or 1+1

The Group's decisions on the management of new business, development strategy, appointment and dismissal of personnel, financial management and other aspects will have an impact on the future development of the enterprise.

Within the group system, the industrial Internet sector must look left and right when manufacturing and development planning, and minimize the adverse impact on the group.

In fact, for a new business that is in the investment period, as an internal department, it is obviously an extremely difficult goal to achieve by taking into account growth and making money, and balancing the contradictions of all parties.

How to find a balance between profitability and growth, various contradictions?

In the words of Nadella's book Refresh, every person, every organization, and even every society should click refresh when they reach a certain point—to re-inject vitality, to re-energize, to reorganize and rethink the meaning of their existence.

If the parent company does not want to be dragged down by the new business itself, nor does it want to drag the new business itself. Spin-off and independent listing have become the fastest and most obvious roads.

2

Side B: The temptation from "more +"

More money, better stories

In the parent company, through the spin-off and divestiture of the industrial interconnection department to achieve self-reduction, after the cost center divestiture, you can get more beautiful financial data.

If it can be listed after the spin-off, the parent company can not only obtain excess investment benefits by holding shares, but also increase the market valuation of both the parent company and the new company.

For industrial interconnection enterprises, in the early stage of the barbaric growth of the industry, the business needs more resources and financial support, whether it is a spin-off or an independent listing, it can be directly connected with the capital market, and the financing channels are greatly expanded.

In fact, the industrial Internet companies running out of the large-scale manufacturing field are not idle people.

In the industrial Internet market dominated by industrial knowledge, they have a wealth of industrial scene accumulation, industrial mechanism model precipitation, strong industry resources and a stable and solid work style from the day of birth.

With resources and industry barriers, after the spin-off or independence, it is easier to obtain the blood transfusion of the capital market.

So we can see that in 2021, after Helkaos COSMOPlat announced the completion of more than 1 billion yuan of B round financing, the valuation doubled to more than 15 billion yuan.

In 2017, the first round of financing of Treeroot Interconnection received hundreds of millions of yuan, and after that, there were funds in the account for 3 consecutive years, the amount of financing ranging from 100 million yuan to 500 million yuan to 800 million yuan, and on November 30, 2021, Treeroot Interconnection was listed in the "2021 Global Unicorn List" with a valuation of 6.5 billion yuan.

InDICS, aerospace cloud network, received a strategic investment of 2.632 billion yuan in March 2021, with a post-investment valuation of 10 billion yuan.

XCMG Information has doubled its value from 10 million yuan today, and is currently in the listing counseling period.

The industrial Internet platform incubated by TCL, Gechuang Dongzhi, also received a series A financing of 100 million yuan from Yunfeng Fund.

Wu Jun expressed a view in "Top of the Wave" that a "professional" company will definitely perform better in specific fields than an all-round company.

From the perspective of capital, in a large enough enterprise, the synergy effect may not be obvious, and capital may not need the startup to have too many diversified businesses, they are more inclined to invest in different enterprises to achieve risk diversification.

He Dongdong, co-founder & CEO of Tree root interconnection, also told Leifeng Network that a very important criterion for judging platform-based industrial Internet companies is whether the platform operates independently and whether the shareholders of the enterprise have top VCs.

"Finding like-minded investors with business ideas and investment ideas can guide invested companies to have a more long-term vision." He Dongdong said that behind successful enterprises there is often the shadow of first-class VC funds, "really understand the industry, long-term venture capital, will really invest in, willing to use money to burn research and development, earn the future." ”

Industrial Internet start-ups, under the inevitable trend of Industry 4.0, have a huge imagination space, with strong capital as backing, they can try their best to achieve the industrial digital story in their hearts.

From being at best a large department in the manufacturing enterprise system, solving the problems of the enterprise itself, to the vast market that stands after independence,

It is equivalent to going from a towering tree (within its own system) to a forest (the whole market).

Just like Alipay, after becoming independent of Taobao, it has grown from a payment tool to a huge Internet amount of giant beasts, and the industrial Internet enterprises after the spin-off and independence also have the potential to grow into industry 4.0 trendsetters.

Lighter movements, more power

The cause of the spin-off is the result of digitalization impacting traditional industries.

Although it is a long-term route, but the field of science and technology, digital field is changing with each passing day, the starting line stage, the placeholder is very important, one wrong step may lose the opportunity. Rapid growth, concentrated output, imminent.

In the new company, cutting off the shackles and lightly carrying out the battle may be able to speed up development.

Jump out of the system, independent development, no longer responsible for the short-term losses of the parent company, there is less unnecessary constraints and concerns.

At the same time, the decision-making mechanism and management mechanism of the new company have more independent decision-making power and the information transmission is more rapid. Under the flexible system, the needs of business iteration, expansion speed and talent introduction are met to a greater extent.

For example, when Shugen Interconnection was established in 2016, the original Sany team was only more than ten people, and nearly 70 people were recruited from the outside in the first year, and now, the number of Shugen employees has reached thousands, from various fields in the outside world.

Stronger motivation: the weight of defending the city after independence

To do a good job in the industrial Internet, it not only requires solid technical skills, continuous financial support, and compound talents, but also the company's own strategic positioning, deep industry understanding, and strong cohesion, consistent action and perseverance.

Within the group system, it may only be a business line of the enterprise, and whether it is done or not is related to the quality of life.

But for those independent enterprises, the industrial Internet track is their lifeline, and the importance of defending the city is a matter of life and death.

"We have to live with it, point it in, so we will fight with all our might." A number of industrial Internet company executives have told Leifeng Network.

In addition, after the independence of the industrial interconnection enterprise, the relationship with the internal business of the group is no longer only the relationship between the department, but the relationship between Party A and Party B.

After independence, to participate in market-oriented competition, the industrial Internet can polish its own commercialization ability through competition and reduce prices.

Behind the price decline, it is the human efficiency ratio, the improvement of the utilization rate of resources and funds, which is more conducive to the healthy growth of the company, and can also accelerate the elimination of pure money-burning attributes.

At the same time, if the new company is not well managed, it is very likely to be acquired by competitors due to lower costs, and this threat will also force the new company to develop well.

Behind these factors point to a hidden core competitiveness that most people ignore: learning and transformation.

From this, it is also possible to roughly clarify which is more important, after all, the direction of the foundation determines the direction and the direction of the strategy.

3

The Two Perfections of the World?

According to the data, from January to November 2021 alone, domestic A-share listed companies issued 170 spin-off announcements. It is inferred from this that in addition to A-share listed companies, more companies may have spin-off plans.

The industry-wide and uniform spin-off independent action can be obtained from honey or yellow lian.

The first problem is maternal dependence.

Judging from the financial data, the business of many spin-off industrial Internet companies is still highly dependent on the parent company group and its subsidiaries. The product radiation surface is narrow, the scene is relatively single, and the comprehensive service capability is insufficient.

Single customer dependence is high, once the group has an unfavorable situation, the spin-off industrial Internet enterprises will be affected, and the risk is not controllable.

In addition, the matrix is the industrial cannon that understands the industry the most, and it is bound to face the soul problem of competition in the same industry.

The business world can never abandon the "human" factor, absolute trust and synergy cannot be formed between business themes, and the solutions or technologies of industry giants are inherently exclusive in the same industry itself.

The Industrial Internet involves a full range of transformations, and no company is willing to give its life to competitors.

New customer development, new industry expansion, and balanced market concentration are important challenges they are currently facing.

In the future industry 4.0 industry, the stronger the stronger, the weaker the Matthew effect will gradually become prominent, judging the maturity of a company's digital technology, but also from the R & D investment, industry knowledge and other indicators to more directly affect the company's existence of commercial orders.

The size of commercial orders and the size of the amount will determine to a large extent whether the company can attract more attention, solicit a new round of investment, and obtain more orders.

Therefore, there is no shortage of enterprises to remove the glass cover of the greenhouse, after the lack of parent company support, the transformation is slow, or even failed, and there are also spin-off subsidiaries facing many problems such as sluggish performance and difficult listing.

The second is the internal and external competition contradiction caused by "removing the big one and raising the small one".

Some groups will still build their own technical support centers after independent industrial interconnection departments. There are two reasons for this:

1, good to summon.

After independence and marketization, the entire market faced by industrial Internet enterprises, the business needs of the group inevitably appear to transfer the new enterprise's own business orders, waiting for the other party's business schedule, so that the group fell into passivity.

"If they can't do it, there are too many lists, the group needs to wait for the schedule, raise a team by itself, and be able to solve its own needs as soon as possible." Wang Junlin said.

The departments within the group can respond more quickly to their own needs and can truly serve the enterprise on call.

2. Ensure competition.

The industrial Internet has become a new highland for the efficient application of emerging technologies, and it is also the embodiment of core technical capabilities.

Behind the industrial Internet is the ability to interconnect production factors such as the human-machine material method, which is equivalent to the new infrastructure of the manufacturing industry.

At the same time as the potential department, there are also core R & D technologies, which also means that the competitiveness of the group's entire business group has declined, of course, there is also a sense of insecurity that "core card neck technology is in the hands of others".

Therefore, the self-built business technology department is enough to meet the needs of self-use, and can also be empowered externally, to a certain extent, to ensure its core competitiveness, and not to be clamped down externally.

When the external and internal technical support gradually grows and can be empowered externally, the interests are no longer highly consistent, and the commercial market is like a battlefield.

In the "we can do what they can do, they can sell we can also sell" in the open and dark struggle, hostility gradually rises.

"When enterprises pursue scale breakthroughs, there are urgent needs for internal and external innovation, but because of human factors and limited resources, they are two parallel or even mutually reinforcing lines, and there is often competition within the system." Pei Canshi told Leifeng Network.

Behind the glossy "group + technology multi-layer blessing" face, it may be the "left and right fighting" of the inside.

4

The spin-off is not the end, but the beginning

After the spin-off, the enterprise can be called strong technology, strong products, strong talents and strong management.

From the perspective of technology and product concept, emphasizing technology leadership will inevitably cost high; emphasizing richness, it will inevitably not be all fine products; emphasizing high products, it is difficult to have scale.

On the back of every positive word, there must be a regret.

When the market is stable, it is the corporate brand and power that push the business forward, but after the big changes in the market, the regrets hidden behind the positive words are fatal traps.

Any organizational innovation in history is a protracted war, the commercial field is a battle, not a war, the spin-off is not the end, and the listing is not a worry-free one.

The cross-border giants of all parties have strong funds, relationship integration, software platforms, cloud services and general communication protocols, relying on the advantages of platforms, communications, IC technology, business ecology, integration capabilities and so on, and have entered the market.

How the market is going, we wait for the answer of time.

Note: Qin Li, Cheng Junhe, Wang Junlin, and Pei Canshi are pseudonyms

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