(Image source: Unsplash)
When the "cold gun" of American software hit Chinese companies with a valuation of tens of billions, the call to accelerate the domestic substitution of software re-emerged.
On March 12, FIGMA, a U.S.-based design software company, released a message saying that figma would not be able to provide services to DJI under U.S. law because the Chinese drone company DJI was on the "entity list" drawn up by the U.S. government. Until the U.S. lifts sanctions, the accounts of the companies on the list will not be able to access Figma.
Subsequently, some media reported that the enterprise accounts of Huawei, 360 and other companies were also banned by the software.
Although domestic design software companies such as Blue Lagoon MasterGo and Instant Design have released the import of Figma files to achieve basic functional equalization, as a core design tool software with Adobe and Sketch, the importance of Figma for designers is self-evident, so the impact of the US corporate ban on the domestic design industry will be far-reaching.
In fact, software has always been the weakest link in China's design and industrial fields.
Although Internet companies such as Ali, Tencent, and ByteDance have been launching various software products, in practical applications, taking the video editing industry as an example, the important editing software used by excellent video creators is still software produced in Europe and the United States such as Final Cut Pro, Adobe Premiere Pro, and DaVinci Resolve.
And, of course, industrial software. As the "soul" carrier of industrial manufacturing, but also the key to the competitiveness of the national manufacturing industry, in the past few decades, the core industrial basic software such as domestic CAD (computer-aided design) and CAE (computer-aided simulation) has been dominated by software developed by European and American enterprises such as Siemens, Dassault, Autodesk, etc. Domestic industrial software has been absent for a long time.
In June 2020, a number of scientific research institutions and companies such as Harbin Institute of Technology and Harbin Engineering University were included in the entity list by the United States on the grounds of military involvement, and teachers and students of the two universities found that they could no longer log in to the overseas mathematical analysis software MATLAB through the school account.
Earlier, in May 2019, the U.S. Department of Commerce placed Huawei on the Entity List, preventing it from designing chips using the latest chip design software tool, EDA (Electronic Design Automation). (For details, see the titanium media App above: "Domestic EDA, in the end can it break the monopoly of the three giants overseas?") 》）
These two events have surfaced the "stuck neck" problem of domestic industrial basic software.
According to the "China Industrial Software White Paper (2020)" research data issued under the guidance of the Ministry of Industry and Information Technology, in the three industrial manufacturing links of production control, operation management, operation and maintenance services, the domestic industrial software market share in China has reached 50%, 70% and 30% respectively, but in the research and development and design process, overseas software still accounts for 95%.
Another set of data released by the Ministry of Industry and Information Technology shows that in 2020, China's software business revenue reached 8,161.6 billion yuan, of which information technology service revenue reached 4,986.8 billion yuan, which means that most of the revenue was taken away by foreign companies.
Tianfeng Securities has predicted that in the next five years, China's industrial software market will grow more than five times, and the long-term market space is expected to reach $40 billion.
"The monopoly of foreign software is particularly high, and it is caused by two reasons, one is technology and the other is ecology." Dr. Wu Yongrong, founder and CEO of Seshu Technology, said in an exclusive interview with Titanium Media App that for engineers of manufacturing enterprises, because overseas industrial software has been used in schools and enterprises for a long time, this interaction preference habit is difficult to change, so even if domestic industrial software products have achieved localization substitution, even if the technology is infinitely close to overseas software, the ecology is still difficult to break.
Wang Guangxi, a partner at Lenovo Venture Capital, said in an interview with Titanium Media App that the gap between domestic industrial software and foreign companies in some high-tech fields, especially in the field of segmentation, is still relatively large. In fact, there are not too many shortcuts to take, in essence, it is still necessary to go through a lot of investment, a lot of accumulation, and the repeated polishing of the scene to really do a good job.
Gao Shuming, a professor at the School of Computer Science of Zhejiang University, pointed out that it will take at least a decade for China's industrial software to reach the world's first-class level.
Then, as a key link that needs to be broken through, the 40 billion Chinese industrial software market has encountered a "card neck" in Europe and the United States, how can domestic industrial software solve the difficulties? When will the problem be solved?
Industrial misjudgment and insufficient capital investment have led to a gap of thirty years of domestic software
To put it simply, industrial software is to softwareize industrial knowledge, and integrate the experience accumulated in the core processes of product planning, design, production, sales, service and so on in the software system to improve the work efficiency of the whole process of the enterprise.
Because CAD/CAE industrial software involves mathematics, physics, engineering, computer and other types of technology, the industry's participation barriers are high, and often requires core customers to participate together to form advantageous products.
According to the product division, industrial software can be roughly divided into five categories: design and development, information management, production control management, industrial embedded software and industrial integration platform, involving dozens of subdivisions. In addition to the common CAD/CAE software, there are also CAM (computer-aided manufacturing) and a large number of mathematical analysis software, software that integrates core industrial experience, etc. In the development of large-scale projects, the total number of software used in various disciplines is as high as hundreds, and different enterprises participate in different links.
As the "soul" of the modern industrial system, industrial software has penetrated and been widely used in almost all industrial fields.
Industrial Software Categories at a Glance (courtesy of Titanium Media App)
Despite the large number of fields, the number and scale of domestic industrial software companies are still very rare, in a small and scattered situation. Taking CAD/CAE software as an example, at present, there are only a few enterprises in China, such as CLP Huada, Zhongwang Software, Digital Dafang, and Suzhou Haochen.
The reason behind it is mainly the technical difficulty of industrial software, high capital investment, long research and development cycle, and limited market, resulting in the slow development of domestic technology for many years, coupled with industrial misjudgment, low capital investment, poor industry-university-research ecology, and downstream enterprises "better to build than to buy", so that industrial software has not formed a scale effect. Foreign enterprises themselves have demand for software, while doing while using, the more used the better, and gradually become the core auxiliary products of the industry.
In fact, from the perspective of the development of the industrial software industry, China has also experienced a heyday.
In the early 1980s, with the needs of powerful research institutes or universities, expensive IBM mainframes, VAX minicomputers, apolo workstations were introduced to China, and some of the CG and CAD software tools attached to them allowed Chinese to be exposed to the category of industrial software for the first time. Most of the early developed software is two-dimensional CAD drawing software.
During the "Seventh Five-Year Plan" to the "Tenth Five-Year Plan" (1986-2005), due to the state's support for domestic independent industrial software, a group of universities and scientific researchers represented by Beihang airlines and Tsinghua began to do related software development, and they applied for financial subsidies through the "CAD Research Project" of the Ministry of Machinery (Ministry of Mechanical and Electrical Affairs) and the "863/CIMS, Manufacturing Informatization Project" of the State Science and Technology Commission (Ministry of Science and Technology), and then took this money to invest in research and development and talent construction.
Around 1999, a number of scientific research institutions in China successfully developed a number of industrial software products such as Gaohua CAD, CAXA Electronic Plate, Kaimu CAD, Zhejiang Datian CAD, Shanda Huatian and so on. Even in the field of three-dimensional CAD, which is difficult to develop, there are also Panda CAD systems of Beihang Airlines.
However, since 2005, the Ministry of Science and Technology's focus on supporting the development and design of software has shifted to 3D CAD. After the "Twelfth Five-Year Plan" (2011), China's informatization began to take the road of "integration of the two modernizations", the Ministry of Science and Technology was no longer in charge of informatization work, the state no longer subsidized the research and development of industrial basic software for scientific research institutions, and the investment in three-dimensional CAD research and development was also reduced year by year.
According to the book "The Fire of Autonomous CAE Nirvana" written by Lu Zhongxun, a professor of the Shanghai Academy of Sciences, the relevant management departments at that time deviated from the understanding of the core technology of CAD/CAE software directly serving the advanced equipment manufacturing industry, believing that CAD/CAE industrial software was neither basic science nor scientific and technological research, so it lost the necessary support and made its development difficult.
At the same time, since the 1990s, a large number of foreign software into the Chinese market, Siemens, Autodesk and other companies through low-cost cooperation, free tying and other measures, so that foreign industrial basic software into universities, government and enterprises, scientific research institutions, when people have "build is not as good as buy" psychology, which has caused a serious impact on the training of industry, education and research, so that students use foreign software to calculate, independent software has been strongly suppressed, did not form a core industrial software ecology.
Moreover, because the R & D and design software is basically installed directly on the general computer, foreign software companies have allowed the global "pirated" IP phenomenon, so that more Chinese enterprises and institutions have enjoyed free foreign software, without the awareness of payment, overseas software to achieve user growth, the ecology can continue to grow, and domestic engineers are very dependent on this ecology.
The long-term blankness of the independent software track has allowed foreign industrial software to drive straight in, directly giving the monopoly throne of China's high-end CAD/CAE market to PTC, UG (now belonging to Siemens), CATIA and other European and American companies, and the low-end is firmly controlled by Solidworks, Autodesk, and SolidEdge.
In addition, with the support of the US government, Siemens, Dassault and other European and American companies have accelerated the pace of mergers and acquisitions, improved their product lines, and moved towards cad/CAE/CAM+PLM integration, thus realizing process collusion and optimization.
Take Siemens as an example: from 2001 to 2006, Siemens successively acquired a number of MES (manufacturing execution system) manufacturers, and launched its own MES software SimaticIT on this basis; in 2007, Siemens acquired the American PLM (product life cycle) company UGS for 3.5 billion US dollars; in 2008, Siemens again acquired the German Innotec software company In 2013, the acquisition of LMS for 690 million euros, as well as the German manufacturer TESIS, Siemens entered the field of simulation and test systems; in April 2017, Siemens acquired Mentor Graphics, entering the field of "mother of chips" and the core tool EAD software in the field of electronic design.
Siemens Industrial Software Acquisition Mileage as of 2016 (Source: Huatai Securities)
"Over the past two decades, Siemens has invested more than $10 billion in software, putting us at the forefront of industrial software." Roland Busch, Chief Operating Officer, Chief Technology Officer and member of the Management Committee of Siemens AG, said that Siemens has enriched the CAX product matrix through mergers and acquisitions and has done a deep job in the automotive industry.
Comparatively speaking, during the 15th and 11th Five-Year Plan periods, the total investment scale of China's three-dimensional CAD software research and development is about 40 million to 50 million yuan, and the two-dimensional CAE is mainly through the National Natural Science Foundation of China, with an average investment of about 10 million a year. As of the three five-year plans of the 12th Five-Year Plan, the state has invested less than 200 million yuan in the research and development of core industrial software such as 3D CAD/CAE.
Compared with Siemens' capital investment of more than 70 billion yuan, the research and development of China's industrial basic software, whether it is the scale of funds or the intensity of technology investment, is slightly backward.
Suzhou Haochen Software once admitted in the prospectus that the company's establishment time is relatively late compared with foreign leading manufacturers, although it constantly improves the product system and marketing network, but from the comprehensive perspective of development history, capital strength and technical strength, there is still a big gap compared with the industry's international leading manufacturers.
After more than 30 years of empty window, today, China's CAD/CAE and other software industry architectures have not yet been established. Although some independent CAE/CRM software has been applied in a specific range, they are all in an occasional "comfortable" state, and the product performance needs to be improved, far from reaching the industrial scale.
The platform is not strong, the core is not hard, is China's major problems in the field of industrial software that need to be solved urgently.
Demand breaks ground, policy boosts "domestic substitution"
Despite repeated defeats, as China accelerates the digitization and intellectualization of manufacturing, and the implementation of Industry 4.0 goals, the rapid advancement of AI technology, the needs of scientific research, economics, national defense and security, and the threat of U.S. technology blockade, the demand for domestic industrial software has accelerated the groundbreaking of domestic industrial software.
First of all, in terms of policy, the problem of "card neck" of China's industrial basic software has attracted the attention of relevant departments.
According to Xinhua News Agency, in May 2021, the central government mentioned that it is necessary to strengthen originality and leading scientific and technological research, and clearly mentioned many fields such as oil and gas and industrial software.
In fact, since the release of the "Guidelines for the Construction of the National Intelligent Manufacturing Standard System" in 2015, China has successively issued a number of policies to support the development of intelligent manufacturing and the industrial Internet.
The name of the policy involved in the industrial software industry (Source: Tianfeng Securities Research)
At the China Industrial Software Conference in June 2021, Xie Shaofeng, director of the Information Technology Development Department of the Ministry of Industry and Information Technology, said that China will release the "14th Five-Year Plan" development plan for the software industry as soon as possible and strengthen key support for key technical software for industrial software.
According to the "Made in China 2025 Key Areas Technology Roadmap", by 2025, most of China's core technologies will make breakthroughs, form an independent and controllable operating system and industrial software and its standard system, and the market share of independent industrial software will exceed 50%.
Some industry insiders pointed out that industrial software is actually a place that particularly needs the national system, and it is necessary to determine the underlying development and design logic from the establishment of upper standards. At the company level, the same is true, it is necessary to take the strategy first, set the industry, and then continue to invest in deep cultivation. Therefore, many people suggest that the development of industrial software should be placed in the equally important position of aviation, aerospace, military industry, shipbuilding and other industries, and crack the situation that industrial software is subject to people.
Wang Guangxi believes that in the past, on some key industrial software tracks such as CAD/CAE, China's vacancies could not be generalized, or ignored somewhere.
"From another point of view, at that time, with the development of globalization, global industries and science and technology also had a division of labor, the upstream and downstream of the industry needed to complete the division of science and technology with some different countries and regions, and not every country took an end-to-end approach to completely build a set of its own independent system." Wang Guangxi told titanium media app.
Affected by the policy boost, industrial software companies have also begun to be concerned by the capital market.
In March 2021, Zhongwang Software (688083. SH) successfully landed on the Science and Technology Innovation Board, and its stock price has continued to rise since its listing, with a price-earnings ratio of more than 100 times, and its market value has now reached about 14.4 billion yuan. The chip design software EDA company BGI Nine Days has also launched a listing plan, which is also highly expected by the market.
In the primary market, in the past two years, many industrial software start-ups have sprung up, for example, the digital generosity focusing on CAD/PLM software, the CAD simulation software manufacturer "Shifeng Technology" founded by Chen Shiyi, an academician of the Chinese Academy of Sciences, the "Shanshu Technology" that makes domestic solver software, the "Xinhuazhang Technology" that does industrial EDA software, and the "Sequence Technology" founded by Dr. Wu Yongrong.
Localization still has a long way to go
In 2020, Dr. Wu Yongrong, a university graduate from Tongji University in Shanghai and was in charge of the application of AI technology at the factory end of WEILAI Automobile, decided to set up "Sequencing Technology".
At first, he did not want to do a domestic CAD replacement, but hoped to use AI technology to help automotive engineers do design and development, and use intelligent technology to solve the problem of workers' repetitive labor. Subsequently, the sequencing team led by Wu Yongrong developed the first AI+CAD industrial R&D design software on the market - SEQUEDO-Design V1.0, which helps enterprises operate efficiently and solve the problem of duplication of labor.
At the same time, this product unexpectedly received orders from other companies in the industry, making it full of confidence in the CAD market and focusing more on the FIELD of AI+CAD.
On February 24 this year, Seura Technology announced the completion of the A round of investment, with a cumulative financing of more than 100 million yuan during the year, and the investors include ByteDance, Lianchuang Yongjun, SIG, Jianfeng Evergreen, Gaorong Capital, Lenovo Venture Capital, etc.
As one of the investors in ordered technology, Wang Guangxi told Titanium Media App that Lenovo Venture Capital layout order this company is betting on two points: one is the localization of industrial software, the other is the order of this project, essentially for intelligent manufacturing, smart industry, these new things in the era of intelligence, it is different from the logic of industrial software in the past, using new computing power. This kind of manufacturing enterprises that use AI to realize automation, efficiency, and intelligence cover some new scenarios.
In Wang Guangxi's view, the biggest challenge encountered by domestic industrial software in the past is also the opportunity point today. After all, China is still a big industrial manufacturing country, with a lot of demand, a lot of customers, and a lot of scene data, which is actually the same as the consumer Internet.
Wu Yongrong told Titanium Media App that the intelligent industrial design SaaS software provided by Sequencing Technology has been used in the field of automotive welding fixture design and stamping die design, providing integrated solutions with "intelligent recommendation, intelligent interaction, intelligent drawing, and part factory" as the core technical functions. Customer feedback is good, of course, there is room for improvement. It is expected that this spring, Seshu will release a new version of the smart industrial design SaaS software.
"Our innovation is mainly in AI technology, and we have invested a lot of effort to clean, reuse and train output of data, which has certain advantages in vertical scene efficiency; compared with foreign software companies, we are Chinese enterprises, which have great advantages in culture and collaboration, and better security." Wu Yongrong said that the commercialization of sequential software products adopts a subscription model rather than a buyout fee.
In addition to private enterprises, the military field is also constantly promoting a comprehensive localization of alternatives from hardware to software. Titanium Media App learned from a number of investors, industry insiders, and corporate executives that at present, China has purchased large-scale enterprise products invested by China Electronics Technology Group. Relevant people said that since 2018, the demand for domestic replacement for military use has increased significantly.
In addition, the demand for industrial software from central enterprises and state-owned enterprises has also shown a growing trend.
According to the industrial software company "Shanshu Technology", with the deterioration of Sino-US relations, the company suddenly found that many state-owned enterprises began to take the initiative to come to the door, hoping to replace the Us software, and Shanshu Technology also quickly targeted this huge domestic alternative market, customers include six countries chemical industry, a province's State Grid, a 211 university, a Beijing science and technology information institutions and so on.
Shanshu Technology was founded by four Stanford University PhDs in the United States to provide customers with domestic solvers. As the basic software, Shanshu uses the "solver" and AI machine learning engine, supported by the "enterprise decision-making brain" optimization middle platform, which can mathematically model complex real-world problems and help customers (enterprises) complete optimal decisions under various complex problems.
(For details, see the titanium media App above: "Beyond the achievements of Ali Dharma Academy, this Stanford team uses "domestic solvers" to help Chinese companies achieve intelligent decision-making")
Ge Dongdong, co-founder of Shanshu Technology & CSO, mentioned in an exclusive interview with Titanium Media App that they use the self-developed "COPT Mathematical Optimization Solver" to increase the factory production scheduling order satisfaction rate by 20% and reduce the capacity loss rate by 30%. In terms of power system optimization, Shanshu products can play a preliminary role in domestic substitution.
However, Professor Gao Shuming gave a more pessimistic evaluation.
He pointed out that on the whole, the tide of domestic substitution of industrial software in the field of civil industry has not yet come. At present, most Chinese manufacturing enterprises are not high enough in product innovation, and the demand is naturally less.
Gao Shuming gave an example, domestic CAD software still faces some technical obstacles in the construction and processing of complex surfaces, and the reliability of core modeling operations is not enough. The lack of this technical difficulty makes the product unable to be recognized by the market.
Li Yizhang, chairman of the domestic industrial software enterprise "Suowei System", once pointed out that the development of industrial software needs investment, can not rely on the state, long-term or benign market competition, but also rely on industry leaders and social capital. After the business model is invested, how to accelerate technological innovation, produce benefits, and form a virtuous circle is still an important issue to be solved urgently in localization.
Wu Yongrong told Titanium Media App that in the future industrial software track, enterprises need to learn the development path of Siemens and Dassault Systèmes and Dassault Systèmes, and continue to grow through mergers and acquisitions.
Wang Guangxi said that China still has an engineer dividend. He believes that from the talent reserve, market environment, customer environment, coupled with the availability of capital, China has the opportunity to catch up.
"But no matter how good the window of this opportunity is, it is still necessary to guard against arrogance, because there is really no shortcut to the development of industrial software." We hope that Chinese enterprises can learn from a lot of previous experience, and at the same time use some new IT means to shorten this journey and reduce this detour process. He said.
(This article was first published on titanium media App, author | Lin Zhijia)