Another blockbuster policy, the industrial Internet to help the high-quality development of the 5 trillion market

Seven departments including the Ministry of Industry and Information Technology recently jointly issued the "Implementation Plan for Promoting Equipment Renewal in the Industrial Field", aiming to promote the digital transformation and upgrading of the industrial field. The program accelerates the pace of digital transformation in the industrial field through the implementation of four key tasks: advanced equipment renewal action, digital transformation action, green equipment promotion action and intrinsic safety level improvement action.

The industry believes that the introduction of this blockbuster policy will inject new impetus into the development of the mainland's industrial sector and promote the high-quality development of the mainland's manufacturing industry.

Seven departments have issued important "plans", and digital transformation is the focus

On April 9, the Ministry of Industry and Information Technology and other seven departments jointly issued the "Implementation Plan for Promoting Equipment Renewal in the Industrial Field", focusing on promoting new industrialization, taking large-scale equipment renewal as the starting point, implementing technological transformation and upgrading projects in the manufacturing industry, focusing on digital transformation and green upgrading, promoting the high-end, intelligent and green development of the manufacturing industry, and providing strong support for the development of new quality productivity and improving the quality and level of national economic circulation.

The plan proposes that by 2027, the scale of equipment investment in the industrial field will increase by more than 25% compared with 2023, the penetration rate of digital R&D and design tools and the numerical control rate of key processes of industrial enterprises above designated size will exceed 90% and 75% respectively, and the digital transformation of industrial enterprises above designated size in major industrial provinces and cities and key parks will be fully covered.

In terms of the implementation of digital transformation actions, the "Plan" proposes to promote the application of intelligent manufacturing equipment, and promote the update of general intelligent manufacturing equipment such as CNC machine tools and basic manufacturing equipment, additive manufacturing equipment, industrial robots, industrial control equipment, intelligent logistics equipment, sensing and testing equipment.

At the same time, it is also necessary to strengthen the construction of digital infrastructure, accelerate the large-scale deployment of new network infrastructure such as industrial Internet, Internet of Things, 5G, and gigabit optical networks, encourage the transformation of internal and external networks of industrial enterprises, and build an integrated system of industrial basic computing resources and application capabilities.

At present, the economic and social development of the mainland is showing increasingly obvious digital characteristics, indicating that we have entered a new stage dominated by digital productivity. The need for intelligent upgrading of the manufacturing industry is becoming more and more urgent, and the importance of the industrial Internet, as a key force to promote this upgrading, is self-evident.

The Industrial Internet can not only provide innovative solutions for the manufacturing industry, but also help enterprises achieve leapfrog improvement in productivity, thereby promoting the transformation and upgrading of the entire industry. Therefore, in the wave of digitalization, the development of the industrial Internet will become a key part of the high-quality development of the mainland's manufacturing industry.

The industrial Internet market has a broad space

The industrial Internet refers to the deep integration of the new generation of information and communication technology with traditional industries, and realizes the intelligence and optimization and upgrading of industrial systems through modern information technology means such as the Internet of Things, cloud computing, and big data. With the continuous progress of technologies such as 5G communication and artificial intelligence, the era of industrial Internet is expected to usher in rapid development.

On the one hand, there is a potential demand for small and medium-sized enterprises. From 2000 to 2010, China's labor productivity grew at an average annual rate of 9.7 percent, but by 2010 to 2021, this figure had fallen to 6.7 percent. The decline in labor productivity has prompted the manufacturing industry to look for new productivity improvement engines, and the Industrial Internet is the only choice to provide system solutions, which is in line with this demand.

On the other hand, with the development of technology, the needs of enterprises are also met. In the past, due to insufficient awareness of digitalization and limited digital capabilities, many enterprises did not dare, did not want to, and would not transform. However, with the opening of data and the deepening of services, the experience of digital transformation has been significantly improved. Coupled with the emergence of more and more successful transformation cases, the confidence and determination of small and medium-sized entrepreneurs have been strengthened.

From 2020 to 2022, the penetration rate of China's industrial Internet reached 14.7%, 17.5%, and 22.2%, respectively. According to the previously established penetration target of 45% in 2025, the industrial Internet has at least a double growth space in the next three years. In reality, this growth may be much higher than expected.

With the in-depth promotion of high-quality development in the mainland, the demand for equipment renewal will continue to expand. In March this year, the mainland issued the "Action Plan for Promoting Large-scale Equipment Renewal and Trade-in of Consumer Goods" to help upgrade equipment in the manufacturing industry. The National Development and Reform Commission also preliminarily estimated that this will be a huge market of more than 5 trillion yuan.

In addition, at the press conference of the State Council Information Office in January this year, the Ministry of Industry and Information Technology also introduced that the mainland's industrial Internet has entered a new stage of large-scale development. From the perspective of coverage, the industrial Internet is integrated into 49 major categories of the national economy, covering all industrial categories. From the perspective of development momentum, the "100 cities and 1000 parks" activity of industrial Internet across the country is in the ascendant, promoting the supply and demand docking of more than 10,000 enterprises and driving investment of more than 170 billion yuan.

Institutions are optimistic about industrial Internet investment opportunities

The Great Wall Securities research report pointed out that with the rapid development of emerging technologies such as general artificial intelligence, 5G, and the metaverse, and the acceleration of penetration into industrial Internet application scenarios, the innovation and application of industrial Internet technology is expected to accelerate the landing, help accelerate the development of the industrial Internet empowerment industry, and continue to be optimistic about investment opportunities in relevant links of the industrial Internet industry chain.

According to industry analysts, the industrial Internet, as an important application direction of AI, is also an important part of high-end manufacturing, and empowering the industrial Internet through AI large models can solve problems such as equipment management, safety detection, energy conservation and carbon reduction, and can make full use of the existing data assets of enterprises to build an enterprise-level knowledge base and decision-making system. In the future, there are high expectations for the dual concept stocks of industrial Internet and artificial intelligence.

Deen Precision (300780.SZ) produces CNC machine tools, turning centers, CNC machining centers, industrial robots and other industrial machine tool products, and its main business includes five business segments: mechanical transmission and transmission couplings, mechanical non-standard customized parts, industrial robots, CNC machine tools and industrial Internet platform services. The company belongs to the national "specialized, special and new" small giant enterprise, industrial Internet pilot demonstration, 5G + industrial Internet benchmark.

Inovance Technology (300124.SZ) has the competitiveness of multi-product solutions in the machine tool industry, and its products such as frequency converters, motion control, and control technology can be used in machine tools, and the company's business is mainly divided into: general automation (including industrial robots), smart elevators, new energy vehicles, and rail transit.

Dongtu Technology (300353.SZ) is the main drafting unit of China's industrial Internet core standards, and its main business is the research and development, production and sales of industrial Internet core hardware and software technologies. The company's Intewell operating system can be used in the control system of industrial machine tools, helping industrial machine tools to achieve autonomy, controllability and intelligence.