Interview with Weiqiang Huang, Partner at Deloitte Greater China: From hardware to services, the industrial internet switches focus

The gradual and steady development of technologies such as cloud computing, big data and AI have provided the underlying foundation for the expansion of the industrial internet. It is something that the market has been increasingly anticipating. Yet, problems persist. The first may well be the inadaptability of the investor, since investment in the industrial internet cannot as yet yield the high returns realized in the consumer internet field. Second, entrepreneurs require the necessary foresight in order to realize that more human, material and financial resources will be required to establish a bottom-tier information system for the new industry. Finally, there as yet exists no clear understanding of what the industrial internet actually is, or how to make it happen.

During the industrial internet segment at this year's Big Data Expo, Weiqiang Huang, senior partner at Deloitte Greater China, spoke with reporters including those from TMTPOST. With 26 years of professional experience in the industry, the prospect of the industrial internet stirred up some strong emotions in him.

Wenqiang Huang, senior partner at Deloitte Greater China speaking at the Big Data Expo 2019

When Weiqiang Huang attended the annual Hannove-Messe global industrial expo for the first time last April, locals told him that the biggest change the event had undergone in recent years was that hardware exhibits were increasingly being replaced with those of a more intangible nature. In past expos, central exhibition booths were reserved for high-end automation and CNC machines. Nowadays, however, no longer are even traditional manufacturers exhibiting their hardware; instead, many of them are talking up the introduction of digitization into the industrial manufacturing process. Even for the equipment that is on display, it is not the hardware that is being sold, but its related services and industries.

According to Weiqiang Huang, it is a trend in line with the current development of the industrial internet: "The equipment matters, but what matters more is how to bring it to life."

Huang reminds us that the ultimate purpose of the industrial internet should not be to create more advanced or beautiful equipment, or to produce better products, but to actually serve the public. For instance, in order to drill a hole in a wall, we first need to buy a drill bit; for that we have drill bit manufacturers like Siemens, Bosch or GE. The real question, though, is if drill bits is what we really need; for the ultimate goal, in fact, is not the drill bits, but the hole itself.

In the coming era of the industrial internet, how can service requirements such as these be met in both a timely and agile manner? There needs to be both an ecosystem and industrial synergy. For instance, if we need a car, it is not the company brand, whether SAIC Motors or Ford, that ultimately matters. We only need to publish our need for a car on the internet, together with how much money we are willing to pay for it, then someone will take the order and build the car. In the process, while enterprise brands will retain some significance in the market, ultimately this importance of brand is being eroded.

The decline in importance of big brands now provides the opportunity for the smaller fish to claim a bigger share of the pond. It also becomes apparent that we are moving out of an economy in which the big fish previously gobbled up the smaller ones, into a new reality in which the small fish have the means to rob the bigger fish of their market share, while faster fish can also gobble up the slow ones.

Looking at China's industrial internet from a global perspective, Huang says that large gaps still exist between industry's big and small players, a situation that comes as a consequence of the current status quo in the country's development. In other words, there are many companies whose product assembly lines or service chains still linger in the earlier stages of industrial development, unable to compete with the larger or more advanced enterprises that already taking advantage of the best in cutting-edge technologies such as AI and IoT.

Stages of industrial development

The question is: can industry 2.0 not play a role in the industrial internet? The answer lies in how the industrial internet is going to be adopted. The core competitiveness of any company lies in how well it is able to integrate its production into one link of an industrial chain. Small and medium enterprises need not fear the prospect of having to automate every piece of equipment in order to integrate into the future industrial chain; one successful link will be enough. With the era of the industrial internet upon us, small and medium enterprises will be able to ensure their survival by finding a suitable product market fit in the coming ecosystem. Future competition will not a battle between enterprises, but one between ecosystems.

With China's economy under pressure internationally, accelerating the development of its industrial internet has a certain practical significance. However, what remains of most importance for the industrial internet is not how much technology is invented, but the change that comes alongside it in the people's way of thinking. According to research data from Deloitte, 87% of China's top-end entrepreneurs comprehend the impact that digitization and the industrial internet is going to exert on enterprises, yet less than 20% of them are taking real action to address it.

The reasons behind the discrepancy may lie in the long-term approach needed of companies in order to integrate into a future industrial internet chain - in other words, it is not a simple case of buying one piece of equipment today, then putting it into operation tomorrow. It requires the integration of an entire industry, which takes time. Entrepreneurs thus need to balance the needs of both long-term and short-term investments. However, the reality is that in the last 30 to 40 years the Chinese have accustomed themselves to the pursuit of fast money; the result is that too few companies have been willing to focus their long-term attention on R&D or invest the tens of billions of yuan necessary for such a pursuit. Thus, if China truly wants to speed up the development of its industrial internet, the most basic change required will be one of outlook in the minds of the country's entrepreneurial elite.

Furthermore, enterprises must find the capacity to properly plan their development, while evaluating their own strengths and weaknesses, and potential benefits, in order to make the intelligent decisions on which links of the industrial internet they choose to integrate into, and how.

In future years, the development of the industrial internet will bring earth- shattering changes to the world of manufacturing. As Weiqiang Huang states, while companies will still be manufacturing products to satisfy the needs of consumers, in the process, the ways of working and thinking will be altered completely.

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This article was edited by @Dido Pong . The original Chinese version was written by Conghui Qin. Please note source and hyperlink when reproduce.

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