Industrial Internet of Things (IIoT)

Industrialization 4.0 / IoT Manufacturing - 101

Industrial IoT seeks to digitize the industrial economy. It basically gives physical machines a digital life. It makes use of a network of sensors to collect critical production data and uses cloud software to turn this data into valuable insights about the efficiency of the manufacturing operations. The end goal is to optimize processes and operations across the production, improving manufacturing outcomes, reducing waste, speeding up the production and improving the yield and quality of goods. IIoT can give insights and full visibility of companies’ assets, processes, resources and products. Based on the collected data, these inputs and processes can be optimized to deliver the highest value possible for the company. For companies this means a higher return on investment, streamlined business operations and optimized productivity.

Use cases that drive IIoT spending growth in 2021 cover areas such as manufacturing operations, production asset management, omni-channel operations, smart grid (electricity), smart homes, and freight monitoring. Also, in the life science and health industry, use cases such as bedside telemetry and remote healthcare monitoring will continue to be some of the fastest-growing industries impacted by the technology.. There is thus a broad range of applications where IoT and industry come together.

The key features of IoT is its capability to connect devices with each other. You can imagine it as an integrated system, where all machines know what the other machines are doing at any given time and place. This makes it possible to integrate diverse industrial data as well as to apply learnings from one system to another at tremendous speed, and at a fraction of the cost of traditional manufacturing. It also means that internal problems in parts of the machine (for instance a mechanical part) that is not functioning well, will be able to communicate this information to operators. This makes it possible to secure the industrial systems for the entire lifespan of the machine and fix malfunctions quickly. However, companies no longer think the value of IoT is limited to achieve operational efficacy and improved productivity. They increasingly see IoT as an enabler in the evolution of enterprises' requirements and challenges in an ever-changing business environment. Many organizations are therefore willing to invest heavily in digital technologies such as IoT and AI to fully leverage data in emerging digital business models.

In China, the IoT market is expected to surpass US$ 300 B by 2025, accounting for around 26.1 % of the total global IoT market volume.^[1] Furthermore, it is no secret that China is a global manufacturing hub. Some of the largest and most active industrial companies are located throughout China’s megacities and these companies are constantly looking to improve operations. With IIoT and automation solutions businesses are transforming across the board and new business models emerge. The IIoT sector contributes with greater prediction and self-adaptation of manufacturing systems, increased corporate profitability as well as a major boom in the demand for industrial robots.

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Policy – 4

China’s desires for leading IoT innovation is supported by a number of industrial policy plans and policy documents such as the Made in China 2025 plan, the Internet+ Strategy, the China Standards 2025 and a number of other policies. The main player orchestrating and publishing these policies is the Ministry of Industry and Information Technology (MIIT). Here the effort is to standardize cutting-edge technologies, such as AI, cloud computing, IoT and big data.

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Corporate – 4

MIIT has set up the Alliance of The Industrial Internet (AII), which is a major forum for interaction between policymakers and industry. It was created in 2016 and has over 1,300 members, including foreign company members such as Siemens, SAP, Schneider Electric and GE. It sets standard for China’s industrial platforms. McKinsey has also opened an IoT hub in China, which will help local companies drive digital transformation by help reaching the last mile in IIoT integration, integrating information technology and operational technology. A number of large-scale forums are also taking place across China’s provinces.

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Academia – 3

A number of Chinese universities are increasing their number of degrees within the field of IoT, from which the companies are recruiting. This also include Sino-Foreign university collaborations such as the Xian Jiaotong-Liverpool University. However, the universities often only target specific areas of IoT, and cross-collaboration is limited, with a number of universities still lacking diverse IoT programmes.

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Entrepreneurship – 3

Chinese start-ups takes part in the ecosystem and  are often backed by larger tech companies in the form of corporate venture capital. An example is the company Mindsphere, which emerged from a deal of EUR 20 billion between Alibaba and Siemens. The company is a cloud-based, open IoT operating system that delivers device and enterprise connectivity options, advanced analytics and closed-loop innovation. Mindsphere’s platform is planned to be implemented on Alibaba Cloud to provide advanced industrial solutions to companies based in China.

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Investment – 5

A number of funds specifically targeting China’s IIoT revolution have been set up to allocate funds to the transition. An example include the Industrial Internet Industry Investment Fund of Chengdu-Chongqing economic circle, which has 500 million yuan (US$ 77.2M)  to invest in e.g. intelligent manufacturing, communication networks, industrial platforms, industrial software, industrial supply chains, and industry application solutions.^[2] According to GlobalData, four of the top five venture capital funded companies in IoT space in 2018 were Chinese companies while only one was American.^[3]

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