After three decades of rapid economic development, China now needs a new growth model. Rapid urbanization and industrialization have lifted hundreds of millions of people out of poverty, Chinese life expectancy has risen by a decade, and China has become the world's largest exporter of manufactured goods and the world's second-largest economy in one fell swoop. Such achievements are remarkable to the world, but they are no mean feat for China. All of China's economic growth to date has been driven by the rapid growth of export-oriented manufacturing, fueled by an abundance of cheap labor.

Stronger consumption, however, needs to be fueled by faster wage growth -- and thus faster productivity gains. As a result, China needs to accelerate its transition from low-cost production to high-value-added, high-tech manufacturing. This is a very serious challenge. Most emerging market countries have failed in this transition and are caught in a "middle-income trap": a situation where per capita incomes have stagnated instead of converging to the high levels of the developed world.

1, digital innovation to enhance competitiveness

China can meet this challenge by embracing the "industrial internet" and the round of digital innovation that is transforming the global economy. The Industrial Internet is the convergence of digital and physical technologies, big data and big machines. Through the deployment of electronic sensors and cloud analytics, the Industrial Internet transforms traditional industrial machines into connected assets, opening up a whole new dimension of functionality and efficiency.

Insights derived from data analytics enable predictive maintenance: dealing with potential failures in advance and avoiding unplanned downtime. Sensors and data analytics build a digital network - all elements of the factory floor are connected together and linked to the supply chain and distribution channels, increasing the speed and flexibility of the manufacturing process - what GE calls the Brilliant Factory ( BrilliantFactory). Digital technologies such as 3D printing are now enabling a number of new manufacturing processes that increase the speed of production while reducing production costs.

These digital innovations can dramatically improve efficiency and productivity across a wide range of industries, boosting competitiveness and enabling some Chinese industries to establish global leadership.

Industrial Internet innovations can also enhance the capabilities of workers at different levels. Portable and wearable devices with virtual reality/augmented reality capabilities can enable workers to instantly access information, provide immediate training, collaborate more effectively, and learn and build on the practical experience accumulated by other colleagues.

There is often a fear that the advent of new technologies will reduce jobs because of increased automation. Industrial Internet innovations are going in a different direction, enabling new and stronger partnerships between people and machines and boosting the capabilities and productivity of workers at all levels. And in recent years, China has made great strides in raising the average skill level of its workers: in 1982, less than 1 percent of the Chinese population between the ages of 25-29 had a high school and higher level of education; by 2010, that percentage was more than 20 percent, with much of that concentrated in science and engineering. Increased levels of education allow China's workforce to benefit greatly from these innovations; this will also create an environment for continued innovation by Chinese scientists and engineers, contributing to the growth and diffusion of new digital industrial technologies.

In this context, digitalization and smart industry are irreversible as a major trend. Many industrial companies already see digitization as a necessary prerequisite for survival and growth. While the Internet has transformed the consumer sector, this value has yet to be unlocked in the industrial sector, where industrial productivity grew at an average annual rate of 4% between 1990 and 2010, but has declined to 1% in the past five years. How to turn digitalization into value is a question that all industrial companies need to answer.

China's economy is undergoing an unprecedented structural transformation, and it is foreseeable that the service industry sector will play a very important pulling role in the overall GDP. Manufacturing has accounted for a large portion of China's GDP in the past, but with the structural transformation, the future manufacturing industry will become a manufacturing and service industry, in which the contribution of value created by services will even exceed that of manufacturing, thus creating a new service industry that is high-quality, high-margin, and sustainable growth.

BCG's data show that the value of services is reflected in the transformation of China's economy in industries such as healthcare, aviation, energy, and some machinery manufacturing, and that in the future, they will all embark on a path of service-driven growth. So the transformation of the manufacturing industry's contribution to the overall GDP has also become an important topic.

GE itself is also a manufacturing enterprise, but this century-old store also need to think about how to find a breakthrough in the new international competition in the road to innovation. GE's industrial Internet came to China in 2012, and this strategy was first put forward five years ago, because the manufacturing industry itself in the search for new growth points into a predicament. Of GE's more than $100 billion in revenue and $16 billion in net profit, 75% comes from manufacturing. However, due to changes in the customer market and global environment, GE needs to find and rethink how to serve customers in various industries around the world. So GE put forward the concept of the industrial Internet, fundamentally, is to connect people and machines, machines and machines through the data seamless connection, through the massive data to find bottlenecks in the operation, reduce costs, improve efficiency, so as to carry out the transformation of the entire core competitiveness.

Industrial Internet and the combination of Chinese industrial intelligence in China at the right time, which mainly stems from three conditions: after 20 years of information technology construction, China has accumulated a very good infrastructure; at the same time, China's current transformation of the manufacturing industry as one of the national strategy, the urgent need for some good information technology means, management concepts, innovation to promote the realization of this goal; finally, the talent pool has also reached a certain level. Has reached a certain level.

2, asset optimization and operation optimization

In the manufacturing field, industrial Internet in the realization of industrial intelligence is mainly focused on asset optimization and operation optimization. Asset optimization is based on the fact that manufacturing enterprises are asset-heavy. At present, the most important concern of heavy asset enterprises is the challenge of overcapacity, how to optimize the efficiency of assets, improve the utilization rate of assets, and at the same time bring some key value-added services to customers, which is usually derived from the equipment service industry. Secondly, it is operation optimization. Chinese enterprises are in a stage where we are still in 2.0 or even more sloppy compared to Germany, which proposed Industry 4.0. Sloppy management, low functionality, weak information technology foundation, etc. are all important issues that constrain the development of manufacturing industry. So how to optimize the operation of our workers on duty, management personnel, and management rules and regulations can be combined to enhance our efficiency, this is the focus of the industrial Internet, but also China's industrial enterprises in the transformation of the urgent need to solve the problem, the optimization of assets, the optimization of operations.

Currently, there are many discrete factories in China, such as manufacturers of home appliances and electronics, and asset optimization and operation optimization are important for these companies. There are three different levels of intelligence: first, sensor-driven automation. Second, factory-wide automation. And third, it includes supply chain, upstream and downstream optimization of the supply chain.

This strategy also coincides with China's demographic transition. Currently, China's population is growing at a lower rate and aging is accelerating. The recent introduction of the two-child policy will not affect China's demographic trends for the time being. At the same time, lower population growth rates also mean that the labor force is no longer growing as fast as it did in past decades. Chinese industry now faces more limited human resources. Therefore, to support rapid economic growth, productivity must be increased more quickly to compensate for slower labor force growth.

3. Manufacturing services and the transformation of Chinese industry

Returning to manufacturing has become a strategic priority for many countries globally, whether in Europe, the United States or China. The Made in China 2025 strategy promotes the deep integration of the two through the combination of "Internet+" and industry. This is also a challenge faced by the industry, government and enterprises*** together, and a topic to be y discussed.

From the implementation point of view, to achieve the optimization of these three aspects to go through four stages, the first stage, in the absence of data we tend to have the feeling of blind men feeling the elephant, just like you sit in the army but the lack of front-line reporting, this combat has no wisdom strategy to speak of. So data is a very important prerequisite, most of the enterprise decision-making and management is based on experience, even if there is some data, but also local untimely, or even wrong data, which will directly affect the final results, so the global data collection is very critical. After the data we want to visualize the next step, so in GE's smart factory we introduced the concept of digital chain and digital twins, through the means of information visualization through the whole process of factory manufacturing, so that we have an understanding of productivity, production resources, production efficiency. Along with the control, than the implementation of automation, intelligent control of management objectives, in process control, resource control, material control, etc., while seamlessly integrated with the manufacturing process. The last part is the part we are most looking forward to, and also the part of the value release, is to realize the optimization, based on the global data basis we can realize the prediction, to be able to the resources, for the market, for the customer's needs of the predictive guidance under our optimization.

These four stages are a reflection of what we just said about the Internet in the smart factory, which is easy to say, but really difficult to do. Throughout China's industrial development, industry and infrastructure is still in the transition from hardware to a combination of hardware and software, according to statistics, in 2014, China's digital R & D design tools penetration rate has reached 54%, the key process CNC rate reached 30%. However, compared with developed countries, China is still far away from the interconnection, hardware and software combination of industrial system. At present, China's high-end sensors, intelligent instrumentation, high-grade CNC systems, industrial application software and other market share of less than 5%.

Currently, the most direct value of the Industrial Internet solutions provided by GE is to help customers achieve zero unplanned downtime. Currently, GE monitors and analyzes 50 million items of metadata from 10 million sensors every day, which involves assets valued at trillions of dollars. Predix-based APM helps customers turn massive amounts of data into accurate decisions, secure assets in a timely and proactive manner, help equipment run better, consume less fuel, deploy services more efficiently, and minimize unplanned downtime. More APM solutions and services will help asset owners and operators reduce maintenance costs and operational risk while improving reliability. Achieving "fully predictable assets" is the ultimate goal for any organization. For immature organizations, it may seem like an unattainable goal. But as asset operators embrace the concept, the benefits justify the investment, and APM will be a fundamental cornerstone of asset predictability.

At the smart factory level, the value lies in the use of big data, software, sensors, controllers, and robots to improve productivity, leading to asset and business optimization. The Smart Factory offering has four elements: virtual manufacturing, sensor-enabled automation, factory optimization and supply chain optimization.GE currently has 400 factories worldwide. To transform the way these factories are managed and improve productivity, we have 16 Smart Factory pilots across the enterprise*** In 2015, we plan to increase the number of pilots to about 75.

4, challenges and concerns

In the implementation of the entire industrial Internet, the challenge is undoubtedly, in summary, we have four need to be very concerned:

Security. Manufacturing enterprises to carry out transformation regardless of what path, the goal is the same, but security is very important. The traditional security of information technology is not enough to cover the security of the manufacturing field, GE Industrial Internet on the advocate of security, in addition to IT security and OT security, is the security of industrial technology.

Infrastructure: infrastructure from data centers to networks, to big data analytics, to cloud computing and so on infrastructure deployment.

Composite talent. In the past 20 years, China has trained many talents in the process of both informatization and industrialization, but they are too homogeneous. After the deep integration of industrialization and informatization, we need more composite talents, who understand the industrial materials and the information industry, and of course, our management also puts forward high requirements. Because technology serves the business, as I mentioned just now, the ultimate hope is to drive the enterprise, so that it has the ability of intelligent management and continuous innovation, so as to improve its core competitiveness. So for business operators, it is also a challenge, that is, how to integrate our management skills with information technology and advanced material technology in many aspects, to develop a good strategy for the enterprise.

Changes in business models. The introduction of technology will also drive us to form a closed-loop process from upstream product design to manufacturing, to supply chain, and all the way to marketing services. Each link will have an impact on our traditional mode of operation and business model. The changes brought by the Internet to the consumer sector have been felt by everyone, as well as the industrial sector. For example, crowdsourcing has been widely used in the product design stage, and I believe that in the future, in the supply chain, in the market service, how to be more accurate, more interactive with consumers, these will bring great changes to our existing model, and we are involved in a lot of projects are focused on this aspect of the change.