Recently (December 21st), Ebrun's "2021 Industrial Internet Development Report Dual-line Launch Conference" successfully concluded at the Beijing Marriott Hotel. The report, jointly released by Ebrun Think Tank, Tsinghua University E-commerce Transaction Technology Engineering Laboratory, and the Yangtze River Delta Industrial Digital Innovation Center, is a significant research achievement in the industrial internet field for 2021.

Attending the live launch were Ebrun Chairman and Ebrun Think Tank President Zheng Min, IBI Board Secretary and Senior Vice President Pan Yong, Nongxin Hulian Chairman Xue Suwen, and representatives from primary and secondary market institutions.

At the launch, Pan Yong delivered an excellent speech entitled "A-share Case Enterprise Sharing: The Value and Layout of Factory Digitalization". He deeply shared the thought process and industry trends that traditional enterprises should have while advancing and practicing digitalization, combining IBI's outstanding performance in the industrial field and the application of intelligent technology in practical scenarios.

In his sharing, Pan Yong stated that digitalization is not for the sake of digitalization itself; the goal is to solve enterprise and industry problems, and ultimately the focus of digitalization will fall on the data level. The process of digitalization involves building data deposition channels and data acquisition capabilities. Industrial internet platforms are naturally vehicles for implementing digital services.

It is reported that this year marks the third year that Ebrun Think Tank has released the Industrial Internet Report. The theme of this year's report, "Seeing Digital Value", is an upgrade from last year's "New Paradigm" theme. The "New Paradigm" first specifically divided the industrial internet into 3+1 categories: network collaborative intelligent manufacturing, digital supply chain, dual-capability brands (intelligent customization or quick-response capability), and intelligent enterprise services. "Seeing Digital Value" first unveils the "industrial digitalization" value release points that support the rapid growth of the industrial internet.

As a benchmark A-share listed industrial internet enterprise, Guolian is currently promoting the digital transformation of cloud factories. It has signed digital cloud factory cooperation agreements with more than 20 enterprises and plans to continuously land 100 digital cloud factories in the next three years.

In his sharing, Pan Yong also revealed that in the future, IBI will continue to explore the comprehensive construction of digital tool systems and the building of the industrial chain ecosystem. Regarding this, Pan Yong emphasized, in this process, first build a trust relationship through e-commerce transaction services, then construct supply chain digital services, and deeply understand the pain points of enterprises to gradually solve digital business operation issues. The digital process should particularly focus on solving enterprise problems and be advanced layer by layer in a paced manner.

As a seasoned predecessor in the industrial internet field, Pan Yong proactively "dialogued" with young companies in the field. He believes that industrial internet companies should first think about which problems they have solved for the industry and what actual value they have brought. "Even if you currently have no profits and your revenue is not particularly good, if the value contribution point is precise, it means you have found a good breakthrough point. As long as the tactics are appropriate and execution is reliable, the enterprise will develop well," Pan Yong summarized.

Speech Transcript

Pan Yong: Hello everyone! I remember back in 2019 when the company had just listed and was still in various roadshows, the capital market asked us most about why we were the only ones able to maintain such rapid growth. And today, in this occasion with Mr. Zheng, we see that apart from us, many other companies in the track are doing very well. They just haven't gone public yet.

Currently, primary market financing for industries is very active, and many companies have even entered the filing process.

In September when I went to Shenzhen, a fund manager told me that we have only benefited from the fundamentals of an excellent company, and the valuation "dividends" of the track are basically zero.

Today, everyone present here, when researching industrial internet companies, will definitely face complex knowledge structure challenges. You might understand the internet well but not traditional enterprises. In your minds, our business growth logic does not have a clear model framework. With more and more industrial internet platforms going public, this issue will become increasingly important.

Some points I've repeatedly mentioned in exchanges with everyone over the past two years are: What is the industrial internet? How is it different from e-commerce and the industrial internet? What is the relationship between the different concepts launched by various ministries?

In my exchanges with Mr. Zheng, he particularly agrees on one point, which is that this matter requires the government to act as a hub from a policy level, and then we companies can form a unified concept together, thereby forming cognition from top to bottom.

Furthermore, the two concepts Mr. Zheng mentioned in the report align highly with my understanding.

First, transactions are core. All internet platforms cannot bypass this stage. Transactions and capital as the core needs of most enterprises are particularly important in some industries, like steel. Therefore, industrial internet practitioners cannot bypass the inherent development model and development logic of traditional industries. We need to build our internet model based on this development model and logic.

Second, digitalization. This is also an important structure supporting our strategic system. IBI's Duoduo Platform is different from many industrial internet platforms. We are engaged in bulk raw material e-commerce transactions, with no comparable companies internationally or domestically. In terms of digitalization, domestic early SaaS informatization development focused more on central state-owned enterprises and less on small and medium-sized enterprises. I divide it into two platforms: one called a closed platform and the other called an open platform.

Central state-owned enterprises are closed platforms, which are based on a supply chain management system built by themselves and their upstream and downstream. Guolian's Duoduo Platform is gathering other enterprises in an open ecosystem to construct a digital ecosystem. This work is more difficult, requiring clear focuses and a better value contribution system.

Every case in Mr. Zheng's report clearly states what problems this enterprise solved for the industry. Mr. Xue and I will also tell you during the introduction what value we have brought to enterprises in the industry and how we solve this problem. This is the grasp and core value of the industrial internet.

I am also responsible for the company's investment and financing business. When we look at enterprises, we pay the most attention to what problems you have solved for the industry's enterprises and what value you have brought. Now, you may have no profit, and your revenue may not be particularly good, but if the value contribution point is particularly precise, it means you have found a very good breakthrough point. As long as the tactics are appropriate and execution is reliable, there will definitely be very good development.

Today, I want to introduce the advancement and practice of digitalization in traditional enterprises, but it must be emphasized that different industries have different models. My experience is effective within my field, but it may not be effective in other industries. I can only try to talk about some commonalities.

First, let me briefly introduce Guolian's business. IBI was established in 1998 and underwent a shareholding reform in 2002. Initially, it was an enterprise engaged in industrial media, providing media services for different vertical industries. This history laid the industrial gene for the company's development over the next 20 years, and Guolian has never left the industrial enterprise service market.

In 2006, we underwent our first transformation, triggered by "adversity brings change". In 2005 and 2006, we faced a large-scale revenue decline, leading us to vigorously imitate Alibaba's 1688 in 2006, launching the Guolian Resource Network, which we summarized as the 1.0 B2B information service model, with revenue sources relying on advertising fees, membership fees, conference fees, etc. This continued until 2013 when it hit a bottleneck.

An episode in 2011. .

At that time, the idea of Internet+ began to emerge. To promote our Internet online membership business, we also launched an enterprise Internet+ service. During this process, we discovered that many enterprises highly recognized the Internet and digitalization and hoped we could help them with some internal digital work. Later, we established a technical team dedicated to internal enterprise informationization. Now, much of our SaaS source code was accumulated during that time. In 2013, the company's growth began to decline, and we felt that the ceiling of the 1.0 model had been reached. It seemed like a long wait for death, with no opportunity or possibility for overtaking on a curve. So, in 2013, we began our second transformation; by the end of 2014, we established the TDD platform. In 2015, we officially entered the fast lane. There was also an opportunity here. We raised more than 200 million on the New Third Board at that time, which supported us through the early stages of unattractive data until we went public in 2019. Even though we listed on July 30th, 2019, we still define ourselves as an early startup.

I divide Guolian's development stages into three phases: the first phase is "seeking industrial voice through transactions", the second phase is "seeking higher competitive barriers and industrial voice through digitalization", and the third phase is "seeking industrial voice through digitalization". Using TDD as an example, its three major categories are titanium, alcohol, and resin. In the titanium sector, we started with titanium dioxide and have now extended to the entire titanium chemical chain. Apart from the upstream mines and downstream finished product series, any enterprise in our ecosystem has overlapping identities.

We build stickiness with enterprises from both ends: both as a raw material supply partner and a product sales partner. This stickiness is very strong and extremely effective in promoting digitalization. You can establish a strong trust relationship with them, greatly enhancing data acquisition capabilities.

The ultimate goal of digitalization is data. To achieve this goal, diverse services must be provided to promote cooperation stickiness and trust-building among enterprises. Only in this way can they accept the digital solutions you offer.

Without any service-level connection with them, proposing digital solutions right away is hard for enterprises, especially small and medium-sized enterprises, to accept in practice.

Digitalization is not for the sake of digitalization itself; ultimately, it will come down to the data level. The process of digitalization is, in fact, to build data deposition channels and data acquisition capabilities.

Why is data important? We believe that the future of industry must revolve around data operation. On this premise, only enterprises with sufficient service capability for the core data resources of the industry can become the core of industrial operations.

We believe that industrial internet platforms are essentially the vehicles for implementing digital services.

The industry has various roles, with some dedicated to developing digital tools, whether they are SaaS types or information-based enterprises. Their strength lies in technological development. However, these products encounter a problem when implemented: every vertical industry has its own logical characteristics and framework of industry knowledge. If you are unfamiliar with this industry, it means your product will struggle to meet the industry's needs.
It is almost impossible for a generic software to be deeply used within an enterprise. Why can industrial internet platforms achieve industrial connectivity? Because we are based on a comprehensive understanding of traditional industries and possess a complex knowledge structure. Otherwise, it would be difficult to identify the fundamental problems of the industry and propose effective solutions by integrating the internet and new technologies.

We can assist our partners in building the architecture of industry-specific knowledge, enable them to understand the actual gap between product and enterprise needs, help them construct a complete system, and act as the "system integrator." This is because we understand both traditional industries and technology, making integration seamless;

Secondly, because we have established these service systems, we have already built a strong trust relationship with enterprises.

Once you have established a transaction and cooperation relationship with an enterprise, suggesting a digital transformation of the supply chain, managing everything from production to sales, logistics, and warehousing becomes much easier for the enterprise to accept. This is because they understand that this setup can genuinely improve their management efficiency.

After helping them with the digital transformation of their supply chain, all traditional enterprises will have a desire to expand. One reason is to improve internal management efficiency, another is to open a new factory or add a new production line, and of course, there could be more.

If there is a need to expand externally, having a brand-new base where digitalization can be implemented from the start will be much easier. At that time, all requests, such as improving work, management, and production efficiency using information and digital means, will be readily accepted.

Finally, it is essential to establish a profit model that integrates digitalization into transactions.

Regarding promoting digital work, our main strategy now is the "cloud factory." This originated from stronger ties with the supply chain through production and sales cooperation. Additionally, we have a PTDCloud Industrial Internet solution that simulates production processes entirely on the data side using digital twins. In the future, all process flows will integrate this system through AI or business intelligence.

During the implementation, we have a few insights.

(1) Entry point

First, the entry point is also known as the trust relationship. The premise is that they trust you enough, are willing to accept your plan, and are willing to provide their data for analysis. Therefore, the first point is to build a relationship of mutual interest.

Everyone knows that bulk buying on platforms is definitely cheaper, but why doesn't everyone immediately move all procurement onto the platform? It is because long-term stable supply chain trust relationships are hard to break; constructing trust relationships takes time.

Second, prioritize building digital supply chain services as they are closely related to transactions. Moreover, transaction demands are undoubtedly the strongest among small and medium-sized enterprises.

Third, deeply understand the pain points of enterprises. You must understand the enterprise well enough, and your plan should be helpful to them to persuade or convince them.

(2) Sense of rhythm

Digitalization must be constructed layer by layer. Offering a vast and comprehensive solution covering thousands of functions to an enterprise right away will only confuse them. Digitalization should be advanced layer by layer and constructed based on the enterprise's actual demands.

For example, during peak seasons when numerous trucks enter the warehouse, the previous model required drivers to give IDs and delivery notes to gatekeepers, who then called names over loudspeakers. Now, we've created an app called "Queue Sync," allowing vehicles within 5 km of the factory to automatically queue using the program. Cameras directly record entry, loading/unloading, and weighing, significantly enhancing loading efficiency during peak seasons.

Also, we have developed a digitalized testing device, reducing the testing time of goods from the original 3-4 hours to 20-30 minutes. After the results are uploaded to the system, the test report is bound with the goods, allowing customers to search and trace online. Upon receipt, customers can forgo additional testing, improving delivery efficiency and reducing trust costs. This enhances the operational efficiency of the entire industry.

Apart from that, we have also undertaken digital transformation focused on energy consumption. Many enterprises are aware of their energy consumption but are unaware of the industry's average energy level. With this system, enterprises can identify their position within the industry's energy consumption levels.

(3) Execution capability

Ecosystem construction should be promoted with partners. Though currently the supply chain is our own intellectual property, we achieve digital transformation through collaboration in areas like testing and energy consumption, including future factory safety assessments. For the platform, digital ecosystem construction also implies collaboration, making execution capability crucial in partnerships.

(4) Scalability

Industrial advancement should be based on customization.

Why do enterprises hesitate to customize? Because customization implies implementation in only one enterprise, causing costs to become tremendously high. However, for Guolian, customizing products in the same industry means that the cost of customization can be shared across dozens of enterprises.

But there's a prerequisite: the ability to achieve thorough advancement in the supply chain. Guolian inherently possesses this ability because they have already built cooperative relationships within the industry chain. If progress is made in one enterprise, it can naturally be advanced in other enterprises. Such scalability becomes meaningful for partners in terms of profitability and cost reduction. We've already begun experimenting by selecting an enterprise for digital transformation in each phase within the industry chain. The hope is to realize interconnectivity across logistics, finance, and information levels through digital tools.

Additionally, within a closed ecosystem, large central enterprises possess considerable influence and capacity. However, in open ecosystems, many enterprises also need platforms and tools to help achieve connectivity, which is what industrial internet platforms should undertake.

Therefore, my conclusion is that digitalization determines the future.

Thank you all!