First, the task of informatization.

There are five specific tasks:

The first is the further innovation and development of the information industry itself through accelerating IT infrastructure development, and in particular mastering the core technology as soon as possible. The second task is to promote deep integration of informatization and industrialization, focusing on the strategy of “Made in China 2025” and “Internet Plus” to propel intellectual manufacturing via new information technology. The third is promoting informatization in all sectors of the economy and society. The fourth is to boost consumption and improve quality of life by producing more modern and user-friendly intelligent devices, which will lead to a heathier and more secure market. The fifth is the maintenance of information security at national, industrial and public levels by means of comprehensive governance in legislation, cybersecurity management, law enforcement, technical equipment and support.

Informatization is featured by broad coverage and deep penetration. Informatization is closely related to various areas and industries of the economy and the society. Therefore, a new term has emerged, “Information Economy”, as a result of the interactive and coordinated development of informatization, industrialization, urbanization, and agricultural modernization.

Second, Made in China plus Internet.

“Made in China” plus “Internet” plays a significant role in promoting informatization, where the industrial manufacturing is the main battlefield. This includes collaborative innovation, cooperative R&D, crowdsourcing designs, digitalization and intellectualization of manufacturing, personalized and mass customization, and transformation towards service-oriented manufacturing.

Where to begin with the intellectual manufacturing that we often talk about? First is the digitalized R&D and design, which needs to be increased up to 84% by 2025. Second is the integrated application of electronic information technology, especially in critical components and materials, which should reach a self-sufficiency rate of 70% by 2025. Third is the numeric control of manufacturing equipment, which should be increased to 64% by 2025. Fourth is the intelligent control of manufacturing process. Fifth is the establishment of a new set of standard specifications for manufacturing technologies.

Third, the cross-border convergence of the network economy and real economy.

The new concept of smart industry was proposed for the first time in “Industry 4.0” by Germany, which attaches more importance to the upgrading of the real economy and the intellectualization of production lines. The U.S. enjoys the advantages in technological resources, finances and internet, and thus further advocates Industrial Internet. The U.S. and Germany have their own distinctive characteristics. “Made in China 2025” embraces the approaches from both of the countries and is based on the high integration of industrialization and informatization, focuses on intelligent manufacturing by means of “Internet Plus”. At national strategy level, China's rise as a major power in cyberspace should be accompanied by its rising power in the manufacturing industry.

German industry nowadays is considered as a model of process excellence, but it was not the case hundreds of years ago when Germany was viewed as a copycat. Prior to the industrial revolution, Germany remained a very primitive and agricultural country. However, as the development of the industrial revolution progressed, Germany began with copying advanced technology and later imported modern facilities. Finally, the country succeeded in the Industrial Revolution. It was not because of copying, but creating an innovative culture that fed into our innovation ability. This is very similar to China, but China is advancing way faster than Germany.

In my view, some elements are essential to future success: first, the environment and the quality of production factors; second, the industrial ecosystem; and third, the company’s internal support for employees’ professional development.

Germany takes vocational education very seriously. Around 70% of high school graduates choose to receive vocational education. The professionalism enables them to be qualified for any occupation, which benefits the enterprises and ensures the quality of the whole production flow. German enterprises are very keen on cooperation. At Zeiss, we have a number of cooperative projects. For instance, we founded a school in Zhangjiakou with the goal of cultivating advanced talents in the field of measurement. Through cooperation with local communities, in particular with Volvo Zhangjiakou Engine Plant, we were able to carry out some small projects in China, aiming to build a local ecosystem and help to train local talents. Moreover, these projects have injected new vitality into business, attracting potential clients and business partners, who were inspired by us and might launch more similar projects in China. This is what I refer to as the positive impacts of the ecosystem on the entire value chain.

There is another case in Germany. One federal state of Germany is known as one of the most innovative places in Europe. It is endowed with an extraordinary industry and R&D capacity, which is not only attributed to its large enterprises, but also to small and medium enterprises. Nearly 100 R&D institutions have set up offices there, which brought market innovation. We hope that China can do similar projects. Shenzhen, for instance, has the advantage of integrating industry, academic and research institutions in the field of medical equipment, and Beijing is also building up its unique IT ecosystem. This is so-called open innovation. We are cooperating with Tongji University in Shanghai to establish the Advanced Manufacturing Center at Sino-German College. The “Industry 4.0”, in essence, is a synergistic network, in which we bring various sectors, industries and R&D institutions together to achieve the innovation and the completion of the ecosystem.

Last but not the least, I would like to emphasize that ongoing training for the staff is a key to the sustainable development and innovation of an enterprise. Competent, educated, and skilled employees are needed for the enterprises. Only through their long-term service can a truly advanced manufacturing industry be created. To ensure the future dynamic innovation and the competency of the staff, in my view, it is necessary for companies to invest in staff to support their personal development.

JIC Investment has always been devoted to investing in the manufacturing sector. Years of experience has helped us gain a profound understanding of the changing demands of Chinese manufactures for investors: initially they only cared about capital and public listing, but later on they started expecting investors to support their management improvement, organizational optimization, and M&A.

Such change is inevitable at the current stage of China’s manufacturing development. Since the late 20th and early 21th century, developed countries have relocated low-profit, energy-intensive and labor-intensive processing and manufacturing industries to developing countries. Chinese manufacturing made rapid progress by taking full advantage of this opportunity. However, in the meantime, they paid the price of environmental risks and resource scarcity, which resulted in high-speed growth accompanied by being locked at the low end of global value chain. As the global manufacturing landscape experiences profound changes, western countries have begun “Re-industrialization” and emerging economies such as India, Vietnam are pursuing industrialization rapidly by utilizing their even lower costs, including labor costs, which makes China’s manufacturing under dual pressure. In this major transition, if manufacturers can proactively upgrade and transform themselves, they will win greater potential for further development and become the propeller of transformation of Chinese manufacturing. If not, they will possibly lose the market or even exit the market.

Today, Chinese manufacturing is at the juncture of value chain rebuilding. More and more visionary entrepreneurs put forward more requests for investors, hoping that we will offer not only money, but also comprehensive resources for management, mechanism, talents, capital operation, M&A, etc. We believe that capital providers should move to the front end and change its role from passive participation such as supporting, assisting and cooperating to active guiding, optimizing and improving. Based on our investment experience in manufacturing industry, we have been increasingly realizing that in the future, investors, as opposed to enterprises, will pioneer in the manufacturing transformation and upgrading. That is because capital, with less constraint from industry development level, tends to be allocated more flexibly and managed in a more efficient and economical way that overcomes the “inertia” of industrial capital in terms of material and functional transformation. In this case, investors can move to the forefront of M&A and industrial integration, and optimize the allocation of enterprises’ resources by means of capital to further dominate the industrial upgrading, transformation and resource allocation.

We focus on three areas in manufacturing investments: 1. Follow the principle of technological progress. We pay close attention to in-depth observation, trace and analysis of rational market demand and developmental paths of manufacturing industries, rather than following others irrationally. 2. Focus on the strategic elements of the global value chain. With these strategic elements at our hands, we can be more proactive in integrating and developing industrial chain. 3. We look for cooperative management with vision and foresight. The cooperation of capital providers and enterprises is a long-term process in which they will tackle many obstacles together. Therefore, we are very careful on the selection and the building of management teams—first, we look at their open mindedness and horizon, and then, their willingness and readiness to cooperate.