$TENCENT | Tencent's Manufacturing Strategy - ChinAI Newsletter

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Greetings from a world where…

众人拾柴火焰高 [When everyone adds fuel, the flame burns brighter] zhong4ren2 shi2 chai2 huo3yan4 gao1

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Feature Translation: Tencent and Manufacturing?

Thanks everyone for taking part in the second round of ChinAI Around the Horn. Another close vote among 1, 4, 3, and 9. I chose #1 — “Tencent, a Manufacturing Re-evaluation” — since it had the most support among the choices that paying subscribers voted for (and tied for most votes overall).

Context: in-depth article on Tencent’s effort to transform China’s manufacturing sector from 机器之能/jiqizhineng (Synced), which has been the source for many previous ChinAI issues on smart manufacturing and the industrial Internet: #58, #70, #78.

Key Takeaways:

  • Wu Xiaobo, a financial writer, predicted in 2017 that in the next few years, 80% of small and medium-sized enterprises in traditional manufacturing will go bankrupt
  • These companies have two choices: 1) transform via informatization (think robotic arms and industrial Internet); 2) implement the “servicification” of manufacturing — for instance, if you’re a construction machinery manufacturer, you also have to provide maintenance services for the equipment after the initial sale.
  • Tencent is working at multiple entry points in the manufacturing chain, including: marketing, data collection and monitoring of equipment, industrial vision in production lines, and ecosystem partners in independent software vendors.

Mini case studies of all 4 vectors:

  • Marketing: WeChat Enterprise/WeChat Work (similar to Slack) helps LingLong Tire target hundreds of millions of users directly, rather than going through 400 dealers and 50 or 60 automobile factories. Linglong was ranked first among Chinese companies in the tire original equipment list, though Michelin and four other foreign companies placed abote it (insert bad headline about the race for tire dominance).
  • ICT monitoring and data collection on equipment: SANY Heavy Industry can complete the monitoring of 400,000 engineering equipment, reaching early warning of equipment failures 6.5 hours in advance, and the early warning accuracy rate is 87%.
  • Industrial vision opportunities in production: Tencent Cloud’s work with China Star Optoelectronics the first domestic AI recognition project for LCD panel defect types, ADC (Auto defect Classification, has been repeatedly brought up as a typical example of industrial Internet intelligent manufacturing.
  • Ecosystem partnerships with independent software vendors: "The service provider does something similar to a bricklayer, building the raw materials provided by Tencent into a house where businesses can live." Zhu Ning, the founder of Youzan, once described the relationship between the WeChat ecosystem and Youzan.

Article posits some intriguing differences between Germany and China re: their approach to manufacturing transformation:

  • In Germany, top companies within the manufacturing industry led the charge; in China, the existence of major consumer Internet companies dictates that they will play an important role in the transformation of manufacturing.
  • Germany more focused on optimizing production processes, whereas Chinese companies see more opportunities in improving the range of manufacturing services —to me, this one was more of an unproven generalization but an interesting theory
  • Longtime readers are probably tired of me harping on this point, but read the full translation and you’ll find that there are zero references to the U.S. in this entire article. In contrast, references to Japan and Germany abound. AI is not a two-player game.

Thank you for reading and engaging.

These are Jeff Ding's (sometimes) weekly translations of Chinese-language musings on AI and related topics. Jeff is a PhD candidate in International Relations at the University of Oxford and a researcher at the Center for the Governance of AI at Oxford’s Future of Humanity Institute.

Check out the archive of all past issues here & please subscribe here to support ChinAI under a Guardian/Wikipedia-style tipping model (everyone gets the same content but those who can pay for a subscription will support access for all).

Any suggestions or feedback? Let me know at chinainewsletter@gmail.com or on Twitter at @jjding99