On July 7, American General Electric (GE) Company reached a cooperation with China Telecom Group to integrate its Industrial Internet Predix platform (equivalent to an operating system for industrial equipment) with China Telecom's integrated information services. From then on, the American Industrial Internet will enter areas such as cloud storage, remote medical applications, smart manufacturing, and cloud computing in China.

　　A few days later, the Industrial Internet China Association was established in New York. This marked a major breakthrough in international cooperation between the industrial and information and communication sectors of China and the U.S., following the establishment of the Industry 4.0 dialogue between China and Germany.

　　It is reported that GE has initiated 12 Industrial Internet pilot projects in China and is promoting the implementation of over 40 big data analysis applications. The Industrial Internet, known as a symbol of the third industrial wave, has begun to substantially participate in and influence the progress of the 'Internet+' action plan in China's industrial sector.

　　Before the large-scale introduction of the Industrial Internet in China's industrial sector, it is necessary to thoroughly examine its origins, what it aims to achieve, its purpose, and whether it has any side effects.

　　Industrial Internet

　　Re-inventing 'Made in America'

　　After the 2008 financial crisis, the biggest reflection by the U.S. government was realizing the importance of the real economy in the national economy, believing that industry is the most crucial component of national competitiveness. A series of national plans were successively introduced, such as the 'Framework for Revitalizing American Manufacturing,' 'Advanced Manufacturing Partnership,' and 'National Strategic Plan for Advanced Manufacturing,' to achieve the national strategy of 're-industrialization.'

　　In 2012, GE, as a leader in American manufacturing, pioneered the concept of the 'Industrial Internet.' Relying on interconnectivity and analytical software between machines and equipment, it transformed the previous model primarily based on standalone intelligent devices. Through a combination of high-performance equipment, low-cost sensors, the Internet, and big data collection and analysis technologies, it significantly improved the efficiency of existing industries and created new ones.

　　This idea has a long history. As early as 2005, when GE's aircraft engine company was reorganized into GE Aviation, a shift in its business model began. The company's original business was solely the production of aircraft engines. Now, by installing numerous sensors on aircraft, real-time collection of various aircraft parameters, and utilizing big data analysis technology, it provides airlines with a complete set of solutions for operations and maintenance management, performance assurance, operational optimization, and financial planning. It can also offer various services such as safety controls and flight predictions, gradually transforming GE into a full-fledged software company.

　　Taking Alitalia as an example, GE installed hundreds of sensors on each of their aircraft, which can collect real-time data such as engine operation, temperature, and fuel consumption. After massive analysis using GE's software, it precisely provides ideal control methods. This single item saved Alitalia $15 million in fuel costs per year for its 145 aircraft. Moreover, these data allow for predicting potential engine failures in advance and performing proactive preventive maintenance, avoiding flight delays, increased costs, or even major safety incidents caused by machine malfunctions.

　　It is precisely through this deep integration of IT technology and equipment that GE has gradually transformed from an equipment manufacturer to an intelligent service provider, and its business model has shifted from single equipment sales to a tripartite intelligent system provider encompassing intelligent equipment, intelligent analysis, and intelligent decision-making.

　　Experts generally believe that the value of the Industrial Internet will primarily be reflected in three aspects: first, by improving equipment utilization efficiency, thereby reducing energy waste and partially boosting GDP. Second, by enhancing the maintenance efficiency of system equipment and shortening maintenance time, which is equivalent to increasing productivity. Lastly, by optimizing and simplifying operations, effectively liberating more valuable human resources.

　　GE predicts that if the Industrial Internet can increase productivity by 1% to 1.5% annually, then over the next 20 years, it will raise the average income of Americans by 25% to 40% compared to current levels; if other regions of the world can ensure half of the U.S. productivity growth, then the Industrial Internet will add $10 trillion to $15 trillion to global GDP during that period.

　　To this end, GE established an Industrial Internet R&D center in Silicon Valley in 2011, and its research team has now grown to over a thousand people. In 2013, GE announced it would invest $1.5 billion over the next three years to develop the Industrial Internet. In April this year, GE announced that it would divest most of its $363 billion financial businesses within the next two years, and plans for 90% of GE's profits in 2018 to come from high-return industrial businesses, compared to 58% last year.

　　From this, we can see that the value of the Industrial Internet lies not only in driving the transformation of main manufacturers towards intelligent manufacturing systems and service providers but also in potentially creating a new high-end real economy business model with profit margins even higher than those of the financial industry.

　　Open Platform

　　Building an 'Apple' System for Smart Manufacturing

　　The United States is the birthplace of the internet, and the Industrial Internet bore a distinct internet imprint from its inception: openness. Compared to the internet, the Industrial Internet needs to achieve openness not only among ICT technology areas such as telecommunication networks, data storage, and transmission but also between manufacturing technology and IT technology, fostering their integration.

　　This is an R&D alliance that spans 'two ITs.' In March 2014, GE partnered with IT companies such as IBM, Cisco, Intel, and AT&T to form the Global Industrial Internet Consortium (IIC). The Industrial Internet Consortium adopts an open membership system, aiming to enable data sharing among devices from various manufacturers. This involves not only Internet network protocols but also various parameter indicators such as data storage capacity, interconnected and non-interconnected devices in IT systems. Its purpose is to break down technological barriers by establishing common standards, leverage the Internet to activate traditional industrial processes, and better promote the integration of the physical and digital worlds. 'It aims to accelerate the development, acquisition, and widespread use of connected machines and devices, foster intelligent analytics, and assist workers.' Currently, the Industrial Internet Consortium has 167 members.

　　This is an open system with ecological significance rather than supply chain significance. In October 2014, GE announced that its Industrial Internet Predix platform (equivalent to an operating system for industrial equipment) would be open to all companies globally, introducing the cooperation model between platforms and application developers from the Internet domain into industry, facilitating and ensuring users' large-scale and rapid development of custom industry applications. This industrial ecosystem, highly similar to Apple's in the smartphone sector, will greatly accelerate the rooting and implementation of the Industrial Internet across various manufacturing sub-sectors.

　　This is a standardized cooperation organization targeting the global market. Currently, Chinese enterprises and institutions such as China Telecom, Haier, Huawei, China Academy of Information and Communications Technology, and Shenyang Institute of Automation, Chinese Academy of Sciences, have joined the IIC, and will synchronously share cutting-edge technologies and resources with the global Industrial Internet industry.

　　We believe that the purpose of GE and other companies in establishing the Industrial Internet Consortium is to leverage the U.S. advantage in information technology, and through deep integration with manufacturing, gain the initiative in technical and industry standards, thereby achieving a dominant position in global competition. So far, the Industrial Internet is not yet a national strategy for the U.S., which stands in stark contrast to Germany's national effort in promoting its Industry 4.0 strategy. However, since many American companies within the consortium are responsible for U.S. 're-industrialization,' and one of its core technologies is the CPS (Cyber-Physical System), many scholars study the Industrial Internet as an industrial strategy equivalent to Industry 4.0.

　　The cooperation with China Telecom can be seen as the first step for the Industrial Internet to extend an olive branch to Chinese enterprises. But hold on, what can China gain by participating in this new industrial process aimed at revitalizing American manufacturing?

　　Let's bring our attention back to the first ecosystem of intelligent manufacturing—the smartphone platform. Nokia, which had held the top global market share for 15 consecutive years during the feature phone era and whose R&D investment was once five times that of Apple, lost in its first battle in the smartphone ecosystem, eventually falling in 2013 and changing ownership. This is the lamentable story of the first manufacturing giant unable to adapt to the intelligent era. In this story, China was clearly an observer, learner, and beneficiary. After Apple, a new, more open-minded platform—Android—quickly rose. Through cooperation with Apple, a large number of small and medium-sized Chinese developers gained billions of yuan in application revenue, fostering many software and hardware development teams for the upcoming "Internet+" era. And by leveraging cooperation with Android, coupled with the enterprising spirit of Chinese mobile phone manufacturers, manufacturers like Huawei, ZTE, Xiaomi, and Coolpad truly entered the top tier of global smartphone shipments.

　　The field of intelligent manufacturing is very likely to see a competitive landscape similar to that of smartphones. German Industry 4.0 and the American Industrial Internet will undoubtedly support the two most important global platforms for intelligent manufacturing in the future. The author calls on China's industrial and information and communication sectors to pay close attention to the historical opportunities emerging from this, to move towards each other, and to work together to integrate global innovation resources, thereby accelerating the intelligent transformation of China's industrial economy. In comparison, the China-Germany Industry 4.0 dialogue process, being government-led, has been quite slow and has not yet reached the point where heavyweight enterprises join each other's industrial cooperation organizations to jointly advance conceptual discussions and define standard systems. In contrast, the Industrial Internet, positioned for open cooperation among enterprises and market-driven, has already "come from behind to lead" in its localization journey within China experiential learning process focusing on

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　　Through our observation of GE's transformation to intelligent manufacturing using the Industrial Internet, we found that world-class manufacturing giants have moved from individual device intelligence to system intelligence, and from leveraging intelligence through simple automation and informatization to leveraging intelligence through deep integration of ICT and equipment, thereby forming a series of new industrial intelligent services such as equipment networking, data collection, big data analysis, and intelligent decision-making. Although GE advocated and established the Industrial Internet Consortium and was the first to open its Predix platform, a main manufacturer with a relatively singular manufacturing model (mainly focused on aerospace, energy, medical, and other fields) may not necessarily develop into a unified industrial application platform controller similar to Apple. The dispersion of various industrial sub-sectors and the complexity of manufacturing technologies will make the platform game and the great power game in intelligent manufacturing even more perplexing.

　　When American manufacturing giants bravely abandoned their lucrative financial divisions and plunged into the torrent of intelligent manufacturing without hesitation, intelligent transformation is undoubtedly a new wave of industrial change that will alter the future landscape. At the same time, we see that Chinese listed companies, using numerous new concepts, have raised huge sums of money, but the vast majority of it flows into real estate, finance, and especially the stock market. The contrast between these two approaches is something that should alert us! (Hu Hu, Zhu Duoxian)