[Guide]: Foxconn has always thought that it has become the world's largest foundry, but not long ago, Guo Taiming also announced that Foxconn will enter the industrial Internet. China's manufacturing has always been synonymous with low-end foundry. Now it seems that the industrial Internet of Things or It is a life-saving straw.
After the "ZTE event", the entire Chinese industry has been eagerly rethinking, from mechanization to electrification, from the electronics industry to informationization. Due to the late start, the Chinese industry has always been passive in core competition.
What is the way out for making in China? Can China seize the next industrial commanding height?
On the occasion of everyone's thinking, on May 17, at the Second World Intelligence Conference, Guo Taiming declared that the Industrial Internet will be the way out for Chinese industry and the opportunity for the entire real economy.
As a well-known foundry business owner who was once known as "Foxconn thirteen jumps", Guo Taiming should be most aware of the fact that the so-called "international OEM" creates profit and employment opportunities, but also means helplessness.
Every time an iPhone is assembled, Foxconn's assembly line has a meager profit of less than 4.5 US dollars. The iPhone has swept the world and brought away the youth of hundreds of thousands of Chinese workers. How should a “labor-intensive†enterprise, and even a country, develop after the initial accumulation?
With Foxconn's upcoming A-share, Guo Taiming gave the answer to "Industrial Internet." What is doubtful about the outside world is: From the "low-end foundry" to the industrial Internet, can it be as magical as Guo Taiming said?
Can the industrial Internet be a new opportunity for China's industrial transformation and upgrading, or is it just a revamp of the “trade and industry†route, which will eventually make the Chinese industry further shackle with Western technology?
One of the most popular views on the Industrial Internet is to replace artificial labor with robots. In the previous report on Foxconn, the use of unmanned factories and a large number of robots has become a scene for the future industry.
With the rise of China's labor costs and the aging population, the loss of cheap labor advantage is becoming the biggest threat to low-end foundry and labor-intensive industries.
However, in the voice of an industrial Internet and automated production, the most overlooked thing is that the root cause of the crisis is precisely the slow growth of labor income.
Workers are also consumers. When their income growth is much lower than industrial growth, especially when they are lower than capital (real estate) growth, the products lose their market and the crisis of the whole industry breaks out.
Workers on the Foxconn iPhone production line can't afford the iPhone, which is the epitome of the root cause of the entire industry crisis. It is hoped that the profit of the foundry can be more abundant. The industrial Internet technology repeats the production mode of low-end foundry. For enterprises, it is only a short-term relief of the crisis. In the long run, it seems to be tantamount to drinking and quenching thirst.
It is undeniable that machine replacement labor will greatly improve production efficiency, and this advantage is obvious in areas such as labor intensity, high risk and scanning classification. But for refined labor, the cost of replacement is higher.
Especially for electronic product assembly companies such as Foxconn, the application cost of robots and automation is high, the production line conversion is not flexible, and the fixed capital investment for expansion and production reduction will be much higher than the wage cost.
At present, the annual cost of a worker at Foxconn is about 50,000 yuan, and the purchase cost of a common robot arm is only about 100,000 yuan. A robotic arm can generally replace the labor of 3-4 workers. On the surface, the application of robots is more cost-effective than workers.
However, in addition to the cost of purchase, a common robotic arm must also consider the installation cost, the purchase cost of the control system, the commissioning cost of the production line, and the system maintenance cost. These costs are almost one to three times the cost of acquisition. The cost of a 100,000 yuan robot is at least 200,000 yuan.
However, robots, like workers, are not “employed†and can be used after systematic training and debugging. The entire robot's system is installed and learned until stable operation, ranging from two weeks to one month. More critically, although these robots can last for 10 years or more. However, it is common for OEMs to adjust their product lines in a few weeks and months.
The versatility and resilience of the machine is much lower than that of the workers. Workers can achieve a smooth transition through training in a few days or weeks. Robots often need technical updates and inputs, and sometimes they have to “retire†in advance and become second-hand. equipment. Therefore, it is obviously not feasible to calculate the cost of using the robot according to the general depreciation of the equipment.
Although Foxconn is greatly increasing the number of robots used, this number has limits, not as many as possible. After Foxconn proposed a three-year, one-million robot replacement program in 2011, it was actually a thunderstorm, and by 2014 it had only completed 400,000 replacements. According to Foxconn, the factory automation rate in China will reach 30% by 2020.
Although the installation and general procedures of some precision parts can be replaced by robots, the cost of robots is obviously too high for a large number of common assembly jobs.
The most troublesome issue is more than that. Even Musk has to admit that "unmanned factories" and "excessive automation" have placed a heavy burden on Tesla.
With the advancement of technology, the cost of robots is likely to be further reduced, but at the level of capital investment, it is difficult to change the current embarrassing situation. Because the wages of workers are paid monthly, the investment and product returns can be rolled monthly. The cost of robots is a one-time investment, and even if the financial leasing is taken into account, companies have to pay high interest rates.
In the case of a need for expansion, the deployment of workers is more flexible. You can ask the worker to work overtime, but you can't overload the robot. Once the capacity needs to be expanded, the cost and time of purchase, installation and commissioning of robots is much greater than that of workers.
This means that projects that could have been rolled up for a month's wages now have to be invested in one-off, one-year or even two-year years to recover the cost of fixed-asset inputs. Moreover, enterprises are faced with the upgrading of the entire production line and the need to repurchase equipment, so they have to continue to invest heavily in fixed investment.
This has led to a huge problem. With the application of robots, the labor efficiency of enterprises has increased, but capital investment has increased substantially. Up to double-digit capital costs will ruthlessly engulf the saved labor costs.
In 2017, Foxconn's communication network equipment gross margin was only 13.65%. Although Foxconn vigorously promoted industrial automation, it still fell 2.23 percentage points from 2016. In the low-end OEM mode, when the iPhone's assembly profit is still maintained at 4.5 US dollars, simply relying on robots to compress production costs can only lead to Foxconn's overall return on capital, which falls into technology upgrades. The trap.
Therefore, getting rid of the "low-end foundry" industry model, achieving automated production, and entering the industrial Internet has become an inevitable choice for Foxconn.
It is the biggest misunderstanding of the industrial Internet to emphasize the replacement of labor by robots and to equate the industrial Internet with automation. As an emerging industrial revolution, the Industrial Internet is focused on integrating “production-consumption†processes to create new consumer demands and reduce system costs.
Just like the Jenny spinning machine, the steam engine, the electric power revolution, and the information revolution, the core of it is to release the new human product demand, create new jobs, and greatly increase the income of workers.
What is the steam engine for the train, the generator for the electric light, the Internet for the smart phone, the industrial Internet, and what can it bring to us? This is also the question that Guo Taiming, as well as Chinese entrepreneurs such as Ma Yun and Liu Qiangdong are thinking.
It can be said that the current revolution in the industrial Internet cannot bring obvious and specific products like the previous industrial revolutions. However, it will re-integrate the entire industry and consumer system.
As Ma Yun said: "In the past 100 years, people have advocated the market economy. But in the next 30 years, there will be great changes, and the planned economy will be bigger and bigger."
The Industrial Internet will open up barriers between individualized needs of everyone and large-scale industrial production; through the two-way feedback of the system, rapid production scheduling; and then integration and production distribution of resource integration.
Just like online ordering, consumers don't need a family to taste, more to choose a restaurant through data evaluation. A variety of dishes are also required to distribute the tasks of each restaurant through the platform.
The formation of online ordering has not only reduced the number of restaurants, but has increased the work of delivering small brothers, increasing the supply of a large number of specialty restaurants, and objectively reducing the advertising investment and stocking costs of restaurants.
Although, at present, we can't monitor the products through the whole process of production, or even directly design the products we want. Some platforms still have bidding rankings and various commercial public relations behaviors. However, the whole system has let us see the industry. The prototype of the Internet.
By the same token, for Foxconn, if the industrial Internet is built successfully, Apple will transform from an upstream task contractor to a product designer. As the industrial integration unit of the final product, Foxconn will become the hub of the entire industrial Internet.
From a fashion consumption, mobile phones will become a kind of mass consumer goods. Consumers can choose Apple's product design, but also choose Huawei's design and Xiaomi's design. Anyway, no matter whose products are produced through a unified industrial Internet platform.
For Apple, Huawei, and Xiaomi, the entire industrial Internet platform, like a restaurant, whether it is McDonald's or Quanjude, can not replace the existence of the entire platform.
By then, Foxconn and Apple's industrial upstream and downstream relations will be reversed. Although Apple can transfer production to Southeast Asia and even move back to the United States, there is no support from the Chinese industrial chain, no data support from the entire China Industrial Internet, and Apple's manufacturing products, to production quality, to sales and after-sales services, products. Feedback, etc., will be difficult to guarantee.
The pure technology, production capacity and cost competition will become the competition of the entire market and the industrial chain through the integration of the industrial Internet. At this point, China has a unique advantage.
Guo Taiming publicly promoted the prospects of the industrial Internet and proposed that the industrial Internet would be the way out for Chinese industry. This is not a false statement.
On May 17, Guo Taiming did not talk about robotic alternative labor as he did 7 years ago. Instead, he focused on the link of production data and placed it on the link of the local Internet of Things (IoT) platform.
By 2020, Foxconn will reach more than 50 billion IOT equipment access. At that time, Foxconn will complete the transition from a foundry enterprise to an industrial Internet enterprise, and finally jump out of the dilemma of low-end foundry.
Industrial manufacturing, security, smart home, health, and car networking, the industrial Internet combining the “five real†economy and the digital economy will generate more service products and bring more jobs.
It is estimated that by 2025, the Industrial Internet will create an economic value of 82 trillion US dollars, reaching half of the global economy. After liberating a large number of 90s and 00s from the production line, it will enter the new industrial Internet industry through training and re-learning, thus creating more value.
Facing the broad prospects and great value of the industrial Internet, not only Foxconn is actively deploying, but also well-known companies such as Lenovo, Haier and Huawei are launching their own industrial Internet platforms.
In October 2017, the state also issued the "Guiding Opinions of the State Council on Deepening the Internet and Advanced Manufacturing Industry to Develop the Industrial Internet."
After the home appliance industry, CNC machine tools, mobile communications, new energy vehicles, Internet entrepreneurship and other fashionable industries, the industrial Internet has shown a situation of tens of thousands of horses. It seems that with one or two conceptual innovations, China can achieve overtaking in corners, and “overturn†the industrial and technological advantages accumulated by Western countries for hundreds of years.
However, the ideal is full and the reality is very skinny. The so-called industrial Internet is not a castle in the air. Its construction still relies on various underlying industries, technological breakthroughs, and capital integration for enterprises.
First of all, the construction of the industrial Internet must rely on the automation of a large number of low-level industries, through the mass production equipment, robot data access, in order to achieve automatic collection and analysis of production data.
Enterprises can't expect to install a chip for each worker to collect data, and it is even more impossible to complete the data collection and production distribution of the entire system through manual report summarization. Otherwise, the Soviet-style planned economy model of one person working, two people supervising, and three people planning will repeat itself.
As an indispensable industrial robot for the industrial Internet, a large number of automated production equipment and software development, it is precisely China's short board. From automation design, precision equipment manufacturing, to industrial control chips, precision motors, high-end bearings, and high-end materials such as wear-resistant and corrosion-resistant high-end materials, as well as software design and development, China is still heavily dependent on imports.
Take Foxconn as an example, the large number of automation equipment used in it, as well as the applied industrial robots, almost rely on overseas imports.
In recent years, although Foxconn has begun to produce its own Foxbot robot, it claims to develop its own core components. However, like most domestic robot R&D and manufacturing companies, despite major breakthroughs in the design of complete machines and localization of spare parts, they still rely on foreign manufacturers in core parts such as core processors, reducers and control system software.
Looking at the development of China's entire robot industry, in just three or five years, the number of so-called robot research and development and production companies in China has reached 700 to 800, and the robot industry parks in various places have also emerged. However, 80% of them are concentrated in the field of system integration, which is to say that it is imported assembly. The total number of companies that are doing core technology such as servo systems, control systems, and reducers is less than 10% of the total.
Chinese robots are facing the same dilemma as cars and mobile phones – the surface looks booming and the market is everywhere, but the key technologies are still in the hands of overseas companies.
Second, the Industrial Internet also needs to have a complete set of IOT access devices and solutions, as well as support for the entire Internet and big data computing centers. The shortcomings of China's communications and computer technology have been seen in the Sino-US trade war. Not only a small chip can smash the entire Chinese economy, but the source code, root server, and technical standards of the entire Internet are also available. They are in the hands of European and American companies.
As far as the current industrial structure is concerned, China's industrial Internet dream is still a building built on the "beach".
Whether it is the acquisition of Toshiba by Foxconn in 2017, the failure to enter the semiconductor industry; or the failure of Alibaba to acquire the world's second largest US remittance company, MoneyGram. Whether it is technology or finance, as long as China truly touches on the core industries and competitiveness of the West, it will inevitably be resolutely blocked.
China hopes that through the "trade and industry" route, it will quickly accumulate wealth and seize the market. In the end, the market will be replaced by a global dream of global cooperation and win-win. If you have money, you can't buy core technology, and the market can't change the core technology. This is the biggest lesson of China's industrial development in recent years. Only when its core technology breaks through to a certain extent can it conduct peer-to-peer negotiations with Western companies and achieve technical cooperation.
Foxconn hopes to gradually develop into an industrial Internet enterprise from "low-end foundry" and has to face the industrial ceiling built by the West.
Whether the industrial Internet can become a new opportunity for China's industrial transformation and upgrading, or once again become a replica of "assembly and assembly", this is not only a problem that Foxconn needs to answer when landing A shares, but also a question that Chinese companies need to answer.
Fortunately, the prospectus of Foxconn's A-shares showed that Guo Taiming did not indulge in the success of Foxconn's low-end foundry model, but showed full foresight and courage. The investment of 27.3 billion yuan is mainly concentrated on “Industry Internet Platform Construction, 5G and Internet of Things Solutions, and Intelligent Manufacturing.â€
Guo Taiming is very clear: If the previous industrial structure, Chinese companies can tolerate the lack of core technology and rely on labor costs to achieve economic take-off, then, as an industrial revolution that replaces labor with machines and replaces traditional production with information integration, once The development of industrial Internet can not form its own core technology and industrial research and development capabilities, which will mean that China's industrial system will be completely reduced to a vassal of arbitrariness; a large number of production line workers replaced by machines will not be able to follow the industry's upgrade and enter technology. Emerging departments such as R&D, production services, and data maintenance have become completely unemployed.
By then, China's entire economic chain will be interrupted, without a large-scale upgrade of the industry, unable to support high wages, and at the same time there will be no increase in consumption, and ultimately the future of China's real economy.
In the face of the industrial Internet revolution that has already arrived, not only Foxconn, but policy makers and entrepreneurs throughout China should recognize the current crisis and support the development of the real economy and remove barriers while embracing the industrial Internet. Reduce the infighting and truly concentrate the funds on technology research and development and industrial integration.
The development of the manufacturing industry to the industrial Internet has become an inevitable trend. The China IoT Conference provides an opportunity for major manufacturers at home and abroad to discuss the development of industrial interconnection.
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