China's steel industry Internet industry development

Definition: Industrial Internet is a two-way penetration network between the demand side and the supply side of the Internet connection industry, which includes online transaction innovation based on the traditional trade model, namely B2B Internet trading platform; It also includes the effective penetration and integration of traditional industrial logistics and credit management services through Internet technology innovation to further promote the realization of online value-added services of offline resources; Finally, through the systematic transformation of new generation technologies such as big data, cloud computing, and artificial intelligence, multi-stream integration and multi-stream collaboration are promoted, and ecological collaboration of the whole industrial chain is realized.

Quantitative statistical categories: Considering that the current iron and steel industry Internet mainly consists of online trading, logistics platform service and credit management service, but credit management service is still in the early stage of development, so the statistical caliber of the industry scale of online trading and logistics platform service is the business scale, and the statistical caliber of credit management service is the potential development space. Iresearch will continue to pay attention to the development of industrial Internet. According to the subsequent increase of industrial Internet formats, the statistical caliber is adjusted accordingly.

According to industry categories, the industrial Internet platform can be divided into steel industry Internet, coal industry Internet, oil industry Internet, non-ferrous metal industry Internet, building materials industry Internet, chemical and plastic industry Internet, auto parts industry Internet, FMCG industry Internet, pharmaceutical industry Internet.

The industrial Internet platform does not participate in the core risk control and lending links of financial institutions, but it not only has accumulated a large number of enterprises with real trade background and financing needs, but also has advantages in the control of goods rights and in-depth understanding of the real-time dynamics of the industry. Advanced technology and unique environment enable the industrial Internet platform to provide credit management services. Assist financial institutions to complete the docking of financing needs before loans, auxiliary risk control support during loans and supervision and disposal of goods after loans. With the intervention of credit management services, financial institutions can better control risks in the industrial chain, and enterprises in the industrial chain can more easily obtain financial support at reasonable prices.

The industrial Internet breaks through the traditional mode of linear information transmission and step-by-step response resource scheduling plan of industrial participants, breaks the information barriers between industrial subjects, and builds a new supply-demand relationship and ecological coordination relationship. Under the role of the industrial Internet, the resources and information among the participants in the industry will rapidly interact and respond, and eventually restructure the industrial network and form a value ecology. The role of industrial Internet in promoting traditional industries is becoming increasingly obvious, especially in the field of industrial manufacturing and bulk supply chain such as steel and mechanical processing, and the digital connection re-energizing the industrial supply chain, driving the dual change of manufacturing production and purchasing and marketing mode.

From supply and demand matching to chain reconstruction, digital new infrastructure to achieve industrial interconnection

Although the development of the industrial Internet depends on core technologies such as big data, cloud computing, artificial intelligence, and the Internet of Things, which continue to accelerate the process of technology development and commercialization and seek more practical application scenarios where technologies can be implemented, the industrial Internet is by no means a simple "technology +" modular concept innovation, its fundamental significance is to be based on online and digital. We will transform industrial forms and organizational methods, optimize the production, operation, and financing models of enterprises, and strengthen industrial collaboration and interaction, so as to achieve optimal allocation of resources, ecological network construction, and even integrated development across industries.

Specifically, the core links in the traditional value chain, such as R & D design, production and manufacturing, content creation, operation and sales, and collaborative management, can all become the objects of industrial Internet penetration and transformation through technology. New technology scenarios, platforms, management concepts and other elements also need to be integrated into the new network relationship shaped by the industrial Internet to achieve landing applications.

From the perspective of the downstream demand industry distribution of the steel industry, demand mainly comes from the construction and machinery industries, and the two industries accounted for a total of 72.1% in 2019. The downstream demand for steel is highly volatile and affected by the internal and external macro environment. Downstream, the majority of small and medium-sized steel enterprises with financing difficulties, financing problems prominent.

In 2019, the market demand of the steel industry was better, mainly due to the stability of downstream industries such as infrastructure and real estate, but the development situation of various industries was not the same, among which investment in the infrastructure industry maintained a low speed and steady growth, real estate investment and new construction maintained a high speed growth, and the machinery industry remained stable.

The poor layout of China's steel industry, the mismatch between supply and demand, the formation of the "north timber south transport" supply and demand structure, and the traditional steel circulation is based on the "hierarchical" distributor agent distribution model, supply chain module segmentation, there are information islands, facing the information flow, logistics and capital flow can not be "three streams into one" pain points: (1) At the level of information flow, the traditional steel distribution network faces the pain point of multi-layer information transmission, while the complicated transaction circulation chain leads to high transaction costs, and the poor return of demand feedback information leads to the asymmetry between steel supply and demand. (2) At the logistics level, the dispersion of industrial layout has formed a complex and diverse steel logistics dilemma. (3) At the level of capital flow, the capital pressure in the middle and lower reaches of the industrial chain is large, and the financial support is unstable.

The traditional steel distribution network has problems such as imperfect business flow contract and single pricing model, multi-layer transmission of information flow and poor return of demand feedback information, and there are fewer high-level talents within the distributor, and the endogenous transformation and upgrading of the traditional steel industry chain is difficult and takes a long time. For the downstream procurement side, there are pain points such as multiple levels of circulation chain, complicated transaction links, low efficiency, high transaction costs, and opaque offline procurement processes. For the upstream production end, there are pain points such as difficulty in matching supply and demand information, strong transaction uncertainty, and single marketing model.

During the "12th Five-Year Plan" period, China's steel production capacity reached about 1.13 billion tons, the utilization rate of crude steel production capacity declined, and steel production capacity showed absolute excess. In December 2015, China's Central Economic Work Conference proposed "capacity reduction, inventory reduction, deleveraging, cost reduction, and strengthening the five tasks". The steel industry to reduce capacity kicked off. In February 2016, The State Council issued the Opinions on Resolving excess capacity in the Steel Industry to achieve Development, proposing the goal of "reducing crude steel production capacity by 100-150 million tons in 5 years from 2016," laying the tone of steel capacity reduction. Since then, a number of ministries and commissions have frequently issued policies related to the steel industry's capacity reduction, and excess capacity has been effectively improved. The core purpose of removing excess capacity is to help steel companies get out of trouble as soon as possible and improve profitability. The steel industry Internet platform will guide the healthy development of the steel industry and help the transformation and upgrading of the industry in the context of the national economic restructuring.

In order to consolidate the important success of the supply-side structural reform during the 13th Five-Year Plan period, the state vigorously carried out environmental protection work, issued relevant policies to control the pollution problems, resource waste problems and high energy consumption problems in the steel industry, and issued the Three-year Action Plan to win the Blue Sky Defense War in 2018. In addition, the implementation of differentiated environmental protection production restriction policies for individual regions, such as the Beijing-Tianjin-Hebei region; Strict eco-protection measures will be implemented for special environmental protection areas, such as the Yangtze River Economic Belt. At the same time, China is also speeding up the regulation of pollution emissions in the steel industry, for example, the 2019 Opinions on Promoting the implementation of Ultra-low Emissions in the Steel Industry and the 2020 China Environmental Protection Industry Association "Ultra-low Emission Transformation Technology Guide for Steel Enterprises". The steel industry Internet can effectively integrate the resources of all parties, promote the concentration of production capacity in the steel industry, resolve excess capacity, reduce emissions, and contribute to the cause of environmental protection.

Since the concept of "Internet +" was mentioned in the government work report in 2015, the integration of the Internet and traditional industries has been continuously improved, and the integration process has gradually accelerated. In 2017, the Ministry of Industry and Information Technology issued the Three-year Action Plan for Industrial E-commerce Development, which clearly "encourages the innovative development of e-commerce platforms for bulk raw materials such as steel, petrochemicals, nonferrous metals, and building materials." As one of the cultivation directions of e-commerce platforms in key industrial industries, the steel industry Internet platform has directly obtained policy dividends, and the steel industry Internet has entered the fast track of development. In recent years, with the popularization of the Internet economy, the industrial Internet that integrates upstream and downstream enterprises and supply chain links has flourished. In 2019, 12 ministries and commissions including the Ministry of Commerce issued the Guiding Opinions on Promoting the Development of Platform Economy in Commodity Trading Markets, proposing to "cultivate and form a number of open, efficient and green supply chain platforms".

Emerging technologies such as cloud computing, big data, and the Internet of Things drive the development of the Internet industry in the steel industry. Cloud computing, big data and other technologies assist the iron and steel industry Internet platform to improve the efficiency of supply and demand matching, and reduce the information opacity caused by the complex intermediate circulation links of the traditional steel trade; The Internet of Things, smart storage and other technologies improve the efficiency of circulation links; Blockchain technology solves the trust problem in the Internet trade of the steel industry.

Pain points: upstream steel enterprises are usually batch large-scale production, downstream enterprises are mostly scattered small batch procurement, upstream and downstream supply and demand there is a batch mismatch, coupled with homogeneous products (building materials, etc.) cross-regional trading volume leading to high transportation and processing costs, resulting in upstream and downstream steel industry chain facing supply and demand mismatch, high transaction costs and low transaction efficiency and other difficulties. In the context of national economic restructuring, steel production and circulation are in urgent need of transformation and upgrading. The steel industry Internet platform relies on Internet technology to break the space-time information asymmetry, build digitalization and supply chain coordination, guide the steel industry to effectively improve excess capacity, promote the transformation and upgrading of the steel industry, high-quality development, and help improve the quality and efficiency of the production end; By analyzing the trading data of the platform, the steel price index is launched to reduce the trading price risk and market uncertainty.

Through data penetration, the steel industry Internet compresses the midstream steel trade circulation link and flattens the circulation link. Eliminate industrial information asymmetry, realize the efficient docking of upstream and downstream supply and demand, and at the same time, provide logistics platform services, trading platform services and other services for the upstream and downstream of the industrial chain.

The industrial Internet opens up through data, breaks the "data island", realizes the "three-flow integration" of information flow, logistics and capital flow, improves business efficiency, accelerates the transformation of decision-making mode from "experience-driven" to "data-driven", and provides data support for the upstream and downstream research and development, procurement, production and sales of the steel industry chain.

The steel industry Internet industry has gone through the initial stage, growth stage and rapid development stage, and has now entered the stage of industrial ecological construction. In the initial stage, the steel industry Internet platform is mainly based on steel information platform; After entering the growth stage, online transactions on platforms such as Shanghai Steel Alliance gradually increased, and the industry entered a period of acceleration; In 2015, the steel industry entered the "ice age", steel mills appeared poor sales, service demands increased, bringing development opportunities for the steel industry Internet, the industry entered a stage of rapid development, and the platform in the leading position began to try the development model of trading + value-added services. At present, the iron and steel industry Internet has entered the stage of industrial ecological construction, and leading enterprises in the iron and steel industry Internet industry have begun to build an industrial ecological platform, cooperating with business flow, information flow, logistics, capital flow and other links to form a multi-flow integrated development model.

The iron and steel industry Internet platform enables the upstream and downstream of the industrial chain through online transactions and various service contents, deconstructing and reconstructing the traditional iron and steel industry chain. At present, for the client, has realized online contract signing, online payment, self-service invoicing and other functions, to achieve upstream and downstream enterprises to improve the cost and efficiency of purchase and sales; In the future, the industrial Internet platform will increase the layout of high value-added services, and provide services such as intelligent resource hanging and accurate matching for steel mills. At the same time, based on the analysis and application of data such as user trading behavior, the steel mill is guided to reasonable pricing; Build a data risk control system, conduct credit scores for users, and reduce transaction risks.