The term “industrial software” refers to computer applications used for management and support of machinery, production and operations, as well as quality control, safety & facilities, inventory control, and R & D, in an industrial enterprise. This software is usually classified in 5 categories: production R&D, production management, production control, collaborative integration, and embedded industrial software.
With the arrival of the “third wave” of industrial revolution, and the ongoing integration of IT into all aspects of design, management and manufacturing, Chinese industrial software is entering a platinum era.
The first industrial revolution realized the replacement of manual with mechanical labor, which gave rise to the concept of the factory or dedicated production facility; the second industrial revolution realized the evolution from single unit production to mass production, along with economies of scale; and the third industrial revolution is realizing manufacturing by means of digital design, intelligent manufacturing, and new materials. At this stage, software is an essential component of the process, often as a service.
Development of Chinese industrial software can be broadly divided into three stages, the first is the creation of the software itself, with foreign companies bringing solutions to the market; the second is collaborative application of software, where business processes are being adapted and optimized by local Chinese manufacturers, who gradually supersede foreign suppliers; the third is the stage of the “industrial cloud”, software being not a single solution, but the integration of a variety of applications and services that can be tailored to any unique situation.
The “2011 Annual Report on China’s Industrial Software Industry” released by China’s Industrial Software Industry Development Alliance, reports that in 2011, the size of the Chinese industrial software market reached RMB 61.634 billion Yuan, an increase of 17.9%, far higher than the global market growth, becoming a new force in the world’s industrial software market. In 2011, the size of the global industrial software market reached 854.723 billion U.S. dollars, an increase of 6.8%. It is expected that the compound annual growth rate will reach 19% in the next three years, and the size of China’s industrial software market will reach RMB 103.746 billion Yuan in 2014.
China’s Ministry of Industry and Information Technology has officially issued the “’12th Five-Year’ Development Plan for the Software and IT Service Industry” (hereinafter referred to as “Plan”) which illustrates the Chinese government’s support of the domestic industrial software. The Plan pointed out that during the “11th Five-Year” period, China’s software and IT service industry continued its rapid development, and a variety of quantitative targets have been exceeded. In the “12th Five-Year” period, the goal for the development of software and IT service sector is that “by 2015, the revenue will exceed RMB 4 trillion Yuan, accounting for 25% of the information industry, with an average annual increase of 24.5%; the software exports will reach 60 billion U.S. dollars, and the revenue of IT services revenue will exceed RMB 2.5 trillion Yuan, accounting 60% of the total revenue of software and IT services industry.
This is China’s first release of a five-year plan focusing on the software and IT services industry, aimed at expanding and developing the industrial software sector and reflecting the importance that China will attach to the Chinese software and IT services industry.
The Plan requires the speeding up of the process of industrial software application and industrialization, promoting its application in a variety of fields, and taking the ten major fields (including basic software, industrial software and industrial solutions, digital content processing, etc.) as the focus of development. Chen Changying, Deputy Director of the Software Services Department of the Ministry of Industry and Information Technology said that developing domestic industrial software is the highest priority. After 10 years of development, the size of China’s software industry has approaching RMB 1.8 trillion Yuan, with the mainstay being transaction processing software. Different from other areas of software, no monopoly system similar to the PC market has been formed, which is good for Chinese domestic enterprises to participate in competition.
The Chinese software and IT services industry has made great achievement through high-speed development. However, there are still such problems as insufficient capability of independent innovation, under-sized enterprise, and talent shortage and so on, so the overall core competitiveness still needs to be further improved.
During the next five years, the Plan calls for over 10 software enterprises with annual revenue of RMB 10 billion Yuan to be fostered and 3 to 5 hundred-billion-revenue enterprises to be established. According to Chen Wei, Director of the Software Services Department of the Ministry of Industry and Information and Technology, China will give full support to the establishment of these enterprises; continue to make use of the relevant funds and projects regarding major science and technology special projects, such as the Electronic Development Fund, cloud computing pilot demonstration, and public service platform construction, and so on to support these enterprises; gather resources and promote leading software enterprises; and make full use of the Government’s policies, plans, standards, etc., to promote the sustained and healthy development of industrial software.