ASIA PACIFIC: SHAPING THE FUTURE OF INDUSTRIA L · Global Industrial & Global Product Industry X.0...

ASIA PACIFIC: SHAPING THE FUTUREOF INDUSTRIAAPAC is capitalizing on the industrial future with a Wise Pivot to the new

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CONTENTSForeword

1. Adapt to thrive: the APAC imperative

2. New era, new ethos: how to grow business value with the wise pivot

3. Embody the wise pivot: APAC trailblazers showing the way forward

Case Studies

4. The industrial future in your hands

References

Authors

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FOREWORDLeaders of automotive and industrial equipment companies across Asia Pacific know all too well that disruptive forces are changing their industries irrevocably. Many are taking proactive steps to adapt. But equally many are still struggling with the question of how to pivot to new sources of growth in a balanced and sustainable way.

This paper highlights how companies across the Asia Pacific region are finding that balance by making a ‘Wise Pivot’ to the new. They’re taking bold decisions to rethink legacy businesses and operating models while developing investment strategies for new and emerging growth areas.

In this new era, disruption and continuous reinvention are a given.

Those who succeed, adapt to thrive. They use widespread disruption to their advantage, harnessing it to accelerate growth. They have the courage to reinvent the business in their own terms, but in a careful and considered way. That’s what we call the Wise Pivot – and it’s the secret to shaping the industrial future across Asia Pacific.

RAGHU GULLAPALLIManaging Director Industrial & Products; Industrial X.0 Lead Asia Pacific, Africa, Middle East & Turkey

3 ASIA PACIFIC: SHAPING THE FUTURE OF INDUSTRIAL

“The Asia Pacific region is already an incredibly powerful engine for economic growth. As more and more industrial organizations digitalize their operations and invest in new partnerships and business models, that growth is set to accelerate exponentially.”

ERIC SCHAEFFERSenior Managing DirectorGlobal Industrial & Global Product Industry X.0 Lead

FABIO VACIRCASenior Managing DirectorProducts Operating Unit LeadAsia Pacific, Africa, Middle East & Turkey

“Digital technology is the biggest opportunity for industrial companies to make the wise pivot to the new – to reinvent. Not just how they make things, but also the products they make. By thinking about how they conceive, make, distribute and support the next generation of goods in the marketplace, they will reshape the future of their industries”


ADAPT TO THRIVE: THE APAC IMPERATIVE

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To shape and maintain APAC’s leading position in the industrial future, today’s enterprises must continue to adapt, innovate, and reinvent their businesses. They must manage a series of disruptive and converging “megatrends” – everything from accelerating consumer demand for electric and connected vehicles to the Industry X.0 revolution in industrial processes being driven by machine learning, real-time connectivity, smart robots, and more.

ADAPT TO THRIVE: THE APAC IMPERATIVE1

Automotive and industrial equipment companies in Asia Pacific (APAC) are facing significant technology-led disruption in their industries. Growth now depends on the ability to continuously adapt to rapid change in both technological possibilities and customer expectations.

China will have 4.1 billion industrial IoT connections by 2025 – almost a third of the global total.1


The C-suite recognises this disruption as an ever-present and growing challenge: nearly three quarters of industries have seen increased levels of disruption on multiple fronts since 2011.2 What’s more, Accenture’s Disruptability Index 2.0 highlights the vulnerability of automotive and industrial equipment companies to future disruption (see Figure 1).3

FIGURE 1

TOTAL EV OF COMPANIES ININDUSTRY SAMPLE

Disruption continues to rise in automotive and industrial equipment and machinery; both are in the “vulnerability” zone as per Disruptability index 2.0

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THE IMPLICATION? APAC automotive and industrial manufacturers must adapt and reinvent their traditional product and engineering focus to secure the region’s position as the engine of growth in the industrial future.

Industry Sector Matrix—2018 Results18 INDUSTRY SECTORS

SUSCEPTIBILITY TO FUTURE DISRUPTION

VIABILITY(18% OF COMPANIES)

DURABILITY(11% OF COMPANIES)

VOLATILITY(33% OF COMPANIES)

VULNERABILITY(38% OF COMPANIES)

CU

RR

ENT

LEV

EL O

F D

ISR

UPT

ION

Software & Platforms

Comms & Media

HealthChemicals

Energy

Utilities

Natural ResourcesCapital Markets

Banking

Insurance

Travel

Retail

CG&S INFRASTRUCTURE & TRANSPORTATION SERVICES

INDUSTRIAL EQUIPMENT AND MACHINERY

High-Tech

Life Sciences

AUTOMOTIVE


APAC: AN INCUBATOR OF INDUSTRIAL INNOVATION

In APAC this transition is well underway, fuelling a disruptive innovation boom across the region. Industrial companies are undergoing extremely rapid digital transformation, adding $1.16 trillion to APAC GDP and boosting annual growth rates by 0.8 per cent.4

The region is also a hotbed of industrial robotics innovation, with China, Japan, and South Korea the largest three global markets (Korea having the highest “robot density” of any country in the world).5 In addition, half of all APAC manufacturers are expected to have smart factories within three years.6

Government policy and support across the region is another key factor. APAC authorities are facilitating free-trade reforms to support cross-border industrial ecosystems, including the Regional Comprehensive Economic Partnership (RCEP): a proposed agreement between ten ASEAN countries and six other APAC states.7 Similarly, Japan has recently signed a new trade agreement with the European Union.8 See Figure 2.

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Industrial companies are undergoing extremely rapid digital transformation, adding $1.16 trillion to APAC GDP and boosting annual growth rates by 0.8 per cent.


1FIGURE 2

Favourable government policies are helping companies to excel in the new Industry 4.0 set up…

INDIA

SINGAPORE

CHINA

JAPAN

“MADE IN CHINA 2025”A concerted initiative to move China up the value chain and compete globally in manufacturing innovative technologies12

COMMITMENT TO ELECTRIC MOBILITY China is targeting 2 million annual EV sales by 2020 and a complete ban on internal combustion engines before 204013

STRONG INSTITUTIONAL FRAMEWORKGovernment announced the Singapore Smart Industry Readiness Index, a tool to help industrial companies harness the full potential of the Fourth Industrial Revolution11

TAX REFORMLargest tax reform rolled out in the form of the Goods and Services Tax (GST), having a noticeable impact on supply chains9

MAKE IN INDIA SCHEME“Make in India” scheme to increase investment and innovation, grow skills, protect intellectual property, and build world-class manufacturing infrastructure10 INDUSTRIAL MANUFACTURING

OF THE FUTUREJapanese government and companies are investing heavily in manufacturing innovation, automation and job training14

The government is funding research specifically targeted at improving the manufacturing process15

The Ministry of Economy, Trade and Industry (METI) has identified advanced manufacturing as one of Japan’s key growing sectors, predicting that it will reach 30 trillion Japanese yen ($270 billion) by 202016


A BREEDING GROUND FOR GLOBAL INDUSTRIAL START-UPS

APAC has rapidly become a global hothouse for disruptive start-ups in the industrial sector. Fuelled by close proximity to major manufacturing heartlands and sources of government and private financing, there are now well over 500 active technology hubs across the region.17

China, in particular, has a vibrant electric vehicle (EV) start-up scene. Beijing and Shanghai are hubs for EV development, with the former home to around 7,000 start-ups (including over 40 unicorns) and the latter hosting around 500 incubators and accelerators18 (see Figure 3).

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HQ SHANGHAI NANJING BEIJING SHANGHAI SHANGHAI BEIJING BEIJING TOKYO NAGOYA KANAGAWA-KEN TOKYO TOKYO BANGALORE BANGALORE BANGALORE

NIO Byton Xpeng Weltmeister YOUXIA BAIC BJEV Singulato Preferred Networks

AZAPA FOMM MUJIN ZMP Netradyne Intellicar Flutura

Founded 2014 2016 2014 2015 2014 2009 2014 2014 2008 2013 2011 2001 2015 2015 2012

Valuation $6bn* $4 bn $4 bn $3 bn $2 bn $1.6 bn $0.9 bn $2 Bn N/A $31 Mn NA $82 Mn $8Mn N/A $47 Mn

Major Investors

Tencent Temasek

China Harmony Auto Holding, FAW

Alibaba, Foxconn

Baidu, Tencent, Sequoia Capital China Chengtong

China Fortune Ocean, GaranTenson Cap

Daimler, Zhongji Investment

ITOCHU Corporation

Toyota Motors, Fanuc, NTT

Sumitomo Private company

JAFCO Mission Capital

Reliance N/A Hitachi, Vertex Ventures,

Focus area

Electric premium cars

Focus on interiors and infotainment

Focus on in-car environment

Electric cars

Electric cars

Electric cars

Electric cars

Edge Heavy Computing to process data at source

AI-based ECUs for automotives

Micro electric vehicles

Intelligent Robotics and Smart Machines

Self- driving taxi

Deep learning and vision based analytics for fleet management, surveillance etc.

Telematics analytics

Cerebra, is a M-to-M analytics platform for extraction and analysis of embedded machine data

INDIACHINA JAPAN

China is the breeding ground for electric vehicles start-ups, while Japan and India are honing many small start-ups in the automotive and IIOT space

FIGURE 3


However, key questions are being asked of these APAC start-ups:

• Can their operating models compete with the mature capabilities of incumbents?

• Can they sustain investment, especially once government subsidies end?

• Can they deliver significantly better products than incumbent manufacturers?

As yet, these questions remain unanswered. Incumbents and the rest of the market are nevertheless watching the space closely, with some already beginning to partner with key players.

1 MUJIN: AN ACADEMIC SPIN-OUT THAT BECAME AN INTELLIGENT ROBOT SUCCESS STORYHaving been spun out of Tokyo University in 2011, Mujin builds intelligent robot controllers providing an industrial robotics platform for the manufacturing and logistics industry. Its strength lies in the logistics and warehouse space, automating logistics processes and improving productivity and quality in warehouses and fulfilment centers. The company’s flagship Mujin Controller is an AI-powered motion planning and computer vision technology which can be retrofitted on existing industrial robots to automate operations.22 The controller has been used to create the world’s first completely automated distribution center for JD.com23 and is being applied to over 1,000 different robots in logistics settings globally as part of Mujin’s overseas expansion.

NIO: THE FIRST CHINESE EV START-UP TO GO PUBLIC IN THE USAFounded in 2014, EV start-up Nio is already valued at over $3.8 billion19. The company is pushing next-generation automotive technologies like in-car connectivity, autonomous driving, and artificial intelligence, and has a strategic cooperation agreement with Bosch Group20. Nio raised around $1 billion when it launched an IPO on the New York Stock Exchange in 201821. But the market is still somewhat cautious about the company’s prospects, with the share price recently dipping and pre-orders flattening.


SHAPING THE FUTURE HOW TO GROW BUSINESS VALUE WITH THE WISE PIVOT

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With revenues contracting in their core businesses,24 companies must be prepared to reinvent their business models and invest in the new.

But many are hesitant to do so. Some are hindered by an inability to raise and replenish sufficient investment capacity. Some fear getting the pace and direction of their new investments wrong. Others are so focused on their core business they’re failing to sense the changing headwinds and risk missing key opportunities to explore new business models and revenue streams.

The solution? Develop a flexible strategy, unique to each business, that finds the right balance between the timing, scale, and direction of investments in core and new businesses. That needs leaders who have the right mindset: those prepared to commit to new business models early, find synergies between old and new sources of revenue, and leverage the wider ecosystem of partners.

Accenture has developed a strategy – the wise pivot – that guides a business as it shifts towards new sources of value while continuing to enjoy a strong and profitable core. A wise pivot has three components:

Balancing these three elements is key. Pivot too slowly to the new, and a company risks being left behind as others capture fertile sources of value. But pivot too quickly, and it risks jeopardizing its core business – and its ability to fund investment.

SHAPING THE FUTURE: HOW TO GROW BUSINESS VALUE WITH THE WISE PIVOT2

Amid all this disruption from technology-driven megatrends and increased competition from emerging players, how can APAC automotive and industrial companies best adapt to the tectonic shifts underway and position their businesses at the forefront of the region‘s industrial future?

TRANSFORM THE CORE

GROW THE CORE

SCALE THE NEW

to release new investment capacity

to ensure investment is sustainable

to build the capabilities needed in the years to come


DETERMINED OR RESTRAINED? HOW ARE COMPANIES APPROACHING THE WISE PIVOT?

We examined the financial pivot of 313 APAC Industrial companies for this paper, assessing them on both investment capacity (liquidity and access to financing) and investment velocity (direction and pace of capital reallocation to the new).

This revealed four starting positions for the financial pivot: “determined” (high capacity, high velocity), “compelled” (lower capacity, high velocity), “reserved” (high capacity, low velocity) and “restrained” (low capacity, low velocity)” (See Figure 4).

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FIGURE 4

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THE RESULTS? It’s a complex picture, with all four starting positions found right across the region and across industrial sub-sectors. In most areas, except automotive suppliers, “determined” companies are the most prevalent. That said, a sense of caution is clearly evident: a quarter of automakers are “reserved” and nearly the same number are “restrained”. And over a third of industrial and electrical equipment manufacturers and automotive suppliers are “restrained”.

There is no magic formula for an effective financial pivot. Each company must take the approach most suited to its particular industry, its capacity and willingness to invest, and its business ambition and growth objectives.

AUTOMOTIVE SUPPLIERS: 49 COMPANIES

AUTOMOTIVE MANUFACTURERS

55 COMPANIES

HEAVY EQUIPMENT MANUFACTURERS:

112 COMPANIES

INDUSTRIAL AND ELECTRICAL EQUIPMENT

MANUFACTURERS:97 COMPANIES

INV

ESTM

ENT

CA

PAC

ITY

INV

ESTM

ENT

CA

PAC

ITY

INV

ESTM

ENT

CA

PAC

ITY

INV

ESTM

ENT

CA

PAC

ITY

HIGH (DETERMINED)LOW (RESTRAINED)

INVESTMENT VELOCITY INVESTMENT VELOCITY INVESTMENT VELOCITY INVESTMENT VELOCITY

HIG

H (D

ETER

MIN

ED)

LOW

(RES

TRA

INED

)

33% 32%25% 21%

20% 20%22% 27%H

IGH

(DET

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W (R

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HIG

H (D

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HIGH (DETERMINED)LOW (RESTRAINED) HIGH (DETERMINED)LOW (RESTRAINED) HIGH (DETERMINED)LOW (RESTRAINED)

29% 40%24% 11%

12% 14%35% 35%


EMBODY THE WISE PIVOT: APAC TRAILBLAZERS SHOWING THE WAY FORWARD

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The following case studies highlight just a selection of the APAC companies who are starting to show how the wise pivot can be realised, bringing a uniquely potent combination of innovation mindset and careful investment to their growth strategies. Operating across sub-sectors in China and Japan, and illustrating the broader shift underway in APAC industry, these trailblazers share one or more key qualities:

A strong commitment, from the top, to new business models, new operating models, and the digitized enterprise.

A willingness to unlock synergies between existing and new businesses and fuel growth through smart connected products and experiences.

A determination to scale the new intelligently, especially through ecosystem partnerships, platform plays, and “outside-in” innovation.

The foresight to rethink operating models, using innovations like the “Digital Service Factory” to deliver greater innovation agility and faster time to market.

These qualities are manifested in the five Pivot Levers shown in Figure 5.

EMBODY THE WISE PIVOT: WHAT CONNECTS THE APAC TRAILBLAZERS?3

Pivoting wisely is a unique journey for each organization. It requires an investment approach that enables the organization to create major new businesses while rejuvenating their core.


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OVERARCHING THEMES

- PIVOT LEVERS

Hardware-centric product companies moving to platform strategies creating network effects

PLATFORM PLAY

Adaptive, collaborative and proactive smart products using new technologies (AI, Big Data, IoT, 5G, Cloud)

SMART AND CONNECTED PRODUCTS AND EXPERIENCE

Flexible and NEW IT driven operating model to remain responsive to market

DIGITIZED ENTERPRISE / NEW OPERATING MODELS

Co-development, co-innovation and strategic partnerships

ECOSYSTEM PLAY/OUTSIDE IN INNOVATION

Shift away from pure product based sales to as-a-service and outcome-based offerings

NEW INNOVATIVE BUSINESS MODELS

FIGURE 5

Trailblazer companies in APAC display a commitment to one or more key Pivot Levers


AUTOMOTIVE MANUFACTURERS:TOYOTA AND GEELY

AUTOMOTIVE SUPPLIERS:DENSO AND BRIDGESTONE

HEAVY EQUIPMENT MANUFACTURERS: ZPMC AND CRRC

INDUSTRIAL AND ELECTRICAL EQUIPMENT MANUFACTURERS:SANY

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CASE STUDIES

TOYOTA: TAKING THE FAST LANE TO INNOVATION-FUELLED GROWTH

Toyota is a leading player in the APAC automotive industry’s pivot towards innovative business models. The company is making a big bet that electric vehicles, autonomous driving, and mobility services represent the future of automotive, and is therefore shifting its focus away from just “pure” car

manufacturing.25 This includes planning for a major upshift in EV sales: Toyota wants to sell 5.5 million EVs each year by 2030 (up from 1.5 million at present) – a significant proportion of which will be zero-emission vehicles.26

Transform and grow the core• Toyota New Global Architecture (TNGA) will cut manufacturing costs by

20 per cent. Half of all Toyota’s car manufacturing will use TNGA by 2020.27

• Billion-dollar investments to expand core automaking operations internationally by upgrading existing manufacturing sites and establishing new facilities.28

• Plans to build new automated vehicle testing and battery testing facilities.29

Scaling the new• Joint venture with Softbank to establish MONET: using connectivity

and data to optimize transportation supply and demand, creating Mobility-as-a-Service (MaaS).30

• $1 billion stake in Grab (a South-East Asian ride-hailing company) – the largest such investment by a carmaker to date.31

• Expanding car-subscription business Kinto, using gamification to reward customers based on how they drive.32

• Partnership with JapanTaxi, KDDI, and Accenture to develop a smart predictive taxi dispatch support system in Tokyo.33

• $3 billion investment in autonomous driving software, and accelerating company innovation with Big Data.34

3AUTOMOTIVE MANUFACTURERS:


Reaching cumulative sales of over 1.5 million cars in 201835, Geely’s accelerated expansion in recent years makes it the fastest-growing automotive manufacturer in China. The company’s growth strategy

includes plans to raise sales of new energy vehicles (NEVs) to 90 per cent of total volumes by 202036 and to become a leader in hybrid, pure electric, and alternative fuel and fuel cell technologies.

Transform and grow the core• Expanding NEV manufacturing with a power battery plant in Hubei37

and Component Plant in Chengdu.38 • Acquired stakes in Daimler AG and Volvo Trucks to become the largest

shareholder in both companies.39 • Established Geely Design UK to support in-house design functions.40

Scaling the new• Formed a joint venture with Daimler to provide premium ride-hailing

services in several Chinese cities.41 • Acquired US-based Terrafugia, a leading developer of flying cars.42 • Working with China Telecom on Big Data, 5G and V2X (vehicle-to-

everything) tech.43 • Partnering with Qualcomm and Gosuncn to launch 5G/C-V2X-support

vehicles in 2021.44 • Collaboration with Smart Eye to produce semi-autonomous vehicles.45

GEELY: THE CHINESE AUTOMOTIVE MANUFACTURER THAT’S OUTPACING THE COMPETITION3AUTOMOTIVE MANUFACTURERS:


DENSO: A KEY COMPONENT IN APAC AUTOMOTIVE TRANSFORMATION

As Japan’s largest automotive parts manufacturer, Denso is driving forward its long-term 2030 vision to increase automotive performance in electrification, software, and autonomous driving, as well as accelerating R&D, enhancing collaboration, and transforming its core manufacturing

business. While leveraging an ecosystem play for scaling the new, the company is also widening its focus to value-adding initiatives outside the automotive industry.46

Transform and grow the core• Fuelled by cost-reduction initiatives, Denso has maintained a healthy

EBITDA margin for a decade.47 • Launching new core products/services: in-vehicle computing, driver

monitoring, fleet management telematics.48 • Investing in companies like Fujitsu Ten to strengthen development of

circuitry technologies.49

Scaling the new• Investing around 9 per cent of revenue in R&D (focusing on

autonomous driving, connectivity, and non-automotive technology). 50 • Investing $1.6 billion during FY 2018-20 to support its aggressive

development and production of electrified automotive products, systems and technologies.51

• Partnering with world-leading innovation platform Plug and Play to accelerate development in connectivity, autonomy, shared mobility, and electrification (CASE).52

• Investing in start-ups such as Dellfer to enhance connected vehicle cybersecurity.53

• Also investing in CASE-focused start-ups like FLOSFIA, Metawave Corporation, and InfiniteKey.54

3AUTOMOTIVE SUPPLIERS:


BRIDGESTONE: A BIG TYRE COMPANY TURNING TO NEW MOBILITY SOLUTIONS

Thanks to its growing investment capacity, Bridgestone, the huge global tyre manufacturer, has been turning its focus to new and innovative business models: in fleet management solutions and mobility services. With its ambition to achieve “Dan-Totsu” (clear and absolute leadership)

in all aspects, the company is enhancing the productivity of its core tyre business, while scaling the new through digital transformation, mobility innovation, and key acquisitions.55

Transform and grow the core• Digital transformation is supporting a high EBITDA margin and annual

return on capital.56 • Growing the core tyre business by expanding global manufacturing

and investing in predictive maintenance.57

• Introduced EXAMATION, a new productivity-enhancing assembly system at its flagship Hikone plant.58

Scaling the new• Acquired TomTom Digital Fleet solutions with a view to becoming

a leading player in the MaaS market.59 • Plans to leverage data from the 860k vehicles using TomTom to

improve tyre maintenance services.60

• Investing in Digital Garage – an open innovation platform – and pioneering a range of digital solutions like Mobox, FleetPulse and Bridgestone Connect.61

3AUTOMOTIVE SUPPLIERS:


ZPMC: NAVIGATING THE TRANSITION TO DIGITAL PORT SERVICES

With annual revenues of over $3 billion62, ZPMC is the largest manufacturer of heavy equipment for ports in the world63. But with revenue growth increasingly inconsistent, the company is aiming to accelerate innovation

and digitalization and use a blend of connectivity, IoT, AI, and cloud technologies to transform itself into a provider and integrator of intelligent end-to-end digital terminal solutions.64

Transform and grow the core• Acquired 50 per cent stake in Greenland Heavylift Holdings (Hong Kong)

to grow core shipping operations.65

• Established a Russian subsidiary66 to focus on producing shipboard equipment.

• Cooperating with Shaanxi Automobile Holding to increase dominance in high-end core markets.67

Scaling the new• Developed new intelligent terminal solutions (unmanned inspection

vehicles, truck fleet control system, intelligent storage yards and energy use, simulation planning, etc.).68

• Pivoting from selling hardware to providing software and services by leveraging Microsoft Azure IoT solutions.69

• Partnered with Qingdao Port Group, China Unicom and Ericsson on 5G smart terminal technology.70

• Developed the world’s first AI straddle carrier in cooperation with start-up Westwell Lab.71

3HEAVY EQUIPMENT MANUFACTURERS:


CRRC: THE WORLD’S BIGGEST ROLLING STOCK MANUFACTURER ON TRACK TO LEAD IN THE NEW

Formed through a merger of two state-owned companies72, Beijing-based CRRC is the largest rolling stock and locomotive manufacturer globally.73 Looking to stem slowing growth in a maturing domestic market74, the

company is refocusing its core business internationally and diversifying into autonomous technologies and new energy vehicles.75

Transform and grow the core• Boosting core manufacturing productivity by deploying a self-developed

intelligent MES (Manufacturing Execution System).76

• Planning a new plant in Canada to fuel expansion in North America77.• Acquired CSR Times Electric and ZF’s Rubber and Plastics business unit to

strengthen operations in European markets.78

• Developed CRRC Procurement e-commerce platform.79

Scaling the new• Testing a self-driving bus fleet in Changsha, part of CRRC’s expansion

into IoV offerings.80 • Trialling an Autonomous Rail Transit System with smart trains and

virtual lines.81

• Collaboration with US-based PerceptIn to develop long-range machine vision technology for trains.82

• Developed advanced sensing, diagnosis, prognosis and intelligent decision making for rolling stock.83

• Long-term collaboration with FAW on new energy vehicle development, intelligent connectivity and mobility services.84

3HEAVY EQUIPMENT MANUFACTURERS:


Sany, a top-ten global industrial equipment manufacturer, is reversing recent revenue decline by diversifying its business, using the industrial IoT and open platforms to kick-start a new era of productivity and profitability.

Leveraging the Chinese government’s “belt and road” strategy, the company is looking to expand internationally by applying Big Data and developing world-class intelligent industrial manufacturing services.

Transform and grow the core• New MES and ERP software at Changsha and Shanghai

manufacturing sites.85 • Acquired concrete machinery manufacturer Putzmeister to accelerate

technological development and open up international markets.86 • Driving international expansion along the Chinese Belt and Road initiative –

overseas revenue has increased from 7% in 2011 to average around 36% for the five-year period from 2013 to 2017.87

Scaling the new• New manufacturing base in Shenzhen equipped with intelligent

manufacturing systems and smart service platforms. 88 • Partnered with BriSky Technology to develop intelligent industrial

drones.89 • Invested in IROOTECH to establish China’s first open Industrial IoT

platform.90

• Launched Enlightenment Capital, a new venture capital fund to invest in IoT start-ups in China. 91

SANY: A CHINESE TRAILBLAZER OF INTELLIGENT MANUFACTURING SETTING SIGHTS ON INTERNATIONAL MARKETS3INDUSTRIAL AND ELECTRICAL EQUIPMENT MANUFACTURERS:


ASIA PACIFIC INDUSTRIAL FUTURE IN YOUR HANDS

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Legacy businesses will need to be revitalized to generate new investment capacity. That capacity will need to be invested carefully in new business models, ecosystem and start-up collaboration, and platform strategies, while supporting enterprise-wide innovation.

Courageous decisions will need to be taken. But fortune will favour the bold – the trailblazer companies are demonstrating that already. They show that the wise pivot is the key to reinventing and scaling tomorrow’s business value in the APAC industrial sector.

Asia Pacific companies can begin their wise pivot journeys by asking these key questions…

The automotive and industrial success stories of tomorrow will be written by the companies that know how and when to pivot wisely to the new.

ASIA PACIFIC INDUSTRIAL FUTURE IN YOUR HANDS4

#1

#2

#3

How do we balance the need to scale new sources of value with the need to continue growing our core business? What services do our customers value today – and what will they value tomorrow?

How can we transform our existing organization to release capital for vital investments in the new? How do we prioritize those investments? What do we buy and what do we build? What data can we leverage to create new insights and new value for ecosystem stakeholders?

Which combination of the five Pivot Levers will best help us make the shift in a careful, considered and sustainable way? What are the operating models and external partnerships that would be necessary to support it?


1 Business Wire (26 June 2018) https://www.businesswire.com/news/home/20180626006274/en/Greater-China-Set-Dominate-Global-Industrial-IoT

2 Accenture Research analysis3 Accenture Research Disruptability Index 2.0 20194 IDC study in partnership with Microsoft titled “Unlocking the Economic

Impact of Digital Transformation in Asia Pacific” (February 2018). https://news.microsoft.com/ apac/2018/02/21/digital-transformation-to-contribute- more-than-us1-trillion-to-asia-pacific-gdp-by-2021-ai-is-primary-catalyst-for-further-growth/

5 IFR. (18 October 2018.) “Global industrial robot sales doubled over the past five years”. https://ifr.org/ifr-press-releases/news/global-industrial-robot-sales-doubled-over-the- past-five-years 6 World Economic Forum - The Readiness for the Future of Production Report 2018.

https://www.digitalcentre2020.com/news/apac-manufacturing-industry/ 7 Nikkei Asian Review. (10 November 2018.) “Five things to know about Asian trade megadeal RCEP”. https://asia.nikkei.com/Economy/Five-things-to-know-about-Asian-trade-megadeal-RCEP 8 European Commission (1 February 2019) http://ec.europa.eu/trade/policy/in-focus/eu-japan- economic-partnership-agreement/9 http://www.gstcouncil.gov.in/brief-history-gst10 IBEF https://www.ibef.org/economy/make-in-india11 Economic Development Board (22 March 2018) https://www.edb.gov.sg/en/news-and-events/

news/advanced-manufacturing-release.html12 Made in China 2025: Source- Knight Frank (5 September 2018) https://www.knightfrank.co.uk/

blog/2018/09/04/key-trends-behind-the-growth-in-asiapacifics-industrial-and-logistics-market-13 Forbes (30 May 2018) https://www.forbes.com/sites/energyinnovation/2018/05/30/chinas-all-in-

on-electric-vehicles-heres-how-that-will-accelerate-sales-in-other-nations/#6727cc1ee5c114 Livemint (21 December 2017) https://www.livemint.com/Opinion/4Vc9DNa58dm1ELw8UbCmTI/

Japan-has-figured-out-factories.html15 Accenture Research analysis 16 Source: Export.gov (6 September 2018) https://www.export.gov/article?id=Japan-Advanced-

Manufacturing

17 GGSMA Mobile for Development (20 March 2018) https://www.gsma.com/mobilefordevelopment/programme/ecosystem-accelerator/1000-tech-hubs-are-powering-ecosystems-in-asia-pacific-and-africa/

18 CNBC (2 May 2018) https://www.cnbc.com/2018/05/02/where-to-start-up-in-east-asia-china-hong-kong-japan-south-korea.html

19 Nio’s market capitalization value accessed from Capital IQ (29 May 2019)20 Nio (9 July 2018) https://www.nio.com/news/bosch-and-nio-sign-strategic-partnership-agreement21 Reuters (12 September 2018) https://in.reuters.com/article/us-nio-inc-ipo/in-teslas-shadow-

chinas-nio-raises-1-billion-from-ipo-sources-idINKCN1LR2QJ22 MUJIN https://mujin.co.jp/en/23 CNBC (30 October 2018) https://www.cnbc.com/2018/10/30/the-worlds-first-humanless-

warehouse-is-run-only-by-robots.html24 Accenture Research ‘Wise Pivot’ Analysis equipment manufacturing, and automotive original equipment manufacturing25 Toyota. (9 January 2018.) “President Akio Toyoda’s Speech at CES 2018”. https://global.toyota/en/

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29 Toyota (3 May 2018) https://global.toyota/en/newsroom/corporate/22406883.html30 Toyota (1 February 2019) https://global.toyota/en/newsroom/corporate/26434644.html31 Reuters (13 June 2018) https://www.reuters.com/article/us-grab-toyota-investment/toyota-pumps- 1-billion-in-grab-in-auto-industrys-biggest-ride-hailing-bet-idUSKBN1J907E

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content_34506418.htm43 MarkLines (29 November 2018) https://www.marklines.com/en/news/22059344 Geely (26 February 2019) http://global.geely.com/media-center/news/geely-to-collaborate-with- qualcomm-and-gosuncn-on-mass-produced-5g-and-c-v2x-enabled-vehicles/45 SmartEye (31 August 2018) https://industryeurope.com/geely-smart-eye-to-create-semi-

autonomous-vehicles/ 46 Denso (19 October 2018) https://www.denso.com/global/en/news/news-releases/

2018/20181019-g01/47 Morningstar Equity Research Analyst report accessed through Capital IQ (12 April 2018)48 Denso (18 December 2018) https://www.denso.com/global/en/news/news-releases/2018/ 20181220-g01/49 Mitsubishi UFJ Morgan Stanley, Thematic Research report accessed through Capital IQ (25 October 2017)

50 Morningstar Equity Research Analyst report accessed through Capital IQ (12 April 2018) 51 Denso (5 April 2019) https://www.denso.com/global/en/news/news-releases/2019/ 20190405-g02/52 PR Newswire (17 July 2018) https://www.prnewswire.com/news-releases/denso-partners-with-

innovation-platform-plug-and-play-to-advance-the-future-of-mobility-300682113.html53 Denso (22 February 2018) https://www.denso.com/cz/en/news/news-releases/2018/ 20180222-g01/54 Denso (6 December 2018) https://www.denso.com/global/en/news/news-releases/2018/ 20181206-g01/; (14 December 2017) https://www.denso.com/global/en/news/ news-releases/2017/20171214-g02/55 Bridgestone https://www.bridgestone.com/responsibilities/commitment/index.html;

Accenture Research analysis 56 Capital IQ platform for financials, Accenture research analysis57 Bridgestone (9 January 2017) https://www.bridgestoneamericas.com/en/newsroom/press-

releases/2017/Bridgestone-Announces-Additional-180-Million-Investment-in-Wilson-Passenger-Tire-Manufacturing-Plant and Automotive World (2 October 2018) https://www.automotiveworld.com/news-releases/bridgestone-help-drivers-to-take-better-care-of-their-vehicles-thanks-to-my-speedy-predictive-maintenance-solution/

58 Bridgestone (17 October 2016) https://www.bridgestone.com/corporate/news/2016101703.html59 Bridgestone (22 January 2019) https://www.bridgestone.com/corporate/news/2019012201.html60 Bridgestone (22 January 2019) https://www.bridgestone.com/corporate/news/2019012201.html61 Iris Capital (17 January 2019) https://www.iriscapital.com/en/detail-news/bridgestone-emea-and-

iris-capital-announce-a-corporate-venture-partnership62 CapitalIQ, year ending 31 December 2018 revenue 63 ZPMC https://www.zpmc.com/gsjies.aspx64 Accenture Research analysis; Port Technology (22 May 2018) https://www.porttechnology.org/

news/zpmc_defines_its_digital_disruption_with_microsoft65 Splash247 (26 Jun 2017) https://splash247.com/zpmc-acquire-50-stake-four-gpo-heavy-lift-vessels/

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https://industryeurope.com/geely-smart-eye-to-create-semi-autonomous-vehicles/

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https://www.iriscapital.com/en/detail-news/bridgestone-emea-and-iris-capital-announce-a-corporate-venture-partnership

https://www.iriscapital.com/en/detail-news/bridgestone-emea-and-iris-capital-announce-a-corporate-venture-partnership

https://www.porttechnology.org/news/zpmc_defines_its_digital_disruption_with_microsoft

https://www.porttechnology.org/news/zpmc_defines_its_digital_disruption_with_microsoft

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985533dc4e9567 ZPMC (26 July 2018) https://www.zpmc.com/news/cont.aspx?id=7568 ZPMC (21 November 2018) https://www.zpmc.com/news/cont.aspx?id=8869 Microsoft IoT (21 June 2017) https://blogs.microsoft.com/iot/2017/06/21/from-cranes-to-

shipping-containers-iot-helps-zpmc-transform-the-worlds-ports/70 Port News (3 March 2019) http://en.portnews.ru/news/273214/71 Safety4Sea (02 May 2018) https://safety4sea.com/zpmc-develops-worlds-first-ai-straddle-carrier/72 Railway Pro (5 June 2015) https://www.railwaypro.com/wp/cnr-and-csr-established-the-worlds-

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yztt/20181228/1815508.html

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launches-venture-fund-to-invest-in-iot-start-ups


http://www.zpmc.ae/articledetails.aspx?ArticleID=c6b863cc-cbd1-437e-af33-985533dc4e95

http://www.zpmc.ae/articledetails.aspx?ArticleID=c6b863cc-cbd1-437e-af33-985533dc4e95

https://blogs.microsoft.com/iot/2017/06/21/from-cranes-to-shipping-containers-iot-helps-zpmc-transform-the-worlds-ports/

https://blogs.microsoft.com/iot/2017/06/21/from-cranes-to-shipping-containers-iot-helps-zpmc-transform-the-worlds-ports/

https://www.railwaypro.com/wp/cnr-and-csr-established-the-worlds-largest-rolling-stock-supplier/

https://www.railwaypro.com/wp/cnr-and-csr-established-the-worlds-largest-rolling-stock-supplier/

https://asia.nikkei.com/Business/Company-in-focus/World-s-largest-train-maker-China-s-CRRC-on-uphill-climb-post-merger3

https://asia.nikkei.com/Business/Company-in-focus/World-s-largest-train-maker-China-s-CRRC-on-uphill-climb-post-merger3

http://english.autoinfo.org.cn/autoinfo_eng/content/yztt/20181228/1815508.html

http://english.autoinfo.org.cn/autoinfo_eng/content/yztt/20181228/1815508.html

Authors Thank you to the following contributors:

ABHISHEK GUPTA Global Automotive Research LeadAccenture Research

PRAVI DUBEY Industrial Research Associate ManagerAccenture Research

RAGHU GULLAPALLI Managing Director Industrial & Products; Industrial X.0 Lead Asia Pacific, Africa, Middle East & Turkey

YU KAMIJOManaging DirectorProducts, Industrial Equipment LeadAccenture Japan

HIDEYA ABEManaging DirectorProducts, Automotive LeadAccenture Japan

SHUGO SOHMAManaging DirectorProducts, IndustrialAccenture Japan

TAICHI TASHIROManaging DirectorProducts, IndustrialAccenture Japan

CHARLIE JIANGManaging DirectorIndustry X.0 Lead for Greater ChinaAccenture Greater China

JOHN SHENManaging Director Products IndustrialAccenture Greater China

HIMANSHU PATNEYTL Research Sr PrincipalAccenture India

OLGA WROBELIndustrial Research SpecialistAccenture Poland


About Accenture

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