What Is an Emerging Industry?

Emerging industries refer to industries that have global, long-term, orientation, and dynamic characteristics that are related to national economic and social development and industrial structure optimization and upgrading. Compared with traditional industries, it has the characteristics of high technological content, high added value, and intensive resources. It is also a fundamental way to promote the development of the national economy and enterprises on an innovation-driven, endogenous growth track. ^[1]

Emerging industry

Emerging industries refer to industries that have global, long-term, orientation, and dynamic characteristics that are related to national economic and social development and industrial structure optimization and upgrading. Compared with traditional industries, it has the characteristics of high technological content, high added value, and intensive resources. It is also a fundamental way to promote the development of the national economy and enterprises on an innovation-driven, endogenous growth track. ^[1]

The emergence of new industries has put forward corresponding requirements for talents. Since the 1940s and 1950s, new science and technology have developed by leaps and bounds. In particular, electronics and information technology have been increasingly widely used, marking that human society has entered a new stage of technological revolution.

An industry formed by the industrialization of new technologies. At the beginning of the new technology, it belongs to a form of knowledge. During the development process, its achievements are gradually industrialized, and finally an industry is formed. For example

First, there is no explicit need. There is no precise description of the industry in the hazy state or in the five years ahead.

Second, there is no stereotype

Development of emerging industries can increase

To save a solar cell company, the local government decided to include a repayment of a trust loan of several hundred million yuan into the fiscal budget. Once this matter was disclosed, it immediately aroused public opinion. Why did the local government use the budget to save a private enterprise? How did the enterprise fall into bankruptcy?

In fact, from its high point, the company's stock price has fallen by more than 90%. In addition, the continued decline of the company's bonds has also raised concerns about the credit market in the Chinese bond market, which is expected to break the record of defaults that has never occurred in the Chinese bond market for many years.

This enterprise is a representative enterprise of the Chinese economy in the transition from traditional industries to emerging industries. The plight of this enterprise today is a typical case that China must reflect on to develop emerging industries. As investors, what lessons can we learn from them, and how can we invest in China's emerging industries in the future?

First of all, we must attach great importance to the development barriers of the industry. The solar photovoltaic industry has become more and more technically difficult from upstream polysilicon raw materials, midstream silicon wafer cutting and cell production, and downstream module production. The most difficult is the production of upstream polysilicon raw materials. Early polysilicon production technology was monopolized by the world's seven largest companies, and China needed to import large amounts of polysilicon raw materials from abroad at high prices. From 100 tons, 1,000 tons to 10,000 tons, Chinese companies have gradually mastered the improved Siemens method for producing polysilicon. Without technical barriers, the entire industry quickly blossomed and production capacity expanded rapidly. A perfect patent and intellectual property protection system is a prerequisite for the development of emerging industries. In this way, innovators can be encouraged and protected, so that companies with technological patents can become larger and stronger. Unfortunately, China has not paid enough attention to the protection of patented technologies and intellectual property rights. The technological patents of some advantageous companies were quickly imitated by competitors, and the original high-tech emerging industries became simple manufacturing.

Secondly, we must pay attention to the changes in industry demand. Because the cost of solar photovoltaic power generation is higher than traditional electricity, the use of downstream photovoltaic cells depends on government subsidies. In 2005, the German Renewable Energy Law specified that the government should The subsidized price of electricity price purchases the electricity generated by the photovoltaic cells installed by residents, and European governments have followed suit since then, which has led to a sharp increase in the global photovoltaic market demand. Germany once occupied half of the global solar photovoltaic market. Germany gradually reduced the subsidy price, while other European countries were affected by the debt crisis and began to control the total amount of photovoltaic cell installations subsidized by the state, which led to a slowdown in the growth rate of the global photovoltaic market. Many emerging industries are inseparable from government subsidies in the early stages of development, so we must always be vigilant about whether market demand will decline once government subsidies decrease.

Third, we must pay attention to the core competitiveness of enterprises. Although the solar industry is highly competitive, some companies that have mastered core technologies rely on their low cost advantages and still maintain good cash flow. Once the industry recovers, these companies are expected to take the lead. Especially in the polysilicon manufacturing process upstream of the solar energy industry, technological gaps will lead to the difference between life and death for different companies, and high-cost companies will find it difficult to survive long-term industry troughs.

The fourth is to stay away from over-expanded simple manufacturing and companies. The main cause of the company's bankruptcy is the over-expansion of the company. The company was only three years old and became the world's first solar wafer manufacturer with a production capacity exceeding 1GW. Capacity is growing at a rate of 1GW per year. The company is just a microcosm of China's fast-growing solar photovoltaic industry. In order to achieve industrial transformation, governments around the world have strongly supported the solar photovoltaic industry as a new rising industry and have provided various preferential electricity prices, land plants and financial discounts Loans and other policies. There are more than 100 solar photovoltaic industrial parks in the country, and more than 300 cities plan to develop the photovoltaic industry. Since 2006, domestic photovoltaic cell production capacity has grown from less than 1 GW to 30 GW in 2011, polysilicon production has grown from less than 1,000 tons to 80,000 tons, and production capacity has reached 150,000 tons. With the assistance of governments at all levels, a Chaoyang industry has become an industry with severe overcapacity and large-scale losses in 6 years.

Fifth, we must pay attention to the company's balance sheet. Once the industry reaches a trough, companies with weak balance sheets will face crisis. Solar photovoltaic is a capital-intensive industry, especially in the upstream polysilicon field. In order to enter the upstream, the company invested 12 billion yuan in new polysilicon projects. With the rapid expansion of production capacity, the company's debt has expanded dramatically. As of the end of 2011, the total debt had exceeded 30 billion yuan, and the debt ratio reached 87.7%. Due to the deterioration of the supply and demand situation of the entire solar energy market, those high-input assets quickly became assets with low capacity utilization rates, and high liabilities became the source of the company's bankruptcy. The most terrible thing is that the solar industry is still undergoing continuous technological innovation. It is difficult for the production capacity formed a few years ago to form effective capacity after the next cycle of the industry cycle is reversed. Dealing with companies in emerging industries that have expanded through high investment and high debt is essentially a simple manufacturing industry, and investors must remain vigilant.

In short, we should not be fooled by the halo of the words "emerging industries". Compared with traditional industries, emerging industries also have huge risks. In emerging industries, we must look for companies that truly have technological barriers and innovation capabilities, look for companies that invest in light assets, can create good cash flow, and have excellent business models. They are concerned about the expansion rate of the entire industry and changes in downstream demand, so that we can avoid them. Risk, really get a good return on investment from the growth of emerging industry companies.

On November 28, 2011, the "Twelfth Five-Year Plan for the Development of the Internet of Things" was released. As an important part of strategic emerging industries, it has an important role in accelerating the transformation of economic development. The Central People's Government Issued documents, in order to seize opportunities, clarify directions, highlight priorities, and accelerate the development and expansion of the Internet of Things. According to China's "Outline of the Twelfth Five-Year Plan for National Economic and Social Development" and "State Council's Strategic Emergence of Accelerating Cultivation and Development" Industry Decision ", special planning, planning period is 2011-2015. ^[3]

The Internet of Things has become one of the strategic commanding heights of a new round of economic and technological development in the world. The development of the Internet of Things has important practical significance for promoting economic development and social progress. The integration of industrialization and industrialization is also the direction of development. Soon after the "Planning" was announced, the Ministry of Industry and Information Technology approved Guangdong's Shunde to create a "deep integration of industrialization and industrialization of industrialization and intelligent manufacturing pilot".

The unmanned manufacturing industry may provide a path for the upgrading of China's manufacturing industry. Li Guangqian believes that intelligence is an inevitable way of "integration of informatization" and industrialization. The core of its technology is undoubtedly the Internet of Things, but it is necessary to balance input and output and do what we can. He Heji pointed out that the premise of "integration of the two industries" is relatively general, and the Internet of Things is the entry point of the "integration of the two industries", which can greatly promote the application of information technology. A large number of applications of the Internet of Things are in the industry, including smart grid, smart transportation, smart logistics, smart medical, smart home, and so on. The purpose of the country's development of the Internet of Things is not only to generate application benefits, but also to drive industrial development. With the Internet of Things, every industry can improve its core competitiveness through informatization. These intelligent applications are the transformation of economic development methods.