Industry Evolution Theory │ Industrial IoT is the Strategic Support for the Laundry Industry Revolution
Release Time:
2019-04-01 16:11
Source:
AIA Laundry Headquarters
Finance, healthcare, travel, new retail, beauty industry, education, big health, maternal and infant, manufacturing... In many spotlighted industry fields, each has its own "BAT". It seems every field is a trillion-level market that excites just by thinking about it. If companies in various sectors of daily life are ranked by compliant financial annual revenue, the laundry and dyeing industry rarely has companies in the top tier. What are the problems in the laundry and dyeing industry? Regional markets, monopolistic resources, clustered development, talent gaps, franchise difficulties...? Laundry entrepreneurs and incumbents are mixed with excitement and anxiety. Let's analyze the future direction of the laundry and dyeing industry from another dimension: the era of industrial Internet of Things.
Reading and Thinking
1. What are the inherent advantages of laundromats in the wave of industrial Internet of Things? Is it technology, promotion, or depth of industry understanding?
2. What is the difference between the transformation of traditional laundromats by industrial Internet of Things and O2O?
3. Where are the most urgent empowerment needs inside and outside laundromats?
4. What kind of laundromats will be eliminated in the future?
Market scale "wrong," crossing from hundreds of billions to trillions
In 2017, China's laundry market size was 112.25 billion yuan, including household laundry (laundromats) and public textile laundry (hotel and medical linens). This is not a numerical error but a calculation of industry scale from a single dimension. In the era of consumption upgrading, we should reflect on the dimension of customer demand cognition to view the industry chain. Previously, clothing was divided into household laundry and commercial laundry, lacking industrial linkage and intersection. For example, laundry companies and enterprises like Haier and Blue Moon belonged to different industries. Now, whether household or commercial laundry, the essence of customer demand is not only how to clean clothes but also upgrading the entire process of washing, caring, storing, matching, and purchasing clothes. Consumer-side demand drives the integration of the business side (equipment, hardware, daily chemicals, washing and care, data, platforms).
Just like Haier first proposed the "Clothing Internet" (an IoT-based smart solution for the entire lifecycle of clothing), it is an exploration of deep integration of the real economy with IoT, big data, artificial intelligence, and industrial supply chains.
Behind the rise of this species is a common background—the acceleration of internet big data penetrating traditional industries, driving changes in production methods and management models, and promoting manufacturing and service industries toward networking, digitization, intelligence, and ecological development. The entire Clothing Internet ecosystem market scale has already entered the trillion-level club.
Defining the development of the laundry and dyeing industry as the "second half of the internet" is inaccurate
I personally do not agree with some people defining the current stage of internet development as the "second half" and extending this to the laundry industry. The "second half" should be a quantitative symbol of development stages, and another interpretation of "second half" represents the end of an era. I think instead of distinguishing the internet's first and second halves as stage transformations, it is better to refer to industrial revolution definitions, such as Industry 1.0, Industry 2.0. The internet will not disappear; only the characteristics of demand and supply sides change in different eras. 
Laundry industry 1.0 stage: traditional industry (manufacturing/chain operation);
Laundry industry 2.0 stage: consumer internet (To C central factory/O2O);
Laundry industry 3.0 stage: industrial Internet of Things (To B supply-side reform);
Laundry industry 4.0 stage: intelligent internet (To AI artificial intelligence);
Laundry industry 5.0 stage: ...? ... (Future materials may not need washing!);
We are currently in the laundry industry 3.0 stage: the era of industrial Internet of Things.
You can choose not to embrace it, but you cannot afford to be unaware
The industrial Internet of Things era in the laundry industry is the combination of data, networks, and traditional laundry production, applying IoT technology to connect and reconstruct the traditional laundry industry supply chain, laundry production, and laundry services.
The consumer internet affects the demand side, while the industrial Internet of Things can directly affect the supply side. In the past decades, the internet has completed market education and consumer cognition through connection and sharing, creating many enterprises focused on front-end information display, such as e-commerce platforms (Taobao), information platforms (Toutiao), social platforms (WeChat), payment platforms (Alipay), O2O laundry platforms (Laundrapp), and other giants. The internet serves our lives anytime, known as "all-powerful," which is the consumer internet.
The industrial Internet of Things is different; its service targets range from the consumer side to the business side. It is the second fold of the internet after the demographic dividend fades, an extension of consumption digitization. With the support of consumer internet and user base, it serves the business side, such as new retail platforms (Alibaba Retail Link), clothing internet ecosystem platforms (Haier Clothing Internet).
Compared to the consumer internet, the industrial Internet of Things is larger in scale. This can be glimpsed from the number of connections: the consumer internet (O2O laundry) mainly connects people with PCs, phones, laundromats, and other terminals, while the industrial Internet of Things (Haier Clothing Internet) connects people, devices, software, stores/factories, products, finance, and various production factors.
Functionally, the consumer internet mainly connects consumers to help existing laundromats achieve more efficient customer laundry orders and clothing circulation. Although it also promotes the laundry process, this impact is generally indirect and limited. In contrast, the industrial Internet of Things has a more direct and obvious impact on laundry production. Leveraging IoT, applying RFID, image recognition, big data, cloud computing, artificial intelligence, and other technologies, traditional laundromats can better meet consumer needs for targeted laundry services, more effectively read, identify, analyze, and classify laundry, and more quickly realize laundry production circulation, optimizing the supply chain structure and improving production efficiency overall. This is very important for promoting the transformation of new and old kinetic energy, achieving laundry industry optimization and upgrading, and enhancing the industry's international competitiveness.
Existing old business, old city renovation 
Tmall Convenience Store, in this example, we see that it breaks the traditional constraints of convenience stores and creates a brand new industry model within a new economy. In 2 years, it has empowered and transformed 1 million traditional convenience stores.
By leveraging digital technology, it unites 1 million small family-run stores, over 6,000 brands, and more than 30 warehouse owners to build an "industrial expressway" without any toll stations, connecting fragmented points in the retail supply chain, empowering each link, and forming a huge scale advantage.
Haier's Clothing Internet layout today has a similar approach, uniting the upstream and downstream of the commercial chain through clothing as a medium, including clothing manufacturers, RFID chip companies, smart hardware companies, and downstream daily chemical companies, laundry factories, etc. From clothing production and circulation to the hands of users, then to home washing and storage, and professional handling by laundry shops, it uses IoT technology to effectively connect fragmented information. Clothing companies can standardize digital washing labels through laundry procedures and processes, and laundry shops can accurately perform professional washing based on precise washing label information and IoT technology, greatly improving productivity and reducing accidents.
If I were a user, I would prefer to choose Haier's Clothing Internet service for the full lifecycle of my clothes instead of traditional fragmented consumption. Whether it is user demand or pain points in the industry chain, this is a trend and an inevitability.
The value moat of the traditional washing industry
The consumer internet era uses finite game thinking, pursuing quick wins or leaving competitors behind, winner takes all; while the industrial IoT uses infinite game thinking, focusing on improving efficiency as a weapon and achieving win-win cooperation.
We may not care about O2O or industrial IoT, just like the relationship between physical clothing stores and Taobao, focusing on running a stable business. But the internet era has nurtured e-commerce opportunities. Zhao, a Taobao clothing store owner who seized the opportunity, is no longer on the same scale as Li, who opened a store next door ten years ago. It's not that Zhao has more history, but that he was lucky to board Alibaba's steady ship early. However, many laundry shops in the O2O laundry era chose to accept the new direction but failed miserably. This is not because the O2O direction was wrong, but due to problems within the O2O platform itself. Not every company can succeed in every era. We need the ability to identify companies and the courage to take risks. This is a matter of choice; there is no absolute "who disrupts whose business," but we must accept that a new era indeed brings opportunities and shocks to the previous one.
The laundry O2O era nurtured by the consumer internet has indeed brought mixed feelings to many traditional laundry operators. The near collapse of Chinese O2O companies contrasts sharply with the flourishing of O2O companies in Europe and America. I personally believe the core issue lies in the end production capacity. Taking the UK’s Laundrapp as an example, its end production capacity is mainly supported by regional large central laundry factories, with mature offline production efficiency, quality, and logistics circulation, forming a good complement between demand and supply sides online and offline. In China, O2O companies are limited by the fact that central factories started at least 10 years later than in Europe and America, so offline production capacity must come from scattered single laundry shops. Due to the blind expansion of brand chain franchises in tens of thousands of laundry shops in China, the market has long lacked effective quality supervision, brand management, and service management. Under the same marginal benefit model, laundry shop washing costs are much higher than laundry factories, and washing quality stability is lower. Therefore, under immature offline production conditions, the contradiction between demand and supply sides for Chinese O2O laundry companies cannot be reconciled in the short term.
However, through the consumer internet era, we can conclude that the core moat of the laundry industry is offline production capacity. The future industrial IoT era will inevitably rely on it. Whoever owns or regulates offline production capacity holds the core value for future business competition. While many laundry shops are still thinking about how to market and acquire customers, smart people have already started thinking about how to improve production capacity.
Data drives transformation and innovation
Data is the weapon of innovation and transformation. As the industrial IoT arrives, entrepreneurs need to establish an industrial router mindset in advance.
The big data held by O2O laundry platforms is user consumption habit data. Through promotion and subsidies, they can quickly build traffic pools. The database accumulated by laundry shops covers production operations, washing processes, equipment consumables, fabric materials, etc. One thing easily overlooked by emerging O2O laundry platforms is that the advantage accumulated by such databases cannot be quickly surpassed.
O2O laundry platforms can of course poach the best technicians and store managers from the traditional washing industry, but what these people can take away is only their accumulated experience, which is just a drop in the ocean.
The internet laundry industry is proficient in consumer-facing technology but lacks expertise in washing production processes and techniques. The complexity of the washing and dyeing industry far exceeds the imagination of these "cross-industry" players.
However, this does not mean O2O and traditional laundry shops cannot integrate. Seeing the tragic end of Chinese O2O laundry platforms, one might think internet companies entering traditional industries must not understand the business and are outsiders facing insiders. But this greatly underestimates the power of internet companies. There is a force that transcends industry business barriers: replacing old production methods with new ones.
When such companies enter the industry, they must adhere to one principle: leverage their own advantages to help all Bs create value for their end users. In other words, the service internet companies provide to industry companies is not directly competing for B’s business but bypassing B to directly reach B’s users (C) through OTT, helping B succeed. This method can also be called an industrial router, where top companies empower B to serve C for mutual benefit.
Empowerment, strengthening, and nurturing industrial resources 
From this target diagram, we can see the evolution path and era characteristics of the IoT. People, information, services, industry, finance — from the IoT evolution path, the core layer is finance. Therefore, in the industrial IoT era, our focus must be on industrial finance.
Today, it seems that Industry + IoT may represent another kind of power. This power is very strong because when you start a business, the most troublesome thing is the cold start, as there are no resources and no accumulation in this industry.
Everything follows the 10,000-hour rule. If you don't spend 3 years or 10,000 hours in it, your understanding is superficial and it's hard to make a big breakthrough. In the traditional washing and care industry, if these leading companies are willing to embrace IoT, the momentum will be very great.
From 2019 to 2022, I believe that Industry IoT will produce new BATs in the trillion-level washing and care full-chain industry. Industry IoT consists of three factors: industry, IoT, and capital. Only by combining these three elements can new BATs in the industry be created. For traditional enterprises, they must either actively transform and iterate to survive or be eliminated.
Consumer upgrade, the arrival of the Internet, and the Matthew effect — we see three trends brought by the characteristics of the Internet era:
Many young people are unwilling to engage in low-level, repetitive work like washing, and China's aging population causes difficulties and high costs in recruitment. The essence of machines replacing people is that as long as automation and systems can do the work, there is no need for humans. Many central washing factories now adopt RFID production lines to reduce manual labor. Even Jack Ma is trying unmanned supermarkets and convenience stores, all representing the main trends of the future.
Purely relying on human management won't get far. Therefore, while scaling up, it is essential to build information systems. If we want to build a hundred-billion enterprise, our technical architecture and systems must support that goal.
Only by truly mining the value of big data and applying it to operations can sales revenue be significantly increased and operating costs greatly reduced.
We find that without IoT sensors, big data cannot be collected and transmitted to the cloud. Without sufficient data in the cloud, so-called artificial intelligence is just a castle in the air. With big data and cloud computing, AI has a foundation. The real combination of these technologies will bring great development opportunities.
Developing Industry IoT is not worried about technology but about the ecosystem. The past approach was investment-driven; it needs to become innovation-driven. From past Internet development experience, successful players often emerge from innovative ecosystems. However, attention must also be paid to the difficulty of promoting Industry IoT from the bottom up. The difficulty lies in that once traditional industry interests are touched, various “red flag laws” will restrict progress. This means reform must enter deep waters, involving not only the business of each chain but also the interests and even the soul of each chain. What does entering deep waters look like? Didi Chuxing is a vivid example. Developing Industry IoT from the bottom up must avoid a purely technical viewpoint and not naively believe that adopting advanced productive forces will be warmly welcomed by traditional industries. People must be mentally prepared for fierce conflicts of interest and institutional conflicts like those caused by Internet transportation.
Theoretically, the core contradiction lies in dividing the pie, which refers to the distribution of interests and belongs to the realm of production relations. Reform means changing production relations that are unsuitable for advanced productive forces, which will involve people's interests. If the existing production relations and economic base are not adjusted, the biggest challenge Industry IoT faces may be that the current management model does not adapt to the development of productive forces.
Why do I have more confidence in Haier than Alibaba to carry out Industry IoT transformation? Because Internet people have not experienced the painful historical process of reforming and adjusting production relations. They naturally live in the atmosphere of reform and think that resistance from traditional physical interests does not exist, as Alibaba finally gave up investing in Yibeijie in 2016. Haier, on the other hand, successfully transformed from a traditional manufacturing enterprise with a complex interest chain into a leading company in the world IoT era. In terms of the core value of Industry IoT, Haier's IoT of clothing network has more advantages.
Finally, taking the automobile industry as an example to briefly analyze the business model in the washing industry IoT era:
Many new energy vehicle companies lack manufacturing capabilities and experience, so they can only cooperate with traditional automobile companies and let them do OEM. NIO cooperates with JAC Motors, Xpeng cooperates with Haima Motors, following this idea.
However, you cannot leave your child in someone else's care forever. Similarly, you cannot rely on others to do OEM forever.
The problem is that once Internet companies start building their own factories, they shift from a light-asset model to a heavy-asset model, turning advantages into disadvantages. Cavalry skilled in flatland battles, do they still have advantages in mountainous areas?
The new car-making movement mainly relies on market financing, hoping to quickly break through the defense line of traditional car companies with sufficient ammunition. But mature traditional car companies have extremely strict cost control measures, making it difficult for emerging car companies to win in a cost war.
This capital-intensive business model carries huge risks. Many things really cannot be accomplished just by having more money.
Once the market does not recognize immature early products and sales channels fail to open, dealers lose networks, suppliers run out of stock, and these problems in turn affect financing, which is fatal for new companies.
A new car used to take 7 to 8 years from preparation to market launch, then 5 to 6 years, and now only 2 to 3 years, with as fast as 18 months. This is the huge impact electric vehicles have brought to traditional cars. The car-making cycle has greatly shortened, but many problems are hidden.
In fact, the laundry O2O model in previous years was the same. Although O2O changed people's life experience, if the companies building O2O platforms do not have good offline foundations, many bright data actually hide many problems. If not solved in time, the outbreak will be fatal. 
In the era of the Industrial Internet of Things, it is no longer a simple O2O combat model, but rather "B2B+O2O+Industrial Finance," with the combat model changing under the drive of digitalization.
The future is an era where the real economy and the virtual economy achieve equal dialogue and deep integration through digitalization, and it is also an era where consumer demand drives the entire manufacturing demand operation.
The Chinese market has transformed from a rapidly growing incremental market over the past 30 years into a slow-growth stock market. China has numerous industries worth trillions, but the entire laundry market is fragmented. The new industrial cycle driven by new technology is accelerating the iteration of the laundry industry, making it worthwhile to redo the laundry industry.
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