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Alibaba

Jack Ma sets out his New Manufacturing vision as Alibaba announces dedicated chip unit

PUBLISHED : Wednesday, 19 September, 2018, 3:02pm
UPDATED : Wednesday, 19 September, 2018, 11:27pm

Alibaba Group Holding co-founder and executive chairman Jack Ma Yun on Wednesday reiterated that so-called New Manufacturing will be an important growth driver of China’s economy, and called on manufacturers to embrace the internet of things, cloud computing and big data or risk getting left behind.

New Manufacturing, a term coined by Ma after his previous invention of New Retail, involves integrating the internet, data, artificial intelligence, cloud computing and the internet of things into the manufacturing process, which has in the past relied on industrial machines to churn out mass-produced products. Only by embracing and incorporating these new technologies can the manufacturing industry keep up with changing consumption trends, said Ma.

“In the future 10 to 15 years, all the pain points that the manufacturing industry will face will be far more than those today,” said Ma, speaking at Alibaba’s Computing Conference 2018 in Hangzhou, China. “The manufacturing industry is not disappearing. It will only disappear if manufacturing technology does not keep up … you cannot succeed if you don’t use these [new technologies.]”

However, he acknowledged that while New Manufacturing will be essential in the future, it is still in its nascent stage today, akin to a blind man driving a car. “You don’t know yet who your customers are,” Ma said.

Ma’s comments come after Alibaba said at its investor day event this week that its New Retail strategy, where online and offline retail experiences are integrated, is beginning to pay off, citing early success with its Hema supermarket chain. Alibaba is also looking to help small and medium enterprises optimise their operations, including making supply chain operations more efficient, such as predicting the type of goods to stock.

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Ma, who has announced he will be stepping down as executive chairman in 12 months’ time, emphasised that in the data era, as more data is generated, customisation will be key. Instead of creating 2,000 pieces of clothing that are exactly the same in five minutes, the challenge will be to create 2,000 different pieces within the same amount of time.

The company has also been using its trove of customer data from its various platforms, including e-commerce marketplaces Taobao and Tmall, to give retailers and companies feedback on popular items and even create new products that are likely to be popular among consumers.

He emphasised that the manufacturing and service sectors in China are not separate, but reliant on each other. New Manufacturing will be an integration of both sectors, which will in turn drive China’s economy forward.

Prior to Ma’s speech, Alibaba chief technology officer Jeff Zhang said the company’s global research program, DAMO Academy, is expected to launch its first neural network chip in April next year, and that it was currently researching and developing its own CK902 series of smart chips, which is expected to be the building block of Alibaba’s Internet of Things infrastructure.

Zhang also announced on Wednesday the establishment of a new semiconductor company, called Pingtou Ge.

In April, Alibaba acquired Hangzhou C-Sky Microsystems, a Chinese chip designer, to increase its own semiconductor expertise. C-Sky Microsystems develops embedded CPU and chip architecture.

Ma called semiconductors a “core technology”, and said that companies in China should be able to create their own chips as China has the largest number of internet users in the world.

“We are still some distance away compared to developed countries [in chip technology], but with the Internet of Things era we can catch up,” Ma said.

Ma’s comments also come as the Chinese government drives its “Made in China 2025” industrial master plan forwards, aiming to close the gap between China and the West in terms of cutting-edge technology, and reduce dependency on imported technology.

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“If we use machines and data, to integrate and digitalise, we will change the economy,” Ma said, reiterating that the US-China trade war will likely not be resolved within the next two decades.

But there may be a silver lining to the trade war – the chance to create outstanding companies. Although many businesses will suffer during this trade war, only the good companies will be the ones that can overcome this disaster and thrive, Ma said.

“Twenty years is enough for any company to become the future Alibaba or future Amazon. After all, Alibaba is only 19 years old,” Ma said.

In a separate announcement, Alibaba Cloud said it would be partnering with the host broadcaster of the 2020 Olympic Games in Japan to launch a cloud broadcasting solution.

The Olympics Broadcasting Services (OBS) Cloud is aimed at speeding up the production and delivery of content amid huge demand and systems pressure during live sports broadcasting, according to a joint statement by OBS and Alibaba Cloud on Wednesday.

Alibaba is the parent company of the South China Morning Post.