Chinese venture capital investors turn to non-tech industries amid the country’s shift to service economy

Chinese investors are seeing opportunities in non-tech companies that stand to benefit from the country’s embrace of the so-called industrial internet amid a planned shift to a service-driven economy.

Steel, mining, construction and chemicals as well as livestock are some of the industries in urgent need of technology applications, according to investors who attended the Chinese Investors Summit in Shenzhen on Tuesday. Companies that can help traditional enterprises upgrade and equip themselves with technologies and internet-based applications are worthy investments, they said.

The world’s manufacturing powerhouse for the past few decades, China is now determined to use the industrial internet to upgrade all its industries at a time when the country’s biggest competitive advantage – its large consumer base – is on the decline as economic growth slows and the population ages.

Seen as a new growth driver in the world’s second largest economy, the industrial internet refers to the broad adoption by industries of technologies such as next-generation wireless networks, big data, artificial intelligence (AI) and the so-called Internet of Things (IoT).

“Investments into 2B, serving enterprises [as opposed to 2C serving consumers], require deep understanding of the industries,” said Yang Rong, a partner with investment firm Black Hole. “The process [of applying technologies like 5G and cloud computing] helps traditional companies pursue higher levels of efficiency, productivity and performance.”

The goal of bringing hi-tech to enterprises is also supported by national strategies such as Made in China 2025 and Internet Plus, which promote the pairing of the mobile internet, cloud computing, big data and IoT with modern manufacturing.