Notification from the Hainan Provincial Department of Industry and Information Technology
Regarding the Release of the Digital Transformation Roadmap for SMEs in Key Industries and the List of “Lighthouse” Enterprises
Document No. 95 [2024]
To thoroughly implement the requirements of the Ministry of Industry and Information Technology and the provincial government for promoting the development of small and medium-sized enterprises (SMEs), and to assist SMEs in their digital transformation, the Hainan Provincial Department of Industry and Information Technology, in collaboration with the China Academy of Information and Communications Technology, conducted an in-depth survey on the digital application levels of SMEs in key cities and industries within the province.
The survey collected and analysed the current state, characteristics, typical cases, cutting-edge technology applications, and transformation trends of digitalization in five specific industries. The goal was to identify common needs and urgent issues faced by SMEs in their digital transformation journey. Based on this comprehensive analysis, a digital transformation roadmap was developed for SMEs in the pharmaceutical manufacturing, agricultural and sideline food processing, electrical machinery and equipment manufacturing, building materials manufacturing, and automobile manufacturing sectors.
The roadmap outlines the overall framework for digital transformation, addressing common needs with targeted application scenarios. It summarizes the paths to digital transformation in stages, compiling case materials from SMEs that cover main business areas, challenges, approaches, and outcomes of their transformation efforts. Using quantitative metrics, qualitative descriptions, and supporting images, the study extracted and refined typical experiences and practices from these cases, creating a list of 13 “Lighthouse” enterprises in five key industries.
This document is now published to guide and support the rapid digital transformation of SMEs in various cities and counties, promoting specialized, refined, and innovative development. It aims to provide a clear pathway and models for digital transformation, encouraging SMEs to learn from these examples, thus empowering them to improve quality, reduce costs, and enhance efficiency through digital means. Ultimately, this will help SMEs strengthen their overall capabilities and core competitiveness.
Hainan Provincial Department of Industry and Information Technology
May 19, 2024
Notification from the Hainan Provincial Department of Finance and the Hainan Provincial Department of Industry and Information Technology Regarding the Application Process for SME Digital Transformation City Pilot Programs.
To the Finance Bureaus and SME Management Departments of Haikou, Sanya, Danzhou, and Sansha:
To thoroughly implement the decisions and policies of the Central Committee of the Communist Party of China and the State Council on supporting innovative development and accelerating the digital transformation of small and medium-sized enterprises (SMEs), the Ministry of Finance and the Ministry of Industry and Information Technology (hereinafter referred to as the “two departments”) plan to organize SME digital transformation city pilot programs in three batches from 2023 to 2025. We are now forwarding to you the “Notification on Conducting SME Digital Transformation City Pilot Programs” (Document No. 117 [2023] from the Ministry of Finance and the Ministry of Industry and Information Technology, hereinafter referred to as the “Notification”) and informing you of relevant matters as follows:
Policy Objectives
The aim of conducting city pilot programs is to explore and establish methods, market mechanisms, and typical models for the digital transformation of small and medium-sized enterprises (SMEs). This involves identifying specific industries for digital transformation, creating a set of exemplary “Lighthouse” enterprises, and cultivating a pool of high-quality digital service providers. Additionally, it seeks to develop and integrate a range of digital solutions and products characterized by being small-scale, fast, lightweight, and precise.
Through demonstration and replication, the pilot programs will guide and encourage a large number of SMEs to accelerate their digital transformation, significantly enhancing their digital capabilities. This initiative will also promote the deep integration of the digital economy with the real economy.
Supported Entities
Hainan province will prioritize recommending prefecture-level cities that have strong foundational conditions, significant transformation potential, feasible implementation plans, and strong demonstration capabilities to the two ministries. In 2023, approximately 30 cities nationwide were selected to participate in the pilot programs. In subsequent years, the scope of the pilot programs will be expanded based on the implementation results.
Requirements for Pilot Cities
According to the “Notification” requirements:
1. Focus on Key Industries: Each pilot city should prioritize SMEs in critical areas of the manufacturing sector as the main focus for digital transformation (specific key industries are listed in Attachment 2 of the “Notification”). The selected industries should align with national and provincial strategic development plans, have significant production value, and a high concentration of SMEs.
2. Identify Target Enterprises: From the selected industries, choose SMEs that occupy key positions in the industrial chain as the primary targets for this digital transformation effort.
3. Select Digital Service Providers: Conduct an open, fair, and impartial selection process to choose a number of digital service providers, allowing the targeted enterprises to select from these providers independently.
4. Complete Transformation Tasks: After completing the digital transformation, the SME management departments in the pilot cities will take the lead in organizing the acceptance and validation of the transformation results.
5. Expand and Promote Replication: Encourage other enterprises within the same industry to follow suit. By the end of the implementation period, ensure that all eligible SMEs above the designated size within the selected industries have undergone transformation, and as many willing SMEs below the designated size as possible have also completed the transformation.
6. Enhance Policy Systems and Mechanisms: Develop strong, practical, and precise supporting policies. Improve public services such as policy promotion, resource matching, evaluation, diagnosis, and platform support. Strengthen support in areas like talent training, financial backing, and security assurance.
Funding Allocation and Usage
(1) Funding Allocation
The central government will provide fixed-amount rewards to the pilot cities. The total reward funds for provincial capital cities will not exceed 150 million yuan, while for other prefecture-level cities, the total reward funds will not exceed 100 million yuan. Each city’s pilot period will last for two years. For the first batch of pilot cities, the first year of the implementation period will be from the date of approval of the implementation plan until December 2024, and the second year will be from January 2025 to December 2025. The reward funds will be disbursed in stages.
(2) Fund Usage
Pilot cities should follow the principle of “enterprise contributes, service providers offer discounts, and government provides subsidies” when using the funds. At least 80% of the reward funds should be allocated to support the digital transformation of SMEs. This can include:
- Supporting targeted enterprises in selecting digital service providers for digital transformation.
- Expenses related to digital transformation, such as software, cloud services, essential data collection and transmission equipment like gateways and routers, as well as consulting and diagnostic services.
Enterprises should focus on deepening the transformation, particularly in production and manufacturing processes. Up to 20% of the reward funds can be used to support the following:
- Enhancing the service capabilities of industrial internet platforms and digital service providers, improving product supply levels.
- Encouraging SMEs to utilise SaaS (Software as a Service) services of industrial internet platforms and professional service cloud platforms.
- Rewarding effective “chain-like” digital transformation products and services for SMEs, promoting integrated development and collaboration along the industry chain.
- Supporting comprehensive services for SMEs, such as consulting, diagnostics, and talent training, through government procurement of services, and supporting digital transformation financing.
The special funds must be used exclusively for their intended purposes. Pilot cities must ensure that the funds are used appropriately, safely, and efficiently. Funds cannot be used for staff benefits, public expenses, operational expenses of financial units, construction projects like office buildings, or balancing local budgets. Enterprises that have already received central government SME development funds or those included in the “Notice on Conducting Pilot Work for Financial Support of SME Digital Transformation” (Document No. 22 [2022] from the Ministry of Industry and Information Technology and the Ministry of Finance) will not receive duplicate support.
Performance Management
Pilot cities should establish performance targets based on the current status of local enterprises and industrial foundations. These targets should focus on factors such as the number of enterprises undergoing transformation, the level of digitalization achieved after transformation, the effectiveness of replication and promotion efforts, enhancement of innovation capabilities, promotion of “chain-like” transformations, and improvement of policy systems.
Provincial-level SME management departments and financial departments should strengthen performance target management, monitor performance operation effectively, and guide pilot cities in conducting annual self-assessments of their performance. The Ministry of Industry and Information Technology, in collaboration with the Ministry of Finance, will conduct performance evaluations. After the first year of implementation, a midterm performance evaluation will be conducted, with the results serving as a significant reference for the disbursement of reward funds.
For cities with poor evaluation results, appropriate measures such as urging corrective actions, suspending pilot qualifications, or reclaiming reward funds may be taken depending on the severity of the situation. After the second year of implementation, a post-implementation performance evaluation will be conducted, and reward funds will be disbursed based on the evaluation results.
Organizing Applications
Cities intending to apply for pilot status should prepare implementation plans for SME digital transformation city pilots in accordance with the requirements outlined in the “Notification” (refer to Template in Attachment 1 of the “Notification”). These plans should include the city’s current work foundation, objectives, specific implementation contents, directions for fund utilization, safeguard measures, and division of responsibilities.
The above documents, jointly prepared by the municipal or county-level finance departments and SME management departments, should be submitted to the provincial Department of Finance and the provincial Department of Industry and Information Technology in triplicate: one paper version with official seals, one PDF version, and one editable electronic version (burned onto a CD). The deadline for submitting applications for the first batch of pilot cities is July 15, 2023.
The provincial Department of Finance, in collaboration with the provincial Department of Industry and Information Technology, will conduct initial reviews of the application materials and recommend them to the two ministries.
Other Matters
We urge all municipal and county-level finance departments to strengthen communication with their counterparts in SME management departments. Please carefully review the specific requirements outlined in the “Notification,” including the overall objectives, support measures, work requirements, fund allocation and utilization, performance management, and organizational implementation.
Thoroughly assess the digital transformation needs of local SMEs and actively engage in various tasks. Please ensure that the preparation of application materials is conducted objectively, truthfully, rigorously, and in accordance with the specified standards.
Pharmaceutical Manufacturing Industry
- Hainan Baimaikang Medical Technology Co., Ltd.
- Hainan Beite Pharmaceutical Co., Ltd.
- Hainan Hululuwa Pharmaceutical Group Co., Ltd.
- Hainan Sida Pharmaceutical Co., Ltd.
Agricultural and Sideline Food Processing Industry
- Hainan Huayan Collagen Technology Co., Ltd.
- Hainan Nanguo Health Industry Co., Ltd.
Electrical Machinery and Equipment Manufacturing Industry
- Hainan Weite Electric Group Co., Ltd.
- Hainan Meiya Cable Group Co., Ltd.
Automobile Manufacturing Industry
- Hainan Yulong Machinery Technology Co., Ltd.
Building Materials Manufacturing Industry
- Hainan Taihe Technology Co., Ltd.
- Hainan Kunlun Group Co., Ltd.
- Hainan Weite Construction Technology Co., Ltd.
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