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With **policy guidance and support, and as the demand for replacing human labor with machines and for building smart factories increases in the future, along with the gradual reduction in the costs of automated equipment, manufacturing companies will have an ever-growing need for automation and intelligent upgrades. Thus, there is huge potential for the development of the automation system integration industry in China. For automation system integrators, leveraging their own strengths, focusing on the recruitment and training of skilled professionals in the field of intelligence, increasing investment in research and development as well as technology, delving deeply into specific niche areas, and offering comprehensive solutions to customers based on core technologies and products represent viable strategies for their future development. As industrial plants become larger, more continuous, and operate under higher parameters, the demands for automated products continue to increase. To meet the requirements for safe start-up/shutdown of industrial equipment, stable operation, optimized operations, fault handling, and a low-carbon economy, it is necessary to seamlessly integrate various instrumentation products and systems manufactured by different manufacturers into a coordinated information system. How to handle data transmission, information sharing, and coordinated operation among these instrumentation products and systems in order to meet user requirements has become a very important technology, namely automation system integration technology. Against this backdrop, automated system integrators emerged. At the same time, with the development of communication network technologies such as industrial Ethernet, automation system integration technology has broken free from the limitations of local automation and begun to evolve toward workshop-level and plant-level applications. System integration is the process of, under the guidance of the scientific methods of systems engineering and in accordance with user requirements, selecting appropriate technologies and products to connect various separate subsystems into a complete, reliable, cost-effective, and efficient whole. This enables these subsystems to operate in coordination with one another, thereby achieving optimal overall performance. Relevant reports have defined automation system integrators as companies that are responsible for customer design, cabinet manufacturing, installation, programming, and debugging of automation systems, excluding those that are engaged solely in cabinet manufacturing or solely in programming and debugging, and of course also agency sales companies. The author believes that the starting point of this definition is to regard automation system integration as an intermediate link between user requirements, product manufacturing, and the operational deployment of applications, while defining automation system integrators as companies capable of carrying out this role independently, that is, of delivering turnkey solutions. I. The Role and Value of Automation System Integrators in the Construction of Smart Factories Automation system integrators play a crucial role in the automation industry, as they are able to provide a range of system services such as project consultation, system design, programming and implementation, installation and commissioning, as well as training support and operation and maintenance management. By integrating various discrete devices or control systems from upstream suppliers into solutions that meet the specific needs of downstream manufacturing enterprises and are suitable for industry-specific and on-site applications, they help these enterprises improve the level of automation in their production systems. Especially in our country, where intelligent manufacturing is used to drive the transformation and upgrading of traditional manufacturing industries, and strong support is provided for the development of digital workshops, digital factories, and smart factories, the automation system integrators – as providers of integrated technical solutions that leverage specialized knowledge in specific industries – can meet the needs of various sectors such as design and R&D, manufacturing, operational management, personalized services, and logistics coordination. They offer vertical integration of an enterprise’s OT and IT systems, horizontal integration across the entire business process, as well as end-to-end integration of products, thereby meeting the requirements of industrial automation in terms of stability, reliability, and continuity. Its role and value in the construction of smart factories are manifested in the following aspects: ① Throughout the entire production process, automation system integrators assist manufacturing enterprises in connecting intelligent equipment (including but not limited to robots, CNC machines, automated integrated equipment, 3D printing, etc.) through information technology, thereby achieving automation of the production process. ②Automation system integrators use various sensing technologies to help manufacturing companies collect different types of data during the production process, and they employ information technologies such as various system optimization software to provide these companies with production solutions. ③Automation system integrators use communication methods such as industrial Ethernet to enable interconnection between devices and data, thereby achieving intelligent production solutions. Achieving automation of the production process: Throughout the entire production process, it helps manufacturing enterprises to organically connect intelligent equipment (including but not limited to robots, CNC machines, automated integrated systems, 3D printing, etc.) through information technology, thereby achieving automation of the production process. Provide production plans for manufacturing enterprises: Utilize various sensing technologies to help these enterprises collect different types of data during the production process, and employ information-based tools such as various optimization software to develop production plans for them. Achieve intelligent production solutions: By utilizing communication methods such as industrial Ethernet to enable interconnection between equipment and data, and by drawing on a deep understanding of industry practices and production processes, flexible, intelligent, efficient, reliable, and easy-to-maintain manufacturing solutions are provided that offer high returns on investment and short payback periods. These solutions help manufacturing companies develop competitive production systems, achieve intelligent production approaches, cope with rising costs of production factors, ensure stability in production organization and staffing, reduce uncertainties in production management, as well as the risks associated with frequent changes in products – particularly by meeting the needs of flexible production in situations where production orders are uncertain. II. Classification of Automation System Integrators 1. OEM System Integrators OEM is an abbreviation for Original Equipment Manufacturer. It refers to a type of \"contract manufacturing\" approach in which the producer does not manufacture the products directly; instead, it uses its own \"key core technologies\" to handle design and development, as well as controlling the sales channels, while leaving the actual manufacturing tasks to other companies. An OEM system integrator is one who utilizes the key core technologies at its disposal to be responsible for the design and development of new products, to manage sales channels, and to carry out specific manufacturing tasks through contractual agreements. 2. Project-based system integrators: For the needs of some large clients, a general contractor is usually selected through bidding, and this contractor then subcontracts out the various subsystems. There is a dedicated integrator responsible for each part. Such integrators, who take a client’s specific requirements and turn them into a project, handling its design, construction, installation, and commissioning, are known as project-based integrators. The system integration for small-scale projects will be carried out through the evaluation of proposal documents and a simplified process for product selection. III. Current Status of the Automation System Integration Market 1. Regional Distribution Among the 460 automation system integrators in China identified by Changhui Instrument Network, there is a high degree of concentration in certain regions. The Pearl River Delta (Guangdong), the Yangtze River Delta (Shanghai, Jiangsu, Zhejiang), the Beijing-Tianjin-Hebei region (Beijing, Tianjin, Hebei), and the middle reaches of the Yangtze River (Hunan, Hubei) are the main areas where these integrators are concentrated, accounting for over 70% of the total. Of these, 27.8% are concentrated in Guangdong Province, 25.9% in the Jiangsu, Zhejiang, and Shanghai regions, 11% in the Beijing-Tianjin-Hebei region, and 8.5% in the Hunan and Hubei regions. Analyzing the reasons, this is mainly because the production in the automotive and electronics industries is concentrated in the East and South China regions. Shanghai, Wuhan, Changchun, and Guangzhou are the four areas with the highest density of automobile manufacturing bases in China; at the same time, Shanghai and Guangzhou are also developed areas for the electronics industry. 2. Industry distribution: Domestic automation system integrators are still primarily concentrated in the automotive industry, driven mainly by the demand for automation in this sector. However, as the growth rate of the automotive industry slows down and the technology for integrating automation systems in this sector becomes more mature, system integration in the automotive industry has gradually turned into a competitive market. Industries such as electronics, home appliances, food processing, and metal processing have begun to take over from the automotive industry, becoming the sectors where automation system integrators focus their efforts. At the same time, as automation system integration technologies and the level of intelligence improve, the scope of this industry has expanded from traditional manufacturing sectors to other manufacturing fields such as semiconductors, new energy (mainly the lithium battery industry), healthcare, and ceramic sanitary ware industries. 3. Revenue and scale: There are currently thousands of automation system integrators in China. However, since automation system integration is a relatively new industry with low barriers to entry, and the companies in this field are spread out across the country, each focusing on its own area of expertise, the size of these enterprises is generally small. According to the \"Top 100 Chinese Intelligent Factory Automation Integrators 2019\" list published by Changhui Instrument Network, among these top 100 automation integration companies, only 3 had annual revenues of over 3 billion yuan in 2018, while as many as 72 had revenues of less than 1 billion yuan. The reason for this is mainly that the integration of automated systems is \"non-standard,\" making it difficult to achieve scale expansion ； It has not developed its own differentiated core competitive advantages ； It is caused by various factors such as multiple risks in the development process including funding, technology, and talent, as well as new challenges brought about by digitalization and informatization. IV. Difficulties and Challenges Faced by Automation Integrators 1. Difficulty in achieving economies of scale for custom orders Due to the customized nature of automation system integration, it is hard for such integrators to use a single solution to meet the varying application scenarios and requirements of different customers. It is also difficult for them to increase production at a rapid pace, as is possible with standardized products, in order to achieve economies of scale. 2. There are industry differences, making cross-industry expansion difficult. These industry differences require automation system integrators to have a thorough understanding of the respective industries and their production processes. Focusing on a specific industry or field allows automation system integrators to build high barriers to entry within that sector, but it also makes it difficult for them to expand across different industries. 3. Capital determines the scale of operations, and financial pressures restrict business expansion. The payment patterns in a \"buyer’s market\" require upfront funding for automation system integration projects. This forces automation system integrators to carefully consider the number and scale of projects that can be undertaken simultaneously, as well as the risks associated with cash flow, resulting in them being reluctant to take on new projects and hindering business expansion. 4. Located in the middle of the industrial chain and facing pressure from both ends. Automation system integrators find themselves in the middle of the automation industry chain; they are connected to equipment suppliers on the upstream side and to end-manufacturing companies on the downstream side. As a result, they face pressure from both these groups, which results in limited bargaining power and generally low gross profits. 5. Prices are becoming increasingly transparent, putting pressure on the comprehensive project management capabilities. Hardware prices are becoming more transparent and competition is intensifying; the profits of automation system integrators depend mainly on the efficiency with which projects are carried out. This tests its comprehensive project management capabilities, from plan preparation to project implementation, to project acceptance, and then to post-project maintenance. 6. The deep integration of the two types of transformation brings new challenges in terms of digitalization and informatization. The construction of smart factories places higher demands on automation system integrators. This requires them to have knowledge not only of automation but also of information technology, in order to achieve a deep integration of the two and provide customers with comprehensive solutions for smart factories/intelligent manufacturing. V. Development Trends in the Automation System Integration Industry 1. Expansion of the market scale as labor costs rise. For simple, repetitive tasks, automated equipment offers significant cost advantages; therefore, the tasks carried out by manual workers who perform simple, repetitive work fall, in theory, within the scope of the automation system integration market. There is a turning point in the integrated application of industrial automation. As labor costs rise, the demand for replacing humans with machines increases, and the cost of automated equipment decreases, this turning point is reached when labor costs exceed the cost of automated systems; thereafter, the market for automated integration experiences explosive growth. In the future, as labor costs rise, the break-even point will shift, and the market size of the automated system integration industry will also expand as a result. At the same time, in recent years, there has been **strong support for the upgrading of the manufacturing sector, with the importance of advanced manufacturing being continuously emphasized. *The report proposes “promoting our country’s industries to move up the global value chain to higher levels, and fostering several world-class advanced manufacturing clusters”” ； The State Council issued the Strategy for Building a Strong Manufacturing Nation in China, as well as the Guidelines on Deepening the Development of the Industrial Internet through the Integration of the Internet and Advanced Manufacturing ； The Ministry of Industry and Information Technology, the **National Development and Reform Commission, and the Ministry of Finance jointly issued the \"Robot Industry Development Plan (2016–2020)\». In his 2019 work report, the Premier of the State Council proposed to \"explore the concept of ‘intelligence +’ to empower the transformation and upgrading of the manufacturing sector\". Driven by these policies, the industry of automated system integration, with industrial automation and its applications at its core, is also set to experience rapid growth. 2. Expansion from industries with large production volumes and high profits to general industries. Looking at the development history of the automation system integration industry, it can be seen that the sectors in which such technologies were first applied were those with batch production and high profits; this is also the main reason why automation system integration services are concentrated in the automotive industry. However, as large-value, high-profit orders have gradually been taken over by large integrators, and the growth rate of the automotive industry has slowed down – with China’s auto market experiencing negative growth for the first time in 28 years in 2018 – the demand for automation upgrades in general industries remains relatively strong. This has led to an expansion of the scope of industrial applications for automation equipment, and automation system integrators have shifted their focus from the automotive industry to sectors such as 3C electronics and home appliances. It is expected that the 3C industry will take over from the automotive industry as the next area with significant demand. Xie Shilai, CEO of Ningbo Junpu Industrial Automation for the Chinese market, is very optimistic about the prospects for integrating automation systems in industries such as 3C consumer goods. Founded in 2017, Ningbo Junpu Industrial Automation is a holding subsidiary of Auto Parts Supplier GS Group. Although its clients in the field of automation integration are primarily from the automotive industry, it has from the very beginning focused on making investments and conducting research and development in sectors such as consumer goods, industrial products, healthcare, and new energy. Today, the intelligent equipment and automation solutions it has developed serve many companies that are part of the Fortune 500 list. 3. Expansion from industries with high levels of automation to those with lower levels of automation. System integration services are typically found in industries that already have a solid foundation in automation, such as the automotive industry, 3C electronics, metal processing, and logistics – sectors that require high levels of automation due to their technical complexity. However, as competition in these industries intensifies and markets become saturated, system integration services will gradually extend to industries with lower levels of automation. In this process, due to the low level of automation and standardization within manufacturing enterprises themselves, these companies place more demands on system integrators regarding special manufacturing processes. This not only creates more business opportunities in the industry but also further contributes to the improvement of factory automation levels. 4. Providing comprehensive solutions for smart factories/intelligent manufacturing. At present, the vast majority of automation system integrators in China have made advancements in the system integration of certain processes or stages in automated production (such as welding system integration, standard workstations, logistics automation, etc.), but few are able to offer comprehensive solutions for smart factories/intelligent manufacturing. With strong support for the development of digital workshops, digital factories, and smart factories, and in order to meet the needs of manufacturing enterprises in building such facilities, more and more automation integrators will, based on their understanding of the industry and relevant processes, combine automation, information technology, and digital technologies to provide manufacturing companies with comprehensive solutions for smart factories/intelligent manufacturing. 5. Intensifying competition accelerates the reshuffling of the automation integration industry. Any industry that experiences unregulated growth eventually faces a process of survival of the fittest due to fierce competition. The intensifying competition in the automated system integration industry will accelerate the consolidation of the automation integration sector. Large integrated contractors with strong comprehensive capabilities will become general contractors for the integration of automated, custom-made systems, or they will offer comprehensive solutions for smart factories/intelligent manufacturing by combining automation and information technology. A number of small-scale, low-quality integrators have either been eliminated by the market or become subcontractors for larger integrators ； Some automation integrators have transformed into industrial IoT cloud platform providers, offering operation and maintenance services to manufacturing companies based on their understanding of the industry and their accumulated experience. At the same time, driven by **policies and market demands, the relatively scattered companies in this industry within China will gradually merge and integrate, and highly skilled engineers will tend to gather in certain areas. As the scale of this industry continues to grow and markets in specific sub-sectors expand further, it is expected that a number of leading enterprises in this field with strong technical capabilities and the ability for ongoing research and development will emerge in China. VI. Future Development Strategies for Automation System Integrators 1. Focus on core business areas to build differentiated core competencies. Since the products, technologies, methods, processes, and solutions used in automation system integration share common characteristics, in order to remain competitive in a highly competitive market, automation system integrators must rely on the accumulation and refinement of experience and knowledge. They need to adapt to the trend of market differentiation by focusing on the industries and fields in which they excel, thereby developing and enhancing their system integration capabilities and creating their own differentiated core competencies. As Yao Weibing, chairman and general manager of Guangzhou Mingluo Auto Equipment Co., Ltd., said, “Just as a person grows over time, competition among enterprises is like exams among classmates; in the end, some will succeed and thrive, and that’s because they are excellent enough, have devoted more effort to one thing, or possess unique advantages that give them an edge in market competition.” In the future, automation system integrators will either become ecosystem-based companies through excellence and efficiency and thus emerge as industry leaders, or they will become specialized small and medium-sized enterprises by focusing on their expertise, thereby gaining the ability for sustainable development. 2. Extract technologies that can be applied on a large scale to standardize and automate custom products. For automation system integrators, the challenges associated with custom products are an ever-present issue. The non-standard nature of automated system integration requires a significant amount of manpower to meet customer demands, resulting in long delivery times and high service costs. As a result, there are too many projects to take on, as there is concern that the services cannot be provided adequately ； Cases cannot be completely replicated, making large-scale implementation difficult; even listed companies face the issue of customer selection. The key to overcoming the challenges associated with \"non-standard\" products lies in transforming customized items that require special manufacturing processes in various sectors into modular, standardized, and intelligent generic products. Alternatively, by gaining a deep understanding of the industry’s manufacturing processes, it is possible to develop replicable industry solutions, thereby increasing corporate profit margins, creating a competitive advantage for the company, and reducing project costs. Most large domestic system integrators adopt this strategy; for example, Mingluo Equipment offers standardized and modular products in the automotive equipment sector, such as integrated grinding and cap-changing machines, conveyor systems, and modular linked workstations ； CRRC Ruibird in Shanghai is a typical example of such an enterprise: it focuses on the rail transit sector and has developed replicable industry solutions such as car body polishing and high-speed rail gluing. 3. Place emphasis on talent development and recruitment, as well as increase investment in research and development. Guo Dahong, director of the Enterprise Technology Center at Tianqi Automation Engineering Co., Ltd., pointed out that the domestic automation system integration industry currently faces issues such as overly impulsive attitudes among professionals in the field of intelligence, insufficient investment in research and development by automation system integrators, and \"pseudo-advanced\" industrial knowledge – all of which are among the reasons why the overall scale of these integration companies remains small. If automation system integrators wish to grow and thrive in the future, they must abandon a hasty attitude, place emphasis on recruiting and training skilled professionals in intelligence technologies, increase investment in research and development, and address the shortcomings in industrial engineering. 4. Enhance financing capabilities through various capital operation methods. When a company faces financial constraints, heavy business volumes, and strong market demand, automation system integrators can consider using various approaches such as taking loans, seeking venture capital, going public, or engaging in financial leasing in order to break through challenges quickly, gain a foothold in the market, and prevent financial limitations from becoming a bottleneck to the company’s development. Since the beginning of this year, a number of automation system integrators, including Liyuanheng, Jiangsu Beiren, Bozhong Jinggong, Hanchuan Intelligence, and Tianzhun Technology, have rushed to enter the Sci-Tech Innovation Board ； Corey Technology successfully listed on the GEM board ； Companies such as Lihe Xing, Zhichang Robotics, and Tigerway, which are automation system integrators, having received financing are typical examples of this. 5. Integrate resources to provide comprehensive solutions: With the development of smart factories and the advancement of intelligent manufacturing, manufacturing companies place increasingly higher demands on the capabilities of automation system integrators. These integrators are expected to have the ability to offer integrated solutions that cover various aspects such as mechanics, automation, communications, data acquisition, machine vision, industrial IoT, and data mining – in other words, solutions that combine hardware, software, and computational elements. Against this backdrop, many automation system integrators have begun to pool their resources for system integration, transforming into comprehensive services providers for intelligent manufacturing or suppliers of intelligent digital products/systems. They are committed to offering customers integrated smart factory/intelligent manufacturing solutions that combine automation, information technology, and digitalization. For example, since its listing, Tuosida has transformed from a system integrator to a \"comprehensive service provider for intelligent manufacturing\"” ； Taida Robotics positions itself as a supplier of intelligent digital products/systems in the field of spraying and gluing in China. In addition, companies such as Mingluo Equipment, CRRC Ruibird in Shanghai, and Tianqi Co., Ltd. also position themselves as providers of smart factory solutions. At present, there are generally three ways for system integrators to pursue system integration: extending the industrial chain to become comprehensive service providers ； Integrate resources and transition toward a platform-based model ； Software innovation reduces the proportion of integration capabilities in business operations. 6. Leveraging data resource advantages to build industrial IoT cloud platforms: As automation system integrators are close to the production lines and manufacturing sites of enterprises, they can meet the needs of these companies regarding on-site applications and management. By collecting, connecting, and transmitting data in real time, they can provide intelligent production solutions for manufacturers. Therefore, they have a natural advantage in building IoT cloud platforms for big data analysis, early warning monitoring, and predictive maintenance. Therefore, domestic automatic system integrators are also beginning to overcome the limitations associated with hardware integration, placing greater emphasis on the collection and utilization of data. By fully exploiting industrial data, they offer customers support for the full life cycle management of factories. For example, Mingjiang Intelligence has developed the Newton IOT industrial cloud platform, while Mingluo Equipment has created the MISP industrial IoT big data platform for the equipment manufacturing industry – these are typical examples. Automation system integrators are key players in the application and implementation of industrial automation. There are numerous such integrators in China at present, and competition in this industry is fierce. However, by examining its role and value in the construction of smart factories, the current state of the automation system integration industry, the difficulties and challenges it faces, as well as the trends in development, it can be seen that **with policy support, and as the demand for replacing human labor with machines and for building smart factories increases in the future, along with rising labor costs for manufacturing enterprises and a gradual decrease in the cost of automated systems, the need for automation and intelligent upgrades among manufacturing companies will continue to grow. Thus, there is huge potential for the development of China’s automation system integration industry. For automation system integrators, leveraging their own strengths, focusing on the recruitment and training of skilled professionals in the field of intelligence, increasing investment in research and development as well as technology, delving deeply into specific niche areas, and offering comprehensive solutions to customers based on core technologies and products represent viable strategies for their future development. Recommended reading: Digital display instruments http://yunrun.com.cn/product/