This article is based on Decoding the Chinese Internet 2.0: Get Ready for the Next Chapter from Boston Consulting Group in conjunction with Chinese internet companies AliResearch and Baidu Development Research Center.

Now that China’s internet giants have performed a digital makeover on fundamental aspects of Chinese consumers’ daily lives, they have set their sights on the industrial internet. They are delving into vertical and B2B markets, developing everything from product design and manufacturing to supply chain and logistics. Their efforts extend to nurturing the digital platforms that are poised to transform industries of all kinds.

Internet companies’ attempts to gain a foothold in the industrial sector were apparent in the ramp up of activity in 2018. Major internet players launched initiatives, such as the latest version of Baidu’s Apollo autonomous-driving open platform, which launched in July, and efforts by giants such as Alibaba to digitize more than 1 million mom-and-pop grocery stores. They were joined by startups like Luckin Coffee and BingoBox, which launched businesses that combine online and offline know-how in new ways. The trend also saw substantial investment in emerging internet leaders such as Meituan Dianping, which raised $51 billion in an initial public offering, and Didi, which secured a new multibillion-dollar round of financing. Another internet giant, Tencent, announced a restructuring to enhance its B2B capabilities and move to the industrial internet. Tencent CEO Pony Ma could have been speaking about the direction of the entire internet industry when he described the company’s initiative as marking “the start of the next two decades.”