Recently, the General Office of the State-owned Assets Supervision and Administration Commission of the State Council issued the Noticeon Issuing the List of “Creating World-Class Professional Leading Demonstration Enterprises”. Lanyou Technology was included in it, being one of the 200 candidate demonstration enterprises in China and also the only selected enterprise under Dongfeng Motor Co., Ltd. (DFL).

(Source: The officialwebsite of the State-owned Assets Supervision and Administration Commission ofthe State Council)

The following is the author’s translation:

Notice on Issuing the List of Candidate Creating World-Class Professional Leading Demonstration Enterprises

Source of article: Bureau of Enterprise Reform     Release date: March 16, 2023

General Office of the State-owned AssetsSupervision and Administration Commission of the State Council

SASAC Fa Gai Ge [2023] No.4

All central state-owned enterprises and thestate-owned assets supervision and administration commissions of all provinces,autonomous regions, municipalities directly under the central government,cities specifically designated in the state plan, and the Xinjiang Productionand Construction Corps:

In order to fully implement the spirit of the 20^th CPC National Congress, and thoroughly implement the decisions and arrangements ofthe CPC Central Committee and the State Council to accelerate the building ofworld-class enterprises, the State-owned Assets Supervision and Administration Commission of the State Council has organized central state-owned enterprises and local state-owned assets supervision and administration commissions to concurrently carry out the “dual demonstration” action of building world-class demonstration enterprises and specialized, refined, differential and innovative demonstrationenterprises on the basis of the positive outcomes achieved in building 11 centralstate-owned enterprises into world-class demonstration enterprises. Throughenterprise application, expert review, and opinion solicitation, the list ofdemonstration enterprises has been prepared and is now issued to you. Please carryout the extensive building work, focus on encouraging enterprises to improve core competencies and enhance core functions, and strive to build a number of world-class enterprises with high-quality products, prominent brands, and modern governance leading in innovation, and world-class innovation-driven specialized, refined, differential and innovative enterprises with outstanding expertise, lean management, and unique characteristics.

The State-owned Assets Supervision and Administration Commission of the State Council will strengthen tracking and guidance, conduct summarization and evaluation timely, and adjust the list of demonstration enterprises dynamically. In addition, it will explore and summarize typical examples, strengthen publicity and promotion, create a strong atmosphere, accelerate the high-quality development of enterprises, and give full play to their demonstration and driving role.

Building national world-class professional leading demonstration enterprises is an integral part of the State-owned Assets Supervision and Administration Commission of the State Council’s efforts to implement the decisions and arrangements of the CPC Central Committee and the State Council to accelerate the building of world-class enterprises and deepen the “four special actions” of business model demonstration, management improvement, value creation, and brand leadership.The aim is to accelerate the building of a number of leading enterprises that dominate global industry, supply, and value chains, develop a number of specialized, refined, differential, and innovative “l(fā)ittle giant” and single-product champion enterprises, and create over 100 typical demonstration enterprises on different levels and in different fields.

Lanyou Technology is a leading digital and intelligent service provider in the whole value chain of the automotive industry in China and specializes in the digital transformation of car makers across the full value chain and the intelligent development of vehicles based on over 21 years of experience in the automotive and internet industries, and supported by the cloud sharing platform. At present, Lanyou Technology has long-term cooperative relationships with over 60 car makers and provides quality services to over 4,100 parts suppliers and over 4,200 auto dealers.

“Specializing”in the digitalization of car makers and automotive intelligence

In terms of the digitalization of car makers, Lanyou focuses on the digital transformation and upgrading of the whole value chain of “R&D, production, supply, marketing&sales, and service.”

Firstly, Lanyou has created software products leading in domestic intelligent manufacturing. An industrial internet platform has been developed independently, and a “dark factory” was built together with Dongfeng Nissan. The enterprise BOM solution has been successfully implemented at eading commercial vehicle enterprises such as Dongfeng Commercial Vehicle, FAW Jiefang, and Shaanxi Heavy Duty Automobile.

Secondly, Lanyou has been leading the industry with a new model of digital marketing. A Super App has been developed, enabling conventional car makers to quickly reach the level of their new peers in terms of user experience. Through an all-channel contact matrix and operation services as well as big data-driven targeted marketing, the transformation and upgrading from the conventional product-centric marketing model to a new user-centric one has been realized. In particular, the digital marketing DMS (Dealer Management System) takes up the second place in China in terms of market share.

Thirdly, Lanyou has established a domestic leading IoV platform. At present, nine major automotive brands are connected, with over 12 million operating users and over 4.5 million vehicles connected in total, ranking among the top two in China in terms of connections.

Fourthly, Lanyou has offered cloud services at the international operation and maintenance benchmark level. Lanyou Technology is an operation and maintenance benchmark for the information systems of Nissan Global and Honda Global. Moreover, it has held a “zero” offline record for many consecutive years.

In terms of automotive intelligence, Lanyou closely follows the trend of software-defined vehicles and empowers car makers to meet user needs.

Lanyou has independently developed intelligent networking products such as the 4G/5G/V2X T-Box and the CCM (central computing module), intelligent cockpit products such as the integrated end-cloud intelligent cockpit and the mobile connected on-board unit, and intelligent driving products such as the integrated driving-parking domain controller and the intelligent forward vision all-in-one unit. It has over 50 independent core intellectual property rights, which can help car makers upgrade their products intelligently. In particular, the Lanyou 4G T-Box is the first mass-produced automotive grade T-box in China, reaching a mass production output of one million first inChina, with a cumulative shipment volume of over 4 million to date. According to the rankings of consulting firms like Gaogong Intelligent and Zuosi Auto Research Institute, the Lanyou 4G T-Box ranked first in terms of mass production scale in China during 2020-2021. The 5G T-Box was put into mass production in August 2021, and the intelligent cockpit and intelligent driving (L2) products already have domestically leading independent R&D capacity and mass production performance.

Focusing on the“refined” high-quality development of enterprises through continual improvement

Firstly, Lanyou adheres to “refined” quality and keeps improvingthe quality management system to ensure product and service quality. Currently, the Company has passed CMMI (Software Maturity Model) Level 5 (the highestlevel) assessment and been rated as DCMM Robust (Level 3) and certified to A-SPICE L2, making it the first enterprise receiving this certificate in the automotive software industry. By introducing the quality system and standards, the Company remains at L1 (the highest level) in the SSC parts quality index all year-round.In addition, the Company won Nissan Motor’s “2021 China Regional Quality Award”with the best performance in electricfittings.

Secondly, Lanyou adheres to “refined” technology. The Company empowers all car makers and supports customers’ digital transformation by creating a technologically leading “digital-intelligence complex” inthe industry—business, technology, and data middle offices based on unified cloud services.

Thirdly, Lanyou adheres to “refined” management. The Company makes operational cockpits and achieves digital operations and decision-making based on its corporate strategy.

Through the above measures, Lanyou Technology has achieved sustained high-quality growth,with a compound growth rate of 14% in annual operating revenue and 16% inannual operating profit in the past three years.

Targeting“special” potential markets based on insight into trends

In terms of digitalization, from 2021 to 2024, the market size of the domestic automotive software industry is expected to grow from 8 billion yuan to 16 billion yuan, indicating a considerable market prospect. In terms of intelligence, the market size of intelligent vehicle terminals is expected to reach 24 billion yuan by 2025, the market size of intelligent cockpit products is expected to reach 103 billion yuan by 2025, and the penetration rate of intelligent driving L2 in China will reach 33% by 2025.

Based on market insights, Lanyou Technology has released the “D-Pro” new strategy, planning to double operating revenue and profits in the overall corporate business plan by 2025.

Based on the new strategy, in terms of digitalization, Lanyou Technology will work together with car makers to promote the transformation and upgrading of business and service models from “product-centric” to “user-centric” ones, and from “product manufacturing” to “intelligent manufacturing + services.” Interms of intelligence, Lanyou Technology will continue to promote the deployment of intelligent part products at the pace of one generation under mass production (intelligent networking products), one generation under R&D (intelligent cockpit products), and one generation under pre-research (intelligent driving products) to help car makers reduce costs and establish independent and controllable core intelligent product capabilities.

A future path driven by “innovation”

As a province-level engineering research center, Lanyou Technology keeps improving its innovation capacity through institutional mechanism reform, salary system optimization, talent introduction, etc.

Firstly, Lanyou has activated new drivers for scientific and technological innovation by establishing the “Lianchuang” internal incubationplatform and the IOM (Innovative Product Management) product management systemand carrying out pre-research at the three major laboratories of intelligent manufacturing, intelligent parts, and big data. Its annual R&D investment accounts for over 10% of ITS operating revenue.

Secondly, Lanyou has applied innovative incentive mechanisms by offering diversified incentives through multiple remuneration measures and encouraging innovation by strengthening performance evaluation and differentiated allocation.

Thirdly, Lanyou has vigorously introduced high-level scientific and technological talents. In the past two years, the Company has introduced over 40 top-tier talents, including chief scientists under the National Thousand Talents Program, experts, doctors, etc.

Currently, the R&D personnel of Lanyou Technology account for 87% of its workforce, with over 100 technology patents and over 280 software copyrights in total. In the past three years, the income from the transformation of scientific and technological achievements exceeded 1.5 billion yuan.

In the future, Lanyou Technology will actively grasp the current opportunities of digital transformation of vehicles, establish systems and mechanisms oriented to the future, and actively carry out innovation and exploration to ensure quality, seize the market quickly, and strive to win the battle of digital transformation in active response to the state’s directive of “creating new advantages in the digital economy.”