At first glance, industrial research and investment promotion may seem unrelated. In fact, the two are inextricably linked.

When it comes to investment promotion, only by truly understanding the industry and gaining deep insights into the sector can you hope to strike up a meaningful conversation with businesses.

It’s like raising sheep: before you start, you must understand the soil’s properties, what kind of grass grows best there, and which sheep thrive on that grass.

Working on the front lines of investment promotion, simply reading industry news allows you to grasp the industry, but it doesn’t mean you truly understand the sector.

Take this example:

We often hear that a shortage of power batteries is causing electric vehicle manufacturers to fall behind on deliveries.

What comes to mind?

When production capacity fails to meet demand, leading companies are highly likely to expand production. In fact, this is precisely why CATL and BYD have been aggressively acquiring land and investing across the country over the past year or two.

Looking at it from the other side, corporate investment represents investment promotion opportunities.

Therefore, quickly gaining a deep understanding of the industry has become a “fundamental skill” for investment promotion.

Intelligence is key

When it comes to researching an industry, trying to establish a comprehensive analytical framework from the outset is likely a bit too ambitious.

Especially in the context of investment promotion, it’s simply not practical.

Today you might be following up on an equipment manufacturing project, tomorrow you could be dealing with a semiconductor project, and in a few days, a new materials project might come along.

As you can see, switching between industries happens very quickly.

When dealing with different companies and industries every day, if this approach is too slow and takes too much time, it becomes impractical for investment promotion professionals.

Simply put, investment promotion moves at a fast pace, so understanding industries must be even faster.

In this context, maintaining a keen awareness of investment intelligence is key.

When browsing industry news, focus on the following types of information. First, let me clarify that this primarily refers to emerging industries and does not include mature, cyclical industries.

News about rapid industry growth is a crucial signal.

Since the industry is growing rapidly, it indicates that the market is expanding quickly—this represents an investment opportunity for companies and, consequently, an investment attraction opportunity. Of course, high growth at a specific company is also a clear signal.

News about products in short supply is a direct signal.

For example, if a leading company’s products are consistently in short supply, or if downstream manufacturers have to wait in line—sometimes for a long time—to purchase a key component, this indicates that current industry capacity is insufficient, making it highly likely that companies will invest in expanding production.

Reports of continuous price increases for products serve as an indirect signal.

For instance, if the prices of a certain product, component, or raw material are continuously rising, this is actually a classic sign of an imbalance between supply and demand, with insufficient production capacity being the underlying cause. Therefore, it is also a signal that companies may expand production.

Does this make things a bit clearer? It turns out that the news we read every day actually contains a wealth of investment leads. As long as you analyze it carefully, you can uncover investment opportunities.

Searching is essential

Perhaps you still have questions: while the above signals indicate investment opportunities in a certain industry, which specific companies should you target?

That’s a great question! The answer is simple:

Whenever a major investment opportunity arises in an industry, leading companies in that sector will inevitably invest—and they often take the lead.

This isn’t derived from some theoretical model, but rather from big data analysis of industrial investment trends.

Once you have the basic intelligence, you can search for the industry sectors of interest to gather information.

So, what should you do next? There are essentially two approaches: top-down and bottom-up.

Top-down refers to starting with the industry as a whole and gradually narrowing in on companies within a specific sub-sector to see which key projects they are rolling out across different regions; the bottom-up approach is the opposite—starting with a specific project and working backward to understand the sector and industry it belongs to.

Let’s start with the top-down approach.

First, you need to gather industry research reports. These can typically be found on public platforms like Baidu Wenku or industry-specific WeChat official accounts by searching for industry keywords. However, these reports often contain a vast amount of information, typically spanning dozens or even hundreds of pages.

Second, to avoid this, identify a few high-quality resources early on to establish a basic understanding of the industry and the strategic footprint of leading companies.

Now, let’s discuss the bottom-up approach.

In practice, this involves selecting companies from both the upstream and downstream segments of an industrial chain and conducting detailed research on them.

By studying these companies at different stages of the supply chain, you can not only understand how the industry operates but also identify which companies are most profitable and which segments hold the greatest growth potential—and these companies often present significant investment opportunities.

After completing the comprehensive search for key industry information, use “mind mapping” tools to organize the relevant content.

Based on sub-sectors, upstream and downstream supporting industries, as well as top-level planning and policy support, establish a basic analytical framework to create Version 1.0 of the industry analysis framework.

During the data collection process, as relevant industry knowledge, key data, and major leading enterprises are identified, they can be progressively incorporated into the framework to create Version 2.0 of the industry analysis framework.

Initially, the framework may appear somewhat disorganized, but once each module is sorted out, the overall analytical logic will become much clearer.

Methodology is Key

Once an industry is identified, analyze it through various dimensions using tools such as the "Porter Diamond Model."

This is one of the key tools for analyzing a country’s competitiveness in a specific industry, examining factors such as production factors, demand conditions, and related and supporting industries.

As shown in the diagram, the elements are presented in both square and circular forms.

The square represents static dimensions, while the circle represents dynamic, variable aspects. Government policies influence industrial development, and changing times also bring new opportunities.

The development of any industry relies on production factors such as water, electricity, heating, and labor. If planning to establish a high-tech industry, one must assess whether the local area possesses the necessary high-tech equipment and access to talent from universities.

In addition to basic production factors, project site selection also considers the consumer market downstream—what are referred to as demand conditions.

The development of an industry also requires support from upstream and downstream sectors. For companies engaged in assembly, can they quickly source raw materials and components from upstream suppliers within a few kilometers? Furthermore, how can the products manufactured by this industry find partners in the downstream market?

Additionally, factors such as industry relevance and supporting sectors—including the training of specialized personnel and the introduction of high-precision equipment—fall under this dimension. Beyond these, corporate strategy, organizational structure, and competition within the industry are also key considerations.

Furthermore, forecasting future market size is crucial, and monitoring information on supply and demand, prices, and other factors is also highly useful.

However, to truly identify investment opportunities, one must understand the industry’s development logic—that is, why the industry continues to grow.

The “Five Forces Model” is a handy tool for analyzing this industry development logic.

Its full name is the “Five Forces Model of Industrial Development,” and as the name suggests, this model comprises five key elements.

These are: government, enterprises, capital, technology, and users.

This means that the development of any industry is driven by the mutual influence and interaction of these five elements.

Consider the process of industry development:

In the early stages, a product is born—whether due to a breakthrough in key technology or a bold innovation by a company. Along the way, there may be government guidance and support, as well as backing from capital.

Subsequently, a new market emerges only when users adopt the new product; once this market takes shape, companies continue to invest their efforts, capital may increase its support, and the government may introduce more incentive policies.

Moving forward, as products undergo continuous upgrades, the market expands, and the industry continues to develop, the ultimate scale of growth is determined by the size of the user base.

All of the above still falls within the five elements of the Five Forces Model.

In fact, the Five Forces Model is not only useful for analyzing the logic of industrial development but can also be fully applied when browsing the news.

When reading the news daily, pay close attention to these “five elements”:

What actions are being taken? What are the latest developments? How are these elements interacting with one another? And how are they influencing the industry’s development?

For business development professionals, cultivating this mindset ensures a high level of industry awareness and provides a solid foundation for interpreting market dynamics and analyzing trends.

Of course, no matter how effective a model may be, it must be put into practice to truly master it.