Accelerating Domestic Substitution of Industrial Software! Smart Manufacturing Policies Continue to Intensify: A Review of 15 Industry Chain Leaders
Simply put, industrial software is the "brain" of the manufacturing industry. Product design, simulation testing, workshop production scheduling, and equipment data monitoring all rely on it to function. Without independent and controllable industrial software, high-end equipment and smart factories would be like systems without an operating system, leaving obvious vulnerabilities in the security of the industrial chain.
For a long time in the past, the domestic high-end industrial software market was long monopolized by overseas giants. The localization rate of R&D and design tools such as CAD, CAE, and EDA remained at a low level for a long time, forcing a large number of high-end manufacturing enterprises to continuously purchase foreign software. This not only resulted in high annual licensing fees but also posed supply chain risks. With the implementation of the 15th Five-Year Plan for Smart Manufacturing and the continuous promotion of "intelligent transformation, digital transformation, and network connectivity" across various regions, coupled with policy support for first-edition software and mandatory requirements for the digital transformation of central enterprises, the domestic substitution of industrial software has officially entered a stage of large-scale implementation.
The downstream demand side is undergoing a critical shift: industries such as automotive, aerospace, semiconductors, chemicals, and equipment manufacturing are beginning to actively pilot the replacement of domestic software. Meanwhile, the deep integration of AI technology with industrial software is presenting domestic manufacturers with an opportunity to overtake on a new track. Unlike articles on the market that simply list individual stocks, this article comprehensively reviews the four major sub-tracks of industrial software, selects 15 core leaders in the industry chain, objectively analyzes each company's core business, substitution logic, and competitive advantages, and clearly points out existing industry shortcomings and potential risks, along with practical strategies for different types of investors. Based entirely on public industry reports and listed companies' financial reports, the full text is explained in plain language, rejecting exaggerated predictions. The article is about 5,000 words long and is tailored to the first-release standards of Toutiao.
I. Understanding the Macro Logic of the Industry: Triple Drivers Accelerating the Substitution of Industrial Software
To clarify the investment opportunities in this track, one must first understand why industrial software is currently ushering in a development window period. The core logic is divided into three aspects: policy, demand, and technology.
1.1 Top-level Policies Continue to Intensify, Driving Independent and Controllable Development from the Top Down
The 15th Five-Year Plan clearly outlines the implementation of the Smart Manufacturing Project and the Industrial Internet Innovative Development Project, listing the core technological research of industrial software as a key task. Multiple departments under the Ministry of Industry and Information Technology have jointly issued policies to establish insurance and application subsidy mechanisms for first-edition software, encouraging manufacturing enterprises to prioritize the trial use of domestic industrial software.
Many provinces have introduced supporting policies, providing financial subsidies for enterprises' digital transformation and the procurement of domestic software. Central enterprises and large state-owned enterprises have even incorporated the localization of industrial software into their digital assessment indicators. Policies are no longer limited to subsidizing enterprise R&D but are now connecting the entire chain of "R&D—trial use—large-scale procurement," addressing the core pain point of domestic software being "usable but no one dares to use it."
1.2 Transformation of Downstream Manufacturing Sparks Massive Incremental Demand
China possesses the world's most complete industrial system, with hundreds of thousands of manufacturing enterprises advancing digital and intelligent transformation. Upgrading traditional factories to smart production lines, building digital twin factories, and setting up workshop data platforms all require supporting industrial software.
Data from market institutions shows that the domestic industrial software market is continuously expanding, with the scale expected to exceed 400 billion yuan in 2026. There is obvious structural differentiation within the track: production control software is progressing relatively quickly in localization, while R&D and design software has the largest substitution space and is also the key direction for market capital allocation in the coming years. High-growth industries such as new energy vehicles, energy storage, semiconductors, and aviation equipment show the most significant increase in demand for independent industrial software.
1.3 AI Empowerment Brings Opportunities to Overtake on a New Track
Overseas industrial software giants have decades of technological accumulation, making it very difficult to catch up through traditional technological routes. The rise of generative AI and industry-specific large models has broken the inherent competitive landscape. Domestic manufacturers can leverage local industrial scenario data to develop AI-assisted design, intelligent simulation, and intelligent production scheduling functions.
Many domestic CAD and MES manufacturers have already launched AI design assistants and intelligent process optimization modules, forming differentiated advantages in some segmented scenarios and attracting a large number of small and medium-sized enterprises to try switching software, thereby accelerating the penetration of domestic products.
Here, an objective understanding needs to be established: domestic substitution is not something that can be achieved overnight. Production control software is expected to achieve large-scale replacement quickly; however, high-end 3D CAD, general-purpose CAE simulation, and advanced process EDA tools still require long-term and continuous R&D investment. Comprehensive catch-up will take a 5-10 year cycle, so investment needs to be matched with a long-term perspective, and one should not expect complete substitution in the short term.
II. Division of the Four Major Tracks in Industrial Software: Difficulty Levels Clear at a Glance
In the industry, industrial software is usually divided into four categories according to application scenarios. The barriers, localization progress, and growth potential vary greatly across different tracks, so it is essential to first distinguish the track attributes when selecting stocks.
The first category: R&D and Design (CAD/CAE/CAM/EDA/PLM). It has the highest technical barriers, belongs to the core "choke point" field, currently has the lowest localization rate, and offers the largest long-term growth potential;
The second category: Production Control (MES/DCS/SCADA). It interfaces with factory production lines and is deeply integrated with industry-specific processes. Localization progress is leading, and segmented leaders have already formed stable customer barriers;
The third category: Business Management (ERP, Supply Chain Management). Domestic manufacturers have basically achieved substitution, competition is sufficient, and industry growth is relatively moderate;
The fourth category: Industrial Internet Platforms and Industrial Digital Services. It connects equipment data and derives value-added services such as digital twins and predictive maintenance, possessing continuous monetization potential.
The 15 leaders selected below prioritize the R&D and design category with the largest substitution space and the production control category with continuously released demand, while also taking into account high-quality enterprises in the industrial internet platform track. They will be analyzed one by one in track order.
III. Comprehensive Review of 15 Core Leaders in the Industrial Software Industry Chain
(I) R&D and Design Industrial Software (Core Tackling Track with the Largest Substitution Space)
1. ZWSOFT
The domestic leader in the CAD track, possessing an independent 3D geometric kernel, with core products covering 2D CAD, 3D CAD, and general-purpose CAE simulation. Customers span general machinery, construction, electronics, and equipment manufacturing.
Core Advantages: One of the few domestic enterprises that have achieved commercial implementation of independent 3D CAD, with product prices showing a clear advantage over overseas giants. It continues to expand cloud-native CAD products and, coupled with AI-assisted design functions, is expanding its SME customer base at a rapid pace.
Shortcomings: There is still a gap with overseas giants in high-end complex industrial scenarios. R&D investment remains high, and the speed of short-term profit release is limited.
2. Empyrean Technology
The domestic EDA leader, focusing on analog and RF circuit design tools. It has achieved large-scale commercial application in the field of analog chip design and is a key link in the independent and controllable domestic semiconductor industry chain.
Core Advantages: A scarce listed platform in the domestic EDA track, benefiting from the autonomous needs of domestic wafer fabs and analog chip enterprises, and continuously undertaking orders from leading domestic chip manufacturers.
Shortcomings: There are still obvious shortcomings in digital chip EDA tools, and the overall market share lags significantly behind the three major overseas giants.
3. Suochen Technology
A core domestic manufacturer of general-purpose CAE simulation software, independently developing fluid and structural simulation solvers, serving the aerospace, shipbuilding, and high-end equipment fields.
Core Advantages: CAE is a track with extremely high barriers in the R&D and design field, long monopolized by ANSYS. The company's products have entered the supply chains of multiple military and high-end equipment enterprises.
Shortcomings: The customer certification cycle for high-end simulation software is lengthy, and large-scale volume growth requires continuous scenario validation.
4. Primarius
Focusing on device modeling EDA tools, with outstanding advantages in memory chips and advanced process testing fields.
Core Advantages: Device modeling is an indispensable part of chip design, competitive in the global market, and rich in customer resources from wafer fabs at home and abroad.
Weaknesses: Relatively single product line, overall small business scale, requiring continuous expansion of the full-process toolchain.
5. Gstar Software
A leading 2D CAD vendor, deeply engaged in the 2D drafting market for architecture and machinery, with a massive user base.
Core Advantages: Mature 2D CAD technology with market-verified product stability; channels cover a large number of small and medium-sized manufacturing and engineering enterprises, ensuring stable cash flow.
Weaknesses: Relatively late start in 3D CAD layout, resulting in weaker short-term growth elasticity compared to 3D design software vendors.
6. Aispace Software
Backed by the China Aerospace Science and Technology Corporation, it is a core supplier of PLM products and aerospace-specific industrial software, deeply engaged in high-end military R&D scenarios.
Core Advantages: Possesses stable customer resources in the high-end aerospace equipment sector, directly benefiting from the demand for independent and controllable military industry chains.
Weaknesses: Business is highly dependent on the military industry, with relatively concentrated downstream industries.
(II) Production Control Industrial Software (Leading in Substitution Progress, High Certainty in Performance Realization)
7. Baosight Software
The absolute leader in MES for the steel industry, while also deploying industrial internet platforms and data center businesses.
Core Advantages: Deeply bound to major domestic steel groups, with its MES system holding a monopoly advantage in the metallurgical industry; relying on a mature industrial platform to expand horizontally into process industries such as non-ferrous metals and chemicals.
Weaknesses: Demand in the traditional steel industry experiences cyclical fluctuations, and cross-industry expansion requires continuous investment.
8. Supcon Technology
A leader in DCS control systems for process industries, covering chemicals, petrochemicals, power, pharmaceuticals, and other sectors.
Core Advantages: A benchmark enterprise for process industry automation in China, with the localization rate of DCS continuously increasing, while simultaneously deploying MES, industrial AI large models, and intelligent operation and maintenance businesses.
Weaknesses: The capital expenditure cycle in the chemical industry affects order growth rates, and industry competition is gradually intensifying.
9. SAIYI Information
A core MES vendor for discrete manufacturing, focusing on serving electronics, new energy, and equipment manufacturing enterprises.
Core Advantages: Deeply engaged in the Pearl River Delta manufacturing cluster, capable of providing integrated MES+ERP digital solutions, and deeply benefiting from the intelligent transformation of new energy factories.
Weaknesses: High customization requirements in the discrete manufacturing industry, high labor costs for project implementation, and pressure on gross profit margins.
10. Digiwin Software
Deeply engaged in the equipment and auto parts sectors, providing integrated MES and ERP services.
Core Advantages: Decades of deep engagement in manufacturing, familiar with the production processes of local small and medium-sized manufacturing enterprises, resulting in strong customer stickiness.
Weaknesses: Fierce industry competition, with a large number of small and medium-sized vendors engaging in low-price competition that squeezes profit margins.
11. Nask Technology
A smart manufacturing system service provider, focusing on MES for aerospace and high-end equipment, as well as digital twin solutions.
Core Advantages: High-quality customers in the high-end equipment track, with simultaneous deployment of industrial software and industrial digitalization implementation services.
Weaknesses: Project-based business model, leading to a longer revenue recognition cycle.
(III) Industrial Internet Platforms and Leading Industrial Software Vendors in Vertical Industries
12. Glodon
A leading industrial software vendor in the construction industry, absolutely leading in domestic BIM construction informatization software.
Core Advantages: Deep barriers in the vertical track, stable demand for digital transformation in construction, and consistently robust cash flow.
Weaknesses: Cyclical fluctuations in the real estate industry disrupt traditional businesses, requiring reliance on infrastructure and new energy construction businesses to hedge against pressure.
13. Yonyou Network
A leading domestic ERP vendor, continuously advancing its industrial internet platform and providing digital business management solutions for the manufacturing industry.
Core Advantages: Massive customer base covering a large number of large, medium, and small manufacturing enterprises in China, with obvious channel advantages.
Weaknesses: Fully competitive ERP market, with the overall industry growth rate gradually slowing down.
14. Kingdee International
A leading cloud ERP vendor, focusing on digital management software for small and medium-sized manufacturing enterprises.
Core Advantages: Leading progress in cloud transformation, with lightweight products adapted to the digital needs of small and medium-sized enterprises.
Weaknesses: There is still a gap in market share for high-end large groups compared to overseas vendors.
15. BONC
A leading industrial internet platform vendor, with outstanding technologies in industrial big data and time-series data platforms, deploying intelligent optimization for process industries.
Core Advantages: Outstanding industrial data processing capabilities, having implemented a large number of intelligent optimization projects in the steel, chemical, and energy industries.
Weaknesses: High initial investment for platform-based businesses, resulting in a slower pace of profit release.
IV. Two Common Cognitive Pitfalls to Avoid in Investment
Many investors, seeing the popularity of the domestic substitution track, tend to follow the trend and buy directly. Here, two high-frequency misconceptions are summarized to help avoid pitfalls.
Misconception 1: Favorable Policies for the Track Mean All Enterprises Will Continue to Rise
Policy support indicates long-term prosperity for the industry, but it does not mean that every enterprise is competitive. The industrial software industry has very distinct characteristics: extreme reliance on R&D, long customer certification cycles, and polarized customer stickiness. Enterprises lacking independent core kernels, relying solely on outsourced implementation, and without continuous iteration capabilities will find it hard to continuously seize the substitution market. When selecting stocks, priority should be given to targets with independent core technologies, continuous R&D investment, and implementation cases in leading manufacturing enterprises.
Misconception 2: Treating Long-term Substitution Logic as a Reason for Short-term Speculation
The catch-up cycle for high-end industrial software in R&D and design is long, and order implementation, product iteration, and customer certification all take time. Many investors adopt a short-term approach, expecting an immediate explosion in performance once policies are released, and are prone to panic and exit if short-term financial reports fall short of expectations. R&D and design targets are more suitable for medium- to long-term deployment; production control enterprises such as those in MES and DCS realize performance faster and are more suitable for medium-term tracking.
V. Practical Deployment Plans for the Track for Investors with Different Risk Preferences
Combining the growth attributes of different tracks, reference ideas are formulated according to three mainstream investment styles.
Plan 1: Steady Medium- to Long-term Investors (Holding Period of 1-3 Years, Low Risk Tolerance)
Deployment Idea: Balanced allocation, balancing performance certainty and long-term growth.
Position Planning: The total position in the industrial software sector should not exceed 25% of total funds.
Allocation Direction: Prioritize leading production control enterprises (Supcon Technology, Baosight Software) with stable cash flow and sustainable orders; allocate a small proportion to leading R&D and design enterprises (ZWSOFT, Empyrean Technology) to capture long-term substitution dividends.
Operation Method: Deploy in batches during phased pullbacks of the sector, without chasing highs. Continuous tracking indicators: R&D expense growth rate, expansion of leading customers, and software licensing revenue growth rate.
Plan 2: Balanced Medium-term Swing Investors (Holding Period of 3-12 Months, Balancing Elasticity and Stability)
Deployment Idea: Focus on grasping two major catalytic windows: first, the implementation of policies for large-scale intelligent transformation, digital transformation, and networking in manufacturing; second, the release of major new products and breakthroughs in key technologies by leading domestic software enterprises.
Position Planning: The maximum total position in the sector is 30%, distinguishing between core positions and flexible swing positions.
Key Focus Tracks: R&D and design CAD, EDA, CAE, and leading discrete manufacturing MES.
Risk Control Rules: If individual stocks surge consecutively in the short term and valuations rise significantly, reduce swing positions; if order growth rates decline for two consecutive quarters, lower the holding proportion.
Plan 3: Short-term Traders (Shorter Holding Period, Betting on Event Catalysts)
The industrial software sector as a whole belongs to the growth track with high volatility, and heavy position betting is not recommended. Hard rules: The position in a single stock should not exceed 5% of total funds, and participation should only be phased during windows of major industrial policies, technological breakthroughs, and large industry exhibitions. Avoid being trapped in short-term trades and passively holding them long-term.
VI. Four Potential Risks to Continuously Monitor When Deploying in the Industrial Software Track
The long-term prospects of the track are promising, but objective risks cannot be ignored and require continuous tracking.
First, technological R&D falls short of expectations. The R&D of underlying algorithms and solvers for high-end industrial software is extremely difficult. If the gap with overseas products cannot be narrowed over the long term, the substitution process will be slower than market expectations.
Second, fluctuations in capital expenditure in downstream manufacturing. If manufacturing enterprises face profit pressures, they may delay budgets for digital transformation, which will directly impact the order acquisition of industrial software vendors.
Third, pressure from the industry talent gap. Industrial software requires a large number of interdisciplinary talents who possess expertise in both industrial processes and software programming. The fierce competition for such talent drives up R&D costs.
Fourth, price competition from overseas giants. To maintain their market share, overseas vendors may lower software licensing prices, thereby squeezing the market expansion space for domestic vendors.
VII. Conclusion
Against the broader backdrop of developing new quality productive forces, the digital transformation of the manufacturing sector is a long-term trend. As the "brain" of the industrial chain, achieving independent and controllable industrial software holds immense strategic significance. With continuous policy support and downstream manufacturing enterprises proactively switching to domestic systems, domestic substitution has progressed from a conceptual stage to large-scale implementation.
There is a clear divergence among the sub-sectors within the entire industrial chain: R&D and design software features the highest technical barriers and the largest room for substitution, but with a longer realization cycle; production control software leads in localization progress, offering greater earnings certainty; and vertical industry management software is highly competitive, with relatively stable growth. The 15 leading companies reviewed in this report essentially cover the four core sub-sectors. Their core strengths and weaknesses are clearly delineated, making them an ideal target pool for continuous tracking.
It must be emphasized once again: domestic substitution is a long-term industrial logic, and the value of this sector should not be judged by short-term stock price fluctuations. During the investment process, in addition to paying close attention to industrial policies, it is even more crucial to continuously verify the actual implementation effects of corporate products, customer expansion capabilities, and R&D conversion efficiency. By avoiding targets driven purely by thematic speculation and sticking to industry leaders with independent core technologies and genuine application scenarios, investors can better seize the long-term opportunities in this sector.
Discussion Topic
In the industrial software sector, which do you think has greater future growth potential: R&D and design software like CAD/EDA, or MES production control software? What is the biggest hurdle to the large-scale adoption of domestic industrial software—the technological gap or established corporate usage habits? Feel free to share your views in the comments. If you found this industrial chain analysis helpful, please like and follow our account for ongoing updates tracking intelligent manufacturing policies, as well as order and financial report changes among leading industrial software companies.