Among all nations, there is no current contender for China’s title as “The World’s Factory.”
Recognized as a prominent destination for offshore production, China took upon itself to manufacture practically every popular high-tech product — from iPhones to flat panel displays, solar panels and wearable devices.
But in recent years, scholars, consultancies, market research firms, and above all, the Chinese government itself, have begun to question the durability of China’s global lead in manufacturing competitiveness.
“A declining labor force, rising wages and skill bottlenecks have been already eroding China’s competitiveness since the turn of the century,” said Dieter Ernst, East-West Center senior fellow. “International trade — a primary source of China’s rise — has fallen to its lowest level since 2009.”
Five Asia-Pacific nations — Malaysia, India, Thailand, Indonesia, and Vietnam — “are expected to pierce the top 15 nations in manufacturing competitiveness over the next five years,” according to Deloitte, a financial consulting firm, who authored “2016 Global Manufacturing Competitive Index.” Deloitte says those five countries could soon represent a “New China” providing low cost labor, agile manufacturing capabilities, favorable demographics, market and economic growth.
Worker at small parts manufacturing factory in China. (Mick Ryan/Getty Images).
Against this backdrop, China’s leaders unveiled in 2015 their “Made in China 2025” initiative
As Ernst said: “After decades of rapid-fire growth, China has reached a level of development where catching up through an investment-driven ‘Global Factory’ model based on low-wage production is no longer sufficient to create long-term economic growth and prosperity.”
Under the new policy, China hopes to turn the tables, pulling out of the low-cost labor race to the bottom. Further, China places the focus of “Made in China 2025” squarely on advanced manufacturing.
More specifically, China hopes to seize the moment when manufacturing becomes a confluence of Industry 4.0, Industrial Internet, Artificial Intelligence, machine learning, robotics, sensing, and data collection.
Clearly, it’s time to scrap the stereotype of Shenzhen sweat shops, with row upon row of production lines packed with young migrant workers.
But then, what exactly is the picture of so-called “advanced manufacturing” in China?
EE Times intends to explore the impact of “Made in China 2025” in a global context. This latest Chinese great leap forward isn’t just about social, economic and technology changes. The rest of the world is involved. Designers, engineers, management executives and investors everywhere now see manufacturing — once considered a lowly sector left to cheap labor — as an arena for serious action.
Asked if factories are back in style, Michelle Drew Rodriguez, manufacturing leader for Deloitte Services LP's Center for Industry Insights, told EE Times, “It isn’t just back in vogue but it has become a hotbed of innovation.”
She added, “Many view manufacturing as the place where physical and digital technologies converge, and they see it as a mega trend.”
Under the Obama administration, the United States launched the Advanced Manufacturing Partnership (AMP) Program in 2011. Germany, in the same year, revived its Industry 4.0 initiative. Companies like AT&T, Cisco, General Electric, IBM and Intel launched the Industrial Internet Consortium (IIC) in 2016.
Factory floors are being redefined as a battleground for aspiring world leaders in robotics, AI, integrated circuits and 5G. China, certainly, shares these aspirations. It is eager for the battle.
Chuck Grindstaff, executive chairman of Siemens PLM Software, a business unit of the Siemens Digital Factory Division, described a big new trend on the digital factory floor as “a shift from mass production to mass customization.”
What’s ‘Made in China 2025’?
The Chinese Communist Party has long relied on five-year plans to guide national economic growth. What makes “Made in China 2025” (MIC 2025) any different?
Ernst acknowledged that the legacy of the planned economy remains deeply ingrained. What’s new is, he explained, that the focus of MIC 2025 on Advanced Manufacturing represents a U-turn in China’s development strategy.
Unlike earlier plans, Ernst said, “MIC 2025 moves beyond science and technology and seeks to upgrade all stages of China’s industrial supply and demand chains, with an explicit focus on upgrading China’s lower-value-added industries (such as steel, heavy equipment, and textiles).”
MIC 2025 also comes with several noteworthy overriding objectives, Ernst observed. They include a big push in firm-level industrial innovation capacity (focused on R&D and patents), quality improvement and accelerated productivity growth, the expansion of information and digitization in industry, and “green development” that focuses on reducing energy consumption, water use and pollution.
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