The country’s recently revealed Made In China 2025 strategy guidelines revolve around the manufacturing evolution, relating specifically to innovative productions. As Germany makes strides with its “Industrie 4.0” programme, China competes for the industry lead.
Euromonitor International anticipates that the Industry 4.0 revolution, which aims to increase labour activity, overcome higher production costs and the ageing population through data generation, will advance manufacturing processes in the next three years.
“Precision-driven” industries such as pharmaceuticals and cosmetics are expected to have a large impact on Industry 4.0 developments and drive it forward. Companies are expected to overhaul present business models and add new revenue opportunities to boost China’s economy.
Manufacturers, technology providers and governmental policies within APAC will combine efforts in the coming years to maximise its Made in China 2025 strategy success.
Competing against Europe
Market intelligence company, Euromonitor International, reveals that between 2006-2016, Chinese manufacturing has received a surge of investments, growing its turnover to a compound annual growth rate (CAGR) of 10%. Despite this rise over the last 10 years, last year its growth slowed down considerably to only 5%.
While national statistics from Euromonitor International show that in the period to 2020, there will be a slight increase in growth, higher wages in China, a mature domestic market and international manufacturing market expansion have led to investments taking place in overseas markets.
With pollution a key concern in the Chinese market, the “Made in China 2025” strategy aims to provide incentives around production to build marketplace positioning to achieve successful sustainable development.
To successfully develop its Industry 4.0 projections, China has to overcome several complexities in the market to achieve growth. Currently, its manufacturing segment has reached a turnover of 19% in China, compared to 34% in Germany and 33% in the US. Unlike Germany, which heavily focuses on digitisation, China is trailing behind its European competitor by discussing the growth of domestic brands and content.
Also, China’s expansion attainment is based on meeting its R&D goals. These remain underdeveloped in the country, as it typically outsources its pre-production efforts to other developing countries. In the period to 2025, China now plans to open 40 R&D centres to overcome its lack of innovation.
Getting ready for Industry 4.0
Euromonitor International also revealed that in APAC, Singapore is ‘most ready to adopt new production methods’, followed by Malaysia. Taiwan and South Korea are ranked highest on the ‘readiness index’ in terms of their manufacturing capabilities. While China is above-average in terms of readiness, it currently trails behind the manufacturing approach of its APAC counterparts.
While the Chinese strategy does focus on the growth of domestic products, the European Union Chamber of Commerce in China has stated its concerns, as it worries that this may lead to lowered foreign activities and disrupted investments.
As the Industry 4.0 revolution is expected to create masses of additional data, areas such as cloud computing need to be secured to match growing industry needs.