The Fundamental Way for “Made in China ” Upgrading

By Liu Dian, Lang Jiange

General Secretary Xi Jinping’s report at the 19th National Congress of CPC proposed to implement new development concepts, build a modern economic system, and speed up the pace of innovation. On 30^th October, China’s Premier Li Keqiang chaired an executive meeting of the State Council and passed the Guiding Opinions of Developing Industrial Internet through Deepening “Internet + Advanced Manufacturing” to combine the digital economy and manufacturing, to promote the transformation and upgrading of the real economy, and to encourage the construction and development of industrial Internet.

Top-level design plays a guiding role

The Guiding Opinions proposal was based on the current status development trends of manufacturing and information technology in China. Since the founding of PRC, we have introduced a series of top-level designs to develop manufacturing and information technologies.

Manufacturing in China’s coastal areas and hinterlands has developed steadily since the reform and opening up. After China’s accession to the WTO, its manufacturing achieved greater integration with international markets. The manufacturing sector has been increasingly offering consumer products after mainly focused on investment products. China has gradually grown into the “World Factory”. At present, China’s manufacturing accounts for about 40% of its total GDP, about 50% of state revenue and about 80% of exports. This is a major stimulus for economic growth and enhances the international status of Made in China products.

At the same time the Internet has flourished and information technology has become a strategic priority for all countries. China’s information industry has also developed rapidly since the 1990s. In recent years, China has made a series of major breakthroughs in key areas as the Internet and information security, high-performance computers and software, mobile and wireless communications, and artificial intelligence.

With a development vision of excellent manufacturing and information technology, China has produced a top-level design that integrates manufacturing with information technology. This will open up new space for national economic development.

“Internet +” reshapes manufacturing upgrade

China’s economic growth model is replacing old driving forces with the new ones, and the structural readjustment of manufacturing industry is an imperative. The application of information technology has accelerated the pace of this process.

The development of China’s traditional manufacturing was mainly driven by labor and resource consumption. However, the conflict in the demands of labor, land, resources and the environment in China is becoming increasingly strained, and the traditional development model is unsustainable. Therefore, China needs to carry out manufacturing transformation and upgrading in the areas such as independent innovation, resource utilization, industrial structure.

Information technology has great potential for development and application, which can help to optimize manufacturing production processes and upgrade manufacturing product structure.

In the production process, we will continue to upgrade traditional low-efficiency high-pollution manufacturing processes. Smart manufacturing can promote innovations in production mode, save transaction costs, and improve production efficiency. By acquiring big data, enterprises can better understand the needs of production. Mechanization, digitization and intelligent operation make precise production a reality, and enable a change in the business model from mass-production to mass-customization. In the sales process, the shift from traditional retail and agents into e-commerce also leads to modern logistics. In service processes, Internet technology has promoted refined and digitized management. Long-distance operation and maintenance service systems are taking shape and extending their reach to enhance the management and service level of manufacturing.

“Two Wheel Drive” model of information technology and manufacturing

The rapid development of the new generation of information technologies such as mobile Internet, cloud computing, big data, and Internet of things, is closely integrated with manufacturing, and jointly stimulate China’s economic development.

The combination of manufacturing and information technology improves design, production and management of traditional manufacturing, and promotes flexible, intelligent and sophisticated changes in the production model.

In the meantime, the profound integration of information technology and manufacturing has reduced the consumption of resources and energy. Green manufacturing can become a reality by implementing special technological transformation. For example, through the popularization of steam remaining heat cascade utilization technology, alternative raw materials, process optimization, and other greenhouse gas emissions control technology, the utilization ratio of renewable energy in production processes can be improved.

The vigorous development of smart manufacturing and green manufacturing has further expanded the scale of manufacturing, which in turn has provided a broader industrial cooperation space for the development of information technology. The combination of information technology and manufacturing is beneficial to an innovation-driven industrial development system, to better links between cloud computing and data collection and industrial enterprises and application services, and to deeper integration of manufacturing and the Internet.

“Internet + Advanced Manufacturing” offers a blueprint for innovation

In the era of global manufacturing, China is known as the “World Factory” because of its strong manufacturing capability. However, much of its manufacturing activity is more or less in the assembly process, producing the final consumer products but gaining only a small proportion of final product value. In the new era, the profound integration of “Internet +” and “Made in China” will improve China’s position in the global value chain by injecting innovative capabilities into China’s manufacturing, and transforming “Made in China” into “Intelligent Manufacturing in China”, “Advanced Manufacturing” and “Created in China”.

In an era focusing on global value chain, branding is not only the value chain’s organizer but also the profit distributor. It is an important weapon in international economic competition. Expanding the brand economy is one of the best ways to upgrade China from a manufacturing country to a manufacturing power.

Brands rely on quality and service. Through better quality control technology, we can formulate and implement manufacturing quality standards aligning with the highest international standards, constantly improve quality supervision, and strive to improve manufacturing quality. We can also integrate global industrial chains through utilizing global resources to enhance core competitiveness, and improve China’s ability to operate and serve in the international arena. Good quality and service can establish the reputation of Chinese brands, and enhance the added value and soft power of the brands themselves.

The integration of “Internet + Advanced Manufacturing” will enable China to gain greater innovative capabilities and promote China’s participation in the creation, design and sales of global products. As a designer and planner of global value chains, China can build brands of global repute.

Liu Dian, Assistant researcher in Chongyang Institute for Financial Studies. Renmin University of China

Lang Jiange, Intern in Chongyang Institute for Financial Studies, Renmin University of China

Opinion articles reflect the views of their authors, not necessarily those of China Matters