Made in China, INSPIRED BY GERMANY
China has looked to Germany for its Made in China 2025 plan released last month. Inspired by the Germans' Industry 4.0 plan, China aims to give its manufacturing sector a makeover, countering the perception of it as the low-cost factory of the world, and
If this works, the improvements to China’s manufacturers will be immense, and the challenges to the rest of the world daunting. However there will also be abundant opportunities for Thai companies, for example, by providing critical components, technology and management as China moves up the value chain.
The China plan was drafted by the Ministry of Industry and Information Technology in a process that took over two and a half years, with input from 150 experts from the China Academy of Engineering. Although relatively few details have so far been released, the scope of the plan is more comprehensive than Germany’s, in part because China has more challenges to overcome.
The quality of Chinese manufacturers is very uneven, and unless the sector improves quickly China risks being squeezed from the bottom by newly-emerging low-cost producers and squeezed from the top by advanced industrialised countries.
Just this month, Chinese Premier Li Keqiang said the country must aim to upgrade its manufacturing by embracing emerging technology such as big data, cloud computing, the Internet of Things (a big part of the German plan) and 3D printing. He called for greater cost-efficiency and cleaner production, more reforms of state-owned enterprises, and government assistance to nurture small enterprises. The priorities are high-end processes in industries such as IT, robotics, aerospace, biopharma, advanced medical products, rail transport and agricultural products.
Premier Li also expressed a sentiment that will be of particular interest for other countries, when he said China's manufacturing industry should take the initiative to go global through international cooperation.
Commentators say this offers three opportunities for the rest of the world.
First, supply chain: China won’t be able to domestically source all the needed components and know-how so will have to outsource some aspects.
Second, collaboration: given the Chinese government’s determination to make the plan a success, there are many opportunities for collaboration such as in production systems and research and development.
Third, governance and education: as part of upgrading its manufacturing capacity, China will need to improve other key areas such as overall economic governance and education, which should benefit both foreign corporates and the global economy.
Looking beyond the 2025 horizon of the current plan, the goal for 2035 is to compete with developed manufacturing powers, and for 2049 (the 100th anniversary of the People’s Republic) to lead the world. The latter in particular is a lofty aim, but one bets against China at one’s peril. I hope that by then Thailand’s producers will also be playing a more elevated role on the world stage.
