The 10-year national plan, introduced in May 2015, is the government's bid to "move Chinese industries up to the medium-high end of the global value chain, and foster a number of world-class advanced manufacturing clusters," said the General Secretary Xi Jinping, as reported by China Daily.
Two and a half years in, and some companies have already noticeably changed their approaches to manufacturing, on the way to digitalisation and smart factories, Qi Wu, vice chairman of consulting company Accenture Greater China, told PE. But there is still a gap as some firms keep lagging behind, he said.
Speaking at this week's Manufacturing in the Age of Experience conference run by French technology firm Dassault Systemes in Shanghai, China, Wu said that one of the most important challenges for the companies to transition to smart manufacturing is finding the right moment and focussing on the benefits. "Business should really understand the true benefits of digitalisation and intelligent manufacturing. They should develop new products and services, create new markets, aim for new margins and new growth," he said.
Companies had to take a pragmatic approach and invest in smart manufacturing processes and infrastructure rather than “build manufacturing facilities first and then think about what kind of products and services to offer. That's the key thing for China," said Wu.
Recently, the Chinese government highlighted its plan to set up a national centre for manufacturing innovation, as part of its push to boost smart manufacturing and create a strong industrial base; the government also wants companies to focus on green manufacturing and high-end equipment innovation – all initiatives announced at the Chinese Communist Party’s 19th National Congress, as China Daily reported.
Digitising steel and train making
And as this week's conference showed, there are already companies that once had a very traditional outlook but are now moving towards digitally-powered manufacturing solutions.
HBIS Group Tangsteel Company has been using Dassault Systemes' 3D Experience platform to introduce a different way of running operations on the shop floor. The company’s 30,000 employees, for example, can all track what exactly is happening on the production line, simply by logging into the system. The IT upgrade has also helped build digital continuity - better information systems have led to creating value for the company and better understanding of customer needs, said Zhenrui Zhao, the firm's director of information and automation department.
"In the past, we had no good method to ensure good delivery to costumers - we couldn't tell them how much time it would take for products to be delivered, or the exact date of delivery," he said. "Now with the installation of the new information systems, we can visualise the entire process, it gives us the full visibility of the execution of the order, and helps customers understand when product will be delivered. We've become a true customer-centric organisation, fully demand-driven."
Last November, the company received an award for its intelligent approach to steel manufacturing. "Our main target is to do everything in accordance with Made in China 2025," said Zhao. "We are a company in a very traditional industry, we used to be very much supply-driven, and we have transformed into customer-centric order-driven company with a value network."
Dassault Systemes' Interactive Shop Floor screenshot (Credit: Dassault Systemes)
Another company that is disrupting and digitising its traditional approach is one of China’s leading train manufacturers CRRC Tangshan. The firm is using digital platforms not only to develop higher speed trains, but also to improve employee productivity. Similar to Tangsteel, the digital shop floor management system has greatly boosted workers' engagement, said Chunming Liu, deputy chief engineer at Tangshan.
"We had a very traditional shop floor and production line, we used very traditional methods to give directives to employees," he said. "Now all the paperwork is digitalised, we push this information to the terminal screen for the workforce on the shop floor, and employees can give us feedback about the situation on the production line and inform us of any issues." The move has made teams much more engaged and increased productivity, he said. The production line is now divided into different working stations, getting employees to multi-task. "This multi-competency in teams has allowed to improve our agility," said Liu.
Goodbye to copycats?
But not everyone is so forward-looking. One of the biggest challenges for Chinese manufacturing companies is to understand the invisible value of digitalisation, said Tony Tan, a partner at McKinsey & Company. It used to be "relatively easy" to spot a gap between China and developed economies, he said, and relatively simple to identify solutions to bridge these gaps. "But now we are entering into a new phase and some of the problems can't be easily solved by introduction of individual tools," he added.
For instance, to resolve city traffic jams, he said, it's no longer traditional industries or the government that are solving the problem; instead, you will find start-ups with young management teams under 30 leading the change. Chinese firms must anticipate any disruptive companies coming into their industry, because "once they emerge, you'll be given very little time to react. You need to approach the market proactively, use big data, consider your time to market," he said.
For years, China used to be called the land of copycats - from websites to cars to whole cities mimicking the West. But with the government pushing the Made in China 2025 initiative, soon the landscape will change, said Jinping. "The copycats won't be the system or model anymore. You copy and then you're not the first mover." Companies are being increasingly driven by new products, services and innovation - forcing them "to reconsider their innovation approach rather than simply copy".
The way innovation is done is also changing. In the past, innovation was physically linked to financial resources and human resources within an organisation. Now there is open innovation, offering new ways to use innovative ideas globally and integrate them into the business model. "It helps Chinese companies that lag behind in regards to innovation - they open outside trials, attract start-ups from outside China," said Jinping. "So there will be fewer benefits from copying."
Sooner or later, more and more Chinese copycats will understand that mimicking isn't the way to go - if not by their own initiative then by looking at market leaders. "If they see that their role models, like Huawei or Tencent, are not copycats anymore, they will make those necessary steps towards innovation," said Jinping. "There will be fewer copycats."
* Content published by Professional Engineering does not necessarily represent the views of the Institution of Mechanical Engineers.