Could ‘Industry 4.0’ mean the rise of Chinese Electronic Manufacturing


Philip Stoten, Owner of EMSNow Media

Industry 4.0

There’s no doubt that Industry 4.0 has been top of the agenda for the electronics manufacturing industry in Germany for a couple of years now.  Elsewhere less so, but now the debate around this topic seems to be gaining momentum in China and with the launch of their own ‘Made in China 2025’ initiative China is looking to move from being the world’s largest manufacturer to the world’s best.

The ‘Made in China 2025’ strategy announced by China has several cornerstones that are intended to lead to the country moving from the largest and cheapest to the largest and best.  These are aims that as well as being laudable, are funded and expected to be achieved.  One major cornerstone is the use of automation and cyber-physical systems to build more intelligent manufacturing software solutions that rely less on low-cost labor to compete.  This initiative looks like the Industry 4.0 solutions promoted and supported by the German government as well as by many of the major manufacturing organizations like Siemens or Robert Bosch, and of course the German automotive industry.

China is in a fantastic position to make the most gains from such a process, but what will it mean to an economy that is built on low-cost labor?

I’ve written many times of my view regarding China’s success and dominance in the electronics manufacturing world, particularly the outsourced part of the industry.  China entered the market as the low cost option and was met by a wave of demand driven by a desire to reduce the cost of manufactured goods, regardless of what that might mean in the supply chain and the quality or reliability of the finished goods.  This wave allowed China to develop the best supply chain in the world and encourage a focused government to build the infrastructure needed to create a more sustainable solution.  So, if Made in China 1.0 was low cost labor, Made in China 2.0 was an excellent integrated supply chain and infrastructure.  Next we see the exponential investment from global EMS players and OEMs with the associated up-skilling of the workforce and systems that drive better quality, yields and efficiencies and lead to the growth of Chinese contract manufacturers success, and this is where we are now – Made in China 3.0, a world where China is dominant not just because its labor is cheap, but because it has the best supply chain, the cheapest bill of materials, the best infrastructure, the most stable political system in the world, and most importantly they’ve become really good at making stuff.

So, what’s next, what will Made in China 4.0 look like and will it include Industry 4.0?  I suspect the answer is yes.

We have been reading about investment in robotics and other automation for years and with the launch of Made in China 2025 it’s clear the Chinese government is ready to move this investment up and create an industrial powerhouse that benefits from method as well as mass.

It is not a coincidence that both Germany and Japan, whilst loosing manufacturing business to China, have gained hugely in the sales of capital equipment and manufacturing expertise.  These two nations have, for many decades, been seen as the leaders in manufacturing technique and with Industry 4.0 the German government is seeking to underline that position.

So, once again, China seeks to learn from the manufacturing leaders of the world and will build its own version of Industry 4.0, just as it built it’s own version of lean manufacturing, applying the benefits of these manufacturing techniques alongside the dynamics of its own industrial base.

Made in China 4.0, or Made in China 2025, won’t be a copy of Industry 4.0.  Electronics manufacturing in China will take the best of the current infrastructure and supply chain in China, overlay the very best techniques from Germany, Japan and elsewhere and build a world class manufacturing industry that fully reflects the needs and demands of the world’s brand and the world consumers.

No article on this topic, or at least one that I’ve penned, would be complete without mentioning IoT (Internet of Things) or IoM (Internet of Manufacturing).  The Chinese government recognizes the importance of the Internet in its industrial strategy and is supporting it with a policy called Internet Plus, ensuring higher speeds and more reliable connections throughout the country.

I like the Made in China 2025 strategy.  It’s pragmatic and ambitious and it recognizes the changes that are occurring all the way along the value chain from changing consumer behavior, through the explosion in innovation and changing role of the brand.  And while it does that it seeks to gain from the best of the current electronic manufacturing industry trends in industrial technology.

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