Made in China 2025

By Catherine
Share on LinkedInTweet about this on TwitterShare on FacebookShare on Google+

By Catherine Bolgar

made in China red square isolated stamp

China’s latest Five-Year Plan, dubbed “Made in China 2025,” aims to modernize its manufacturing sector, transforming it into an innovative, high-quality, high-technology global competitor within a decade.

China is losing international competitiveness right now,” says Helmut Wagner, professor of economics and president of the Center for East Asia Macroeconomic Studies at the University of Hagen, Germany. Foreign direct investment (FDI) has shifted to other countries, such as Vietnam and Cambodia, because Chinese wages have risen faster than productivity, he says.

To avoid the middle-income trap, China needs to advance from being the “world’s workbench,” making cheap products, to providing higher-level products and services that eventually can compete with those from highly developed countries, he says.

“So they will try to build an ambitious initiative to restructure the whole of Chinese manufacturing by 2025. They want to be in the mid-range by 2035 and the world’s leader in manufacturing by 2049,” the 100th anniversary of the founding of the People’s Republic, Prof. Wagner adds.

The gradual process reflects how much Chinese manufacturing needs to change if it wants to compete on quality and not just on price, the way Japan and then South Korea evolved to become high-quality manufacturing powerhouses.

IndustrialChina’s government identified 10 key manufacturing sectors to focus on: information technology; numerical control tools and robotics; aerospace equipment; ocean engineering and high-tech ships; railway equipment; energy-saving and new-energy vehicles; power equipment; new materials; biological medicine and medical devices; and agricultural machinery.

The government is taking a top-down approach to improve quality, Premier Li Keqiang said. “We will formulate high standards to spur the upgrade of ‘made in China’ goods,” Mr. Li was quoted as saying in one of China’s daily newspapers. The government also will funnel investment into the key sectors.

“They have always thrown money at this issue, and a lot of engineering talent as well,” says Scott Kennedy, director, Project on Chinese Business and Political Economy at the Center for Strategic and International Studies (CSIS), a Washington think tank.

If China were a small country, this would be an extremely risky way to try to approach things,” Dr. Kennedy says. “But their view is that ‘we’ve got millions of companies, a large market and even if only one in a thousand yields a substantial technological or commercial breakthrough, that might be good enough…’ If they continue on this path, they are more likely to be a very inefficient high-tech power.”

While most other countries have climbed the income ladder by moving into services, China doesn’t want to give up manufacturing. Instead it aims to follow the German example and shift toward a high-end industry, Dr. Wagner says. “Germany was successful by focusing on manufacturing and industry, even after having become a developed country.”

Germany’s relative economic health in the 2008 global financial crisis made China look again at the German model, called Industry 4.0. China wants to do much the same by integrating the Internet into industry to improve efficiency, and by increasing automation.

“But if they totally move toward automation, they will create a labor problem,” Dr. Kennedy says. “The right mix for China isn’t the same as for a country with fewer workers.”

Investment is just one part of the equation. Innovation also requires an educated workforce and protection of intellectual property.

China sends about 500,000 students to universities around the world, while 37 million study at home. China wants 20% of its population to have higher education by 2020.

However, Dr. Wagner says, “when you don’t learn to think creatively but just to repeat, then maybe you will be a good engineer—but it’s hard to be as creative as the Americans.” The challenge, he adds, is to allow enough free thinking for innovation in technology while limiting it to avoid political unrest, which the leadership fears.

“You cannot order innovation,” he says. “You have to create an environment for people to jump up and do what is necessary.”

Innovation comes not only from companies but also from the military and research institutes, where people are pursuing such goals as national security or pushing the bounds of knowledge, such as in pure science, Dr. Kennedy says. China is entirely comfortable fostering military-based and research institute-based innovation while also proactively guiding commercial innovation.

Institution-led innovation may be necessary in a place where the legal framework for intellectual property protection—while stronger than in the past—remains weaker than in much of the world. “The risks of a business model based on innovating and filing your intellectual property, licensing it and building a business off it are still higher than manufacturing and assembling something [that] someone else invented,” Dr. Kennedy says.

Intellectual property rights and investor protections will be key to attracting foreign investors.

“Nothing will happen without foreign investment,” Dr. Wagner says. “Foreign investors have been the most important factor in China’s success in the past 20 years. Will there be enough foreign investors willing to give away their technological know-how to future Chinese competitors? Success will depend on how restrictive the Chinese government will be with foreign investors.”


Catherine Bolgar is a former managing editor of The Wall Street Journal Europe, now working as a freelance writer and editor with WSJ. Custom Studios in EMEA. For more from Catherine Bolgar, along with other industry experts, join the Future Realities discussion on LinkedIn.

Photos courtesy of iStock

Engineer-to-order Can’t Succeed Without  the Internet of Things

By Catherine
Share on LinkedInTweet about this on TwitterShare on FacebookShare on Google+

By Catherine Bolgar

As usual, the Internet is busy disrupting industries: this time, it’s manufacturing. Since the industrial age began around 1760, manufacturing has strived for efficiency through standardization. The Internet—especially the Internet of Things—is taking that apart by allowing for greater personalization.

Making unique products doesn’t mean a return to the days of handmade artisanal goods. Instead, it means multipurpose manufacturing systems and flexible production, often executed by automation and robots that assist human workers.

“Machine tools are typically restricted in their functions and the types of material they can handle,” says Karl Hribernik, department manager at the Bremer Institute for Production and Logistics, or BIBA, in Bremen, Germany. “Production in the future will be more flexible. Cyber-physical, multipurpose production systems and manufacturing cells are the next generation of industrial machinery. In the Industry 4.0 paradigm [alluding to Germany’s initiative to integrate the Internet of Things (IoT) in industry to usher in rapid technological change in manufacturing], distributed resources will make use of local capabilities in flexible supply chains.”

Such flexible systems will rely on the IoT as well as on robots.

Robots can be reprogrammed to do different tasks. So engineer-to-order will make extensive use of robots. It can’t be restricted to single-purpose machines,” Mr. Hribernik says.

Industrial engineer

The communication among robots, machines and humans relies on the Internet of Things. Sensors are getting cheaper even as they are able to do more, with more precision.

The Industrial Internet Consortium, an international group setting the architectural framework and direction for the Industrial Internet, including operating two dozen test beds, launched a new test bed last year using the IoT to track everything on the floor of a factory—tools, parts, work in progress, people.

“There are two reasons,” explains Richard Soley, Massachussetts-based executive director of the Industrial Internet Consortium and CEO of Object Management Group, a technology standards consortium. “We can make more efficient use of the factory floor if we know where everything is. People on the floor spend half their time looking for the right tool. So if the system knows where the tool is, it can say, ‘Tool C is behind you, four meters on the left.’ We also know which parts of the factory floor are likely to be free soon, so we can move in the next part to be worked on. It increases human and machine efficiency. It’s reinventing factory-floor management and greatly enhancing factory-floor safety.”

The communication with workers increasingly is taking place via a worker’s personal smart phone, he adds. “It has sensors in it, it communicates on 25 different communication bands and it’s something you carry everywhere. That is going to be the most ubiquitous IoT communicator.”

The dream in the manufacturing space for decades has been to do what was called flexible manufacturing: changing with short or no notice, Dr. Soley adds. Retooling an automotive production line can take several weeks. So, for example, one motorcycle maker doesn’t retool at all, but builds each motorcycle separately.

“They know more about their customers because of the IOT—tracking customers and predicting what they need,” Dr. Soley says. “Because they meter the production line, they know what’s in production now and what they could be producing on the fly. Essentially they make every order differently. It means they can respond more rapidly to customer demand, offer more options and products and stay ahead of competitors.”

As this approach takes hold, he adds,

We’re looking at a future not far away in which everything you build is completely personalized.”

Indeed, an important aspect of the IoT isn’t just in the making of products but in monitoring  their entire life cycle.

The IoT provides “better information on how products are made and used,” Mr. Hribernik says. “It allows a more granular and precise monitoring of the quality of products being manufactured. If you feed that back into design, it allows engineers and designers to improve design for manufacturing and quality. In the middle of a product’s life, investigating product usage can help detect faults. If companies get that feedback via the Internet of Things, then they can iterate product design and manufacturing more quickly. It also can allow them to provide tailor-made services, like predictive maintenance, during the product’s life. And at the end of life, if you know how a product was used, what parts it was  made of and which parts were replaced, you can better achieve recycling, refurbishing or reuse.”

“It’s a revolution/evolution from mass-producing automated lines to more flexible production based on cyber-physical systems,” Mr. Hribernik says. No matter how refined robots are, they are still far from the flexibility and adaptability of humans. The best practices use robots and automation to augment human workers, by doing things that are too repetitive, strenuous or dangerous for people.

“We see a potential for collaboration with robots to help older workers and keep them in the workplace, maintaining their jobs and also their experience in the company,” he says.

Although awareness and acceptance of IoT and engineer-to-order processes is increasing, “manufacturers are still very, very careful about sharing data out of their production lines with machine-tool providers,” Mr. Hribernik says. “The B2B models need to evolve before widespread acceptance in industry will make an impact on manufacturing.”


Catherine Bolgar is a former managing editor of The Wall Street Journal Europe, now working as a freelance writer and editor with WSJ. Custom Studios in EMEA. For more from Catherine Bolgar, along with other industry experts, join the Future Realities discussion on LinkedIn.

Photos courtesy of iStock

Revolutionizing Smart Appliance Innovation through Collaboration

By Neno
Share on LinkedInTweet about this on TwitterShare on FacebookShare on Google+

According to Berg Insight, in 2014, smart appliances made up one-third of the estimated 5.9 billion smart and connected products sold worldwide: that’s 2 billion smart appliances. With that level of production, and a market growing at an estimated CAGR of 15.4% toward a value of $37.2 billion USD by 2020 (MarketsandMarkets), there’s no doubt about it: customers love smart appliances.

Puremotion video washing machineIn the recent post “A New Spin on Washing Machine Design”, we explained how customers today expect more than just a product when they do business with a company: they would rather spend money on an experience than a thing. The ability of smart appliances to deliver delightful, intuitive experiences that make daily life easier and more pleasurable is in large measure the key to the smart appliance market’s success.

This is a theme we returned to in “The Secret to Creating Market-Winning Experiences”, in which we explored the use of collaborative simulation and design exploration software to help craft these compelling experiences, enabling manufactures to simulate virtual product experiences while evaluating and analyzing hundreds of design options.

engineer-puremotionSuch advanced software is invaluable because at technical level, designing great smart appliance experiences can be a daunting challenge. It requires that companies have engineering proficiency in a wide array of areas such as software, mechanical, electrical, fluid, electronics, software, and other specialized areas.  What’s more, success requires bringing all of these competencies together to collaboratively develop requirements, solve problems and optimize outcomes (see our post “How to Stay Competitive? Develop Smart Appliances in the Era of Experience”).

This kind of collaboration is essential for success in systems engineering in general, but the need for collaboration in the fast-growing but intensely competitive smart appliance market requires expanding collaboration to an enterprise level. It requires establishing an ongoing dialogue between design, engineering, manufacturing, marketing and support.

We’ve developed a short video, Pure Motion, to introduce the ways in which these disciplines can revolutionize smart appliance innovation through collaboration on a single platform – the 3DEXPERIENCE platform, while leveraging common 3D system models and digital assets across optimized processes.

Watch the video now, or to learn more, visit our white goods webpage or download the V-ZUG case study today, which details how the Swiss High Tech appliance maker is innovating for perfect cooking and washing experiences with the 3DEXPERIENCE platform.



Page 1 of 1112345...10...Last »