Manufacturers in China ‘ill-prepared for Industry 4.0’
Manufacturers in China ‘ill-prepared for Industry 4.0’
says McKinsey report
Despite being the ‘world’s factory’, its manufacturing
productivity is still only a quarter of developed countries
By Wendy Wu PUBLISHED: Monday, 24 April, 2017, 9:02am
Chinese manufacturers are not well prepared to brace for
the coming wave of digitalisation to narrow the gap with advanced economies,
McKinsey & Company suggest in a report.
McKinsey sent the warning when it launched a Digital
Capability Centre at Tsinghua University, the fifth it has set up after ones in
the United States, Germany, Italy and Singapore, to facilitate the application
of smart production and digital operation to reshape manufacturing.
As the world’s factory, China produced 70 per cent of
mobile phones, 80 per cent of air conditioners and 91 per cent of personal
computers, but its manufacturing productivity was still only a quarter of
developed countries.
Aiming to transfer the country from a manufacturing
workshop to a leading innovator, Premier Li Keqiang launched “Made in China
2025” two years ago. It was China’s version of “Industry 4.0” to join the
global wave of the fourth major upheaval in modern manufacturing.
“Digitalisation is not just the purchase and installation
of expansive, state-of-the-art automation equipment. Organisational structure,
management talent and mindset all matter”, said Arthur Wang, partner at
McKinsey at a press conference on Friday.
The Chinese are actively engaged in hi-tech R&D, such
as 3D printing, big data and VR, but McKinsey noted in the report that most of
the players are small start-ups or branches of research agencies, with the
market still being dominated by multinationals.
“For most manufacturers in China, Industry 4.0 still
seems like a stretch goal,” McKinsey said in the report after talking to 130
Chinese manufacturing executives.
Taking robotics as an example, the report pointed out
that China’s robotics, in the absence of sufficient research support, are
mainly applied in assembly and system integration that offer lowest profits
along the value chain. With customers from low or middle-end producers such as
cosmetics and beverage producers, Chinese robotics is less competitive against
global giants such as Fonuc and ABB.
Still, Chinese manufacturers, especially private
entrepreneurs, showed great interest and put great hope on the digital
operation to improve competitiveness, raise income and reduce costs, McKinsey
said in the report.
Manufacturing automation to drive China’s robotics
spending to US$59b by 2020, says IDC
The report noticed only a limited number of companies are
ready to put the Industry 4.0 initiatives into operation.
“Excessive enthusiasm toward Industry 4.0 can lead to
irrational investment in equipment and tools, resulting in wasted resources,”
the report said.
“Lack of a systematic roadmap and toolbox is consistently
cited as a top obstacle to implementing Industry 4.0 among Chinese
manufacturers.”
More than half of Chinese manufacturers were “followers”
with semi-automation and a sense of data collection but lacking in digital
management experience and talent.
Less than 5 per cent of Chinese manufacturers were first
movers or pioneers with innovative business models and advanced digitalisation,
such as Haier, Lenovo and Huawei, it said.
Therefore, a “one-size-fits-all” solution to digital
transformation did not work for China.
This article appeared in the South China Morning Post
print edition as: Manufacturers in China ‘ill-prepared for Industry 4.0’
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