Industry 4.0: 3 Reasons why China Might Lead the Charge

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Industry 4.0
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Compared to more developed Western economies with a 200-year head start, China has industrialized incredibly quickly. As a result of being the world’s assembly line, the People’s Republic has a reputation for producing tons of industrial emissions and generally not participating in international pacts with the goal of reducing such emissions.

With Made in China 2025, however, China is positioned to dominate Industry 4.0.

China is known for its robust supply chain and low manufacturing costs. Almost 30 years after the country’s entrance into the world market, China has become the world’s factory.

Low labor and overhead costs combined with more relaxed state regulation compared to figures in more developed regions like the U.S. and Europe have incentivized countless business to move production offshore to the People’s Republic and elsewhere in Asia.

However, with a rapidly growing population starting to age, wages rising and automation cutting onshore manufacturing costs, the Chinese government recognizes that smart manufacturing is the key to being able to continue to provide competitive manufacturing.

“China purchased 27.5% or 66,000 of 240,000 industrial robots produced worldwide in 2015.”

After decades growth spurred in part by consumer demand for cheaper Chinese made goods and foreign businesses setting up factories within the country, China is reinvesting its savings from foreign investment in a next-gen manufacturing model.

Consider that China imported $120 billion USD in oil last year and spent $230 billion USD on microchip and related technologies.

Here are three reasons why China is positioned to lead the transition into Industry 4.0:

1. Embracing Industry 4.0

While most of the world is starting to learn about the impending Fourth Industrial Revolution, China is already busy comprehensively prepping for it on the national level.

The Chinese government announced in 2015 a ten-year program called “Made in China 2025.” This initiative, adopted in 2013 and launched in 2015, aims to turn China into the world’s foremost industrial power.

The idea is that China won’t just assemble gadgets and arguably low-quality products for the world’s consumer; this newest goal seeks to create innovative, high-value and high-quality smart technology products on par trade heavyweights like the U.S.

In fact, more than raising the manufacturing bar in order to be comparable with the U.S., China seems to be positioning itself to directly compete with the U.S.

2. Workplace Automation

Germany reportedly utilizes 292 robots per manufacturing worker while South Korea ranks a bit higher at 478 robots per worker.

China, however, has reported just 36 robots per 10,000 workers. Comparatively, it seems that the world’s factory is still behind with regard to workplace automation.

But, Chinese companies are catching up, and quickly.

Partially to compensate for increasing wages, China purchased 66,000 of 240,000 industrial robots produced worldwide in 2015 – that translates to 27.5% of all industrial robots manufactured that year.

Robots are already widely integrated in manufacturing in the Guangdong province, and domestic telecommunications goliath Huawei is investing heavily in foreign-made robots for it’s assembly lines.

A new trend is seeing producers fire human workers and replace them with robots, and production is reportedly soaring.

3. Competitive Domestic Goods

Chinese manufacturers have long understood that in order to be able to sell products at low cost, material costs must be limited by using inexpensive components. This makes Chinese products infamously inexpensive, but also makes them less versatile.

In a move similiar to how Germany rekindled it’s industry after reunifaction and the fall of the Berlin Wall in the 1990’s, Chinese business strategy is looking to ensure that goods produced domestically cost less than those imported from foreign competitors.

By undercutting the cost of technologies produced by foreign competitors using access to inexpensive resources, Chinese companies will theoretically be able to widen their profit margin where other country’s businesses cannot.

While China may have a lot of work to do to catch up with Western industry, China 2025 could not only put the country on par with other industrialized powers in less than a decade, but position it to surpass them.

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