In 2015 the Chinese Ministry of Industry and Information Technology (MIIT) completed Made in China 2025, which it had prepared for over a period of two and a half years with 150 experts from the China Academy of Engineering and in collaboration with three other ministries.
The China Daily News reported in April that the document, described as a road-map for the future of manufacturing, had gone to the State Council. A summary of the document was made available in a State Council document in May 2015. There are reports that a further plan is in preparation to transform China into a leading manufacturing power by 2049, the 100th anniversary of the founding of the People’s Republic.
Made in China 2025 stresses that Chinese manufacturing needs to get beyond making ever greater quantities and focus on higher quality with a strong emphasis on sustainability. Innovation is the primary means of achieving this and it can only be delivered via a strong emphasis on talent and skills. China wants to reposition its manufacturing sector within global value chains and like so many other nations move up market to higher value added segments. There is an explicit goal of raising the domestic content of core components and materials to 40% by 2020 and 70% by 2025.
Echoing the UK’s policy for Catapults, which is itself based on the well-established Fraunhofer model in Germany, the road-map commits to creating15 manufacturing innovation centres by 2020 and 40 by 2025. A major change is envisaged in the approach to intellectual property rights with protections for SMEs and a more constructive approach to IPR in overall business strategy at all levels in Chinese manufacturing. The importance of international standards is also highlighted in the plan together with the need for Chinese manufacturers to take a more active role in their development.
New energy vehicles and equipment, agricultural equipment, aerospace and aeronautical equipment, maritime equipment and high-tec shipping and modern rail equipment are amongst the 10 priority sectors identified in the plan. This is particularly important from the UK point of view as a potent transport equipment manufacturing cluster has been developing for some years. The other sectors in the top ten are advanced information technology, automated machine tools and robotics, power equipment, new materials and biopharma and advanced medicinal products. Several of these are part of the supply chain for transport equipment manufacturing.
But although Made in China 2025 highlights these ten sectors it focuses on the whole manufacturing sector and stresses that the whole sector needs to progress and not just the priority areas. Some commentators detect Japanese and German national strategy models in the construction of Made in China 2025.poP
Made in China 2025 also identifies a set of priority tasks: improving manufacturing innovation, integrating technology and industry, strengthening the industrial base, building Chinese brands, pushing through green manufacturing, restructuring the manufacturing sector, developing service oriented manufacturing and internationalising Chinese manufacturing. This portfolio reflects the awareness that China is under pressure from other emerging economies but advanced competitors including Germany, Japan and the US already are well advanced with policies and programmes to promote advanced manufacturing.
The Global Automotive Forum (GAF)
Speaking at the opening of the Global Automotive Forum (GAF) in Chongqing, Wang Xia, the chairman of the automotive committee of the China Council for the Promotion of International Trade, reiterated one of the core messages in Made in China 2025, stressing that Chinese automakers need to improve their manufacturing quality. This improvement is needed to raise the standing of Chinese auto brands to match international brands. Chinese component suppliers need to connect with the global market. The GAF is considered the most prestigious auto industry forum in China and the theme of the 2015 event was ‘Mega-Change: Reshaping and Industry’. There were 800 participants attending from 17 countries.
The GAF included a brainstorming session on the future of new energy vehicles. The concept of new energy vehicles which is one of the 10 priority sectors in Made in China 2025 covers the development of hydrogen powered fuel cells, hybrids and electric cars.
Honda presented the advances they have made with fuel cell powered vehicles which are in trial production. Continental discussed the severity of the Chinese auto energy consumption standard for 2020 and the way that achieving it required changes across the whole supply chain. The existing Chinese policy instruments were discussed which include the progress made in introducing new energy buses.However the energy performance of Chinese made bus batteries has some way to go before it meets the best international standards. Chinese ministries have made progress in developing a coherent body of measures to encourage electric car ownership
Chinese automaker, BYD Auto in Shenzhen which sold over half a million vehicles in 2013, has a joint venture with Daimler AG which makes luxury electric cars sold under the Denza brand. Its first model went on sale at the end of 2014 and the manufacturing volumes planned is 40,000 a year. It is also building an electric car factory in Brazil targeting the taxi and car sharing segments. In addition it makes plug-in hybrids sold under the BYD brand. Chinese automakers assess that no Western carmaker has established yet a strong electric car brand and this represents an opportunity for them.
The largest ever Chinese designed and built aircraft is the Comac C919 170 seat twin engine narrow bodied airliner.The first aircraft rolled out in September 2015 and first delivery is planned for 2018. China has the explicit goal of breaking the Boeing-Airbus duopoly and 300 and 400 seat airliners are in development. The engines for the C909 will be provided by CFM International – one of several international firms in the supply chain. Experts judge that the C909 is like to be priced lower than the equivalent models from Boeing and Airbus.
A number of Western commentators have raised the question whether China can produce enough PhDs to support large competitive transport equipment manufacturing sector. On the other hand, Professor Williamson of the Judge Business School at Cambridge has reported that in certain sectors China is already developing new innovative product development methods which utilise large numbers of lower level technicians. At this point it is impossible to judge whether these innovative approaches can be adapted to automotive and aerospace but it would be unwise to dismiss the possibility. It is worth remembering that BYD Auto has already been ranked as one of the world’s most innovative companies.