10 Feb 2015
Beijing, February 10, 2015 – 2014 was tough for Chinese manufacturing companies, with labor shortages, increasing costs, excessive capacity and the slacking global economy holding back growth in all sectors. Global competition is gradually cracking down the “World Factory” position of China. Low-cost manufacturing is shifting from China to other low-cost countries, while high-end manufacturing is returning to developed countries, further hindering the development of Chinese manufacturing industry. Under this pressure, transformation has become the top priority of companies in manufacturing industry. Through product innovation, lean manufacturing, flexible production and supply chain integration based on are the key trends for China manufacturing industry in 2014.
Yves Wang, Senior Research Manager of IDC China, believes that Chinese manufacturing industry will be under heavy downward pressure in 2015. The sector is in the agonies of restructuring, and more difficulties will arise from company operations. In the state of “New Normal”, innovation will remain the driving force for growth. Transformation and upgrades are urgently needed, as companies move toward miniaturized, intelligent and specialized manufacturing. With the innovation accelerators such as the Internet of Things (IoT), robots and 3D printing, the 3rd-Platform technologies will be adopted in a shorter time. The “Convergence of Informatization and Industrialization” describes these trends for Chinese manufacturing industry.
Within this context, IDC predicts the following for Chinese manufacturing industry in 2015:
- Internet will speed up its penetration into the manufacturing industry, and Internet-enabled products will boost into an explosion in 2015
- Industrial robots replacing humans will be accelerated in 2015
- Cloud computing will safeguard the management of enterprise supply chain
- Industry 4.0 will set up the model for traditional manufacturers to build intelligent factories
- The development of Internet technology will redefine the job of the Chief Information Officer
- Integration of digital world and real world will continue, posing severe test on the information security of manufacturing companies
- Product Lifecycle Management (PLM) will bring forth innovations for Chinese manufacturing companies
- Chinese manufacturing companies will expedite its steps in overseas market exploration
- Servitization of manufacturing industry will become the main trend of manufacturing companies’ transformation and upgrading
- Miniaturization and specialization will be the new features of manufacturing companies’ development
Among the numerous predictions, IDC suggests industrial readers to pay special attention to the following keywords:
- Internet-enabled products
- Industry 4.0
- Servitization, Miniaturization & Specialization of manufacturing industry
IDC’s interpretation of the above keywords is as follows:
Internet-enabled manufacturing will extend to Internet-enabled products, boosted by the adoption of 3rd-Platform technologies
According to IDC predictions, Internet-enabled manufacturing will penetrate into the value chains of enterprises R&D, production, logistics, sales and after-sales service. IDC predicts this trend will extend to the realm of products in 2015. Physical products will be used more as interfaces to access the Internet, for example to collect and transmit information. Moreover, the virtual world and the real world will be integrated through products enabled by the technologies of IoT, cloud computing, big data/analytics and mobility.
Industry 4.0 will be the model for traditional manufacturers to build smart factories
Originated in Germany, Industry 4.0 attracted attentions from Chinese manufacturing companies in 2014. Its core concepts are: building a Cyber-Physical System, making a research on the subjects of smart factory and smart manufacturing, and realizing horizontal integration, vertical integration and terminal-to-terminal integration. Industry 4.0 will play a fundamental role for enterprises to improve productivity, reduce costs and realize flexible production. IDC expects that Industry 4.0 will rapidly spread from leading companies to small-and-medium-sized companies and from high-end manufacturing to traditional manufacturing.
Servitization of manufacturing industry will extend to every part of the value chain, driving companies’ transformation
Chinese manufacturing companies are striving to escape from the price competition at the low-end of the value chain by extending toward both ends of it. Investments to R&D, design, marketing, brand management, intelligent property rights management, and after-sales service are increasing year by year. IDC predicts that in 2015, the boundaries between Chinese manufacturing industry and service industry will become more blurred. Interdependence between the two will drive transformation from traditional manufacturing to service-enabled manufacturing. Chinese manufacturing companies will embed services into every part of value chain to provide end-to-end service to customers, improve customer experience, and to create new revenue streams.
Miniaturization and specialization will drive development of manufacturing companies
The managing style of Chinese enterprises are business-oriented, and their competitive advantages mainly come out of the cost reduction from mass manufacturing. However, huge scale restrains enterprises’ flexibility and responsiveness to the rapidly changing market circumstances, which bring along increasing risks and possibilities of missing market opportunities. IDC believes that, miniaturization, promptness, flexibility and specialization will be the way the Chinese manufacturing companies should go in order to survive and prosper in the future.
About IDC
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. IDC helps IT professionals, business executives, and the investment institutions make fact-based decisions on technology purchases and business strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For more than 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives, including not only well-known MNCs in the Fortune Global 500, but also many Chinese domestic industry leaders. IDC is a subsidiary of IDG (International Data Group), the world’s leading technology media, research, and events company. More information can be found at www.idc.com.cn.