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With its “Made in China 2025” initiative, the People’s Republic of China
aims to become a global powerhouse in high tech and finally shake off its image as the world’s production line. Billions in investments should help catapult the nation right up to the top.

Text Tino Scholz

It’s an annual ritual: the Chinese television program “The Future Lies in Our Hands” presents role models for China’s youth. Normally for this occasion they introduce the audience to the mainly young women and men who have committed themselves to some good cause. But times are now changing in China—as could be seen in the show broadcast at the end of last year.

The man on the stage wasn’t just anyone. He was someone who could prom-ise a bright future for the entire nation: Wang Chuanfu, president of the Chinese car manufacturer Build Your Dreams (BYD). The huge screen behind him showed images of electric cars and buses made in China. For nearly 45 minutes, Chuanfu extolled China’s excellent prospects for the future. The young studio audience listened with rapt attention.

“The Silicon Valley of the future is being built in China right now.”

Jost Wübbeke, China-Expert of the Merics-Institus

There was a reason why he was invited to this show by the Chinese national broadcaster: with regard to sales, BYD has become the largest supplier of electric vehicles in the world. And the next goal for e-mobility in China has already been set: by 2025, one-fifth of all cars sold should be powered from an electrical outlet. 

Chuanfu and BYD typify the revolutionary changes occurring in the global economy. In the next seven years, China wants to make huge strides from being the world’s major contract manufacturer to being a driver of innovation. The maxim is: “Quality first!” Two years ago, the Chinese government passed a master plan for industrial modernization. The Made in China 2025 initiative goes much further than comparable strategies for industrial automation and digitization in other countries.

 

 

Efficiency made in China

Photo: GettyImages/FredFroese

Efficiency made in China

Automated machines are set to catapult China’s smart manufacturing forward—at the same time, the People’s Republic also wants to become the leading producer of networked machines.

Ascent to Superpower

The strategic plan is set up to transform China into an unparalleled global manufacturing superpower. By 2025 they hope to have breakthroughs in ten key sectors that will be particularly influenced by smart manufacturing. The sectors include industrial robotics, e-mobility, high-end medical technology and state-of-the-art railway and aeronautics technology. By 2049, the centennial of the People’s Republic, China hopes to have surpassed those countries that it currently considers ahead of it in the smart manufacturing arena: the United States, South Korea, Japan and Germany.

China’s government, led by President Xi Jinping, views this technological upgrading as an opportunity for industrial modernization—and possibly more importantly as a demonstration of its claim to power in the world. The Chinese believe that technological know-how has a role to play in global political power structures in the future. If you had to sum up China’s efforts in this area in one sentence, it would read as follows: “In the future, if you want to know how important future technologies develop, you’ll have to look first and foremost to China.”

That’s a quote from Jost Wübbeke, head of the Economy & Technology Program at the Mercator Institute for China Studies (Merics), headquartered in Berlin. Due to his position, Wübbeke is an acknowledged expert on the Chinese economy and its interconnections. Back in late 2016 he published a sensational report describing in detail China’s strategy to become a new industrial superpower. “Change has become important for China,” Wübbeke explains. “The country’s leadership knows that the old economic model, the massive export abroad of cheap mass-produced goods and comprehensive investments in infrastructure, isn’t working any longer. That’s why they have this new large-scale strategy with which China has already made up a lot of ground in many areas over the past three years.”

“Everyone in China is aware that robotics is a great opportunity.”

TÜV SÜD Greater China CEO Dirk von Wahl

One of the initiatives Made in China 2025 is modeled after is Germany’s Industry 4.0 platform, of all things. It’s said that China is copying and trying to improve it. “China has a lot of catching up to do in many areas,” Wübbeke says. “Numerous Chinese companies are also deep in debt and the transition to Industry 4.0 is proving difficult because a majority of firms haven’t even reached the level of Industry 3.0. If China is able to deal with these problems, it could become a global center for innovation, comparable to Silicon Valley in the U.S.” 

China’s future is meant to grow in clusters around existing hubs. Jiangsu Province, for instance, in the eastern part of the country north of Shanghai, is already a leading industrial center. And now in the metropolitan region of the megacities Nanjing, Wuxi and Changzhou—  one of the country’s most productive and prosperous regions — 150 smart factories are in planning to be built. These will produce six thousand industrial robots annually, which will then go on to manufacture high-quality products and automate more than 80 percent of industrial processes. And down in Guangzhou, the industrial center north of Hong Kong, the plan is to shift the focus from “Made in Guangzhou” to “Intelligent Manufacturing in Guangzhou.” By the year 2020, the city government hopes to achieve a production value of around 17 billion euros in the industry for intelligent manufacturing technology.

 

 

E-Mobility made in china

Getty Images/Moment/Marin Thomas

E-Mobility made in china

Politicians are fully backing electric vehicles—and subsidizing them accordingly.

A total of twelve city clusters and four cities have been chosen by the Chinese Ministry of Industry and Information Technology. By 2040, it is expected to be 40. For the core industries of Made in China 2025, the government is providing billions of dollars in funding, for example up to 19 billion euros have been budgeted  for the development of the semiconductor industry, according to Merics. What’s more, in order to bridge technology gaps, Chinese companies are making massive investments abroad: around 35 billion euros in the EU in 2016, some of which was used to take over high-tech companies.

“We are smart and we work hard.”

Wang Chuanfu, CEO of the e-mobility corporation BYD

“Digitization and the transition to intelligent manufacturing is a huge opportunity for China,” says Dirk von Wahl. The 55-year old is very familiar with the economy of the world’s most populous country: he’s been living there with his family since 1994 and has been managing TÜV SÜD’s operations in the country since 2009. “China hasn’t lost its dynamic edge and is constantly growing and developing.”

One of his favorite projects is robotics. By 2020, China wants to be able to manufacture at least 100,000 industrial robots annually. Right now, there are more such robots working in factories in China than in any other country on the planet—and in two years, according to estimates from the International Federation of Robots trade association, it could rise to almost one billion. That would equal almost one-third of the entire inventory across the globe. 

“No matter who you speak to, university professors, politicians or business owners: robotics is China’s greatest opportunity,” von Wahl says. “And an increasingly important field for TÜV SÜD: We’re ready to establish a local certification for industrial robots and hope that the country will soon open this field to foreign companies. We can make a major contribution to making sure new technologies are safely implemented.”

In the area of mobility, von Wahl, who is CEO of TÜV SÜD Greater China, finds China right at the forefront as well—also thanks to a radical government-imposed reorganization of the automobile industry. Starting next year, car manufacturers in China must meet binding minimum targets for the percentage of alternative engines in production and sales: a 10-percent quota in 2019, and 12 percent in 2020.

 

 

Batteries of the Future

Shutterstock/SV Production

Batteries of the Future

The country is already leading in the production of lithium-ion batteries for e-mobility.

China is already well ahead of competitors from other countries in manufacturing batteries for electric cars—and they’re striving for market dominance for the entire cars themselves as well. “A goal for the Chinese government is to squeeze out foreign technologies and replace them with Chinese tech,” Wübbeke says. “The market is going to get more difficult for European and North American companies.”

Whether domestic or foreign car manufacturers, there is one thing that’s true for all of them: new technologies can only take over if they’re also safe to use. Thus, as von Wahl explains, the Made in China 2025 initiative will be both a challenge and an opportunity for TÜV SÜD: “We’re in constant contact with car manufactuers from a variety of countries that absolutely want to test batteries for their electric vehicles in China.”

That is why TÜV SÜD is investing in state-of-the-art testing and inspection facilities: three large battery technology centers will be opening in southern, northern and central China within the next 24 months, to be used as testing laboratories in cooperation with car manufacturers. “We’ll be able to test batteries to the point of explosion,” von Wahl says. “We’ll be providing support for this innovation, from development through to an absolutely safe product.”

 

 

In China, as in all countries, it is not enough for the relevant machines and devices to be networked together and communicate amongst themselves—the security must also be guaranteed. “As an independent testing services provider, TÜV SÜD is very deeply engaged in this transition, particularly for IT security certifications in industrial automation and control systems,” von Wahl says. To support these developments, TÜV SÜD has set up two Service Centers of Excellence that focus on expanding digitization services.

From a developing nation in the 1970s to a high-tech country in just a few decades: hardly anyone doubts that China will continue its economic success story into the future. “The market will continue to grow,” von Wahl says. Wübbeke is also optimistic, but he sounds a note of caution in light of many external factors, including general global economic developments.

And what about BYD President Wang Chuanfu? Asked about the Chinese recipe for success, he said what role models on China’s television shows almost always say: “We are smart and we work hard.” The competition in the rest of the world should listen very closely to such statements.