Cooperation marks the path to Industry 4.0

To maintain the speed of its industrial upgrades, China will need partners - and Germany can help

Manufacturing upgrading has become a huge trend in China in recent years, and the progress in some fields is very fast.

When I came to China in 2005, I was leading factories in the electronics sector in Shenzhen and Beijing. There was virtually no automation. Instead, there was an abundant supply of young (mostly female) workers coming from neighboring provinces. They worked with minimal training and at minimal wages (700 yuan per month in Shenzhen at that time) to produce electronics for the rest of the world.

Conveyor belts were in place, but other than this, no automation. The year 2005 was still the time of Industry 2.0 in China. Those times have long gone. Automation upgrades are now everywhere. Robots are doing easy work like packaging tobacco in Kunming's factories, working in shoe factories and so on. The car companies have been using robots since the 1970s, and when the foreign car companies came to China, they brought this know-how with them, educating an entire supply chain.

For years, even Foxconn, with its more than a million-strong workforce, is updating its production with all kinds of robots and machinery, moving into the age of Industry 3.0 very quickly.

While the process of reaching Industry 3.0 in many fields is at full steam, the government is already pushing hard to catch up and lead the next industrial revolution-the so-called Industry 4.0 or Made in China 2025.What could be away forward to achieve this?

Industry 4.0 refers not only to automation but to the real-time use of data to control and manage production-interconnecting factories and even supply chains by involving suppliers. However, this means first that Industry 3.0-automation-needs to be in place. Jumping over this phase (from 2.0 to 4.0) is not easy.

In this light, an intriguing observation that was made in a recent McKinsey study can be understood: Many Chinese companies see a big benefit for their business by applying Industry 4.0 technologies (76 percent), but fewer believe their companies are ready (57 percent).

The speed of China's upgrading is amazing when we look back 10 years. To maintain this speed, China needs partners with which to cooperate.

My country of birth, Germany, and my residence, China, can be partners. Innovation is critical for both China and Germany to stay competitive in the world and to keep or upgrade the living standards of their citizens as worldwide resources become scarce and the environment needs protecting.

In Germany, small and medium-sized enterprises are a big pillar of the economy, as they are often the drivers of innovation. Partnering with these technology companies (the big and the small) can be away.

Germany and China have recently re-emphasized the partnership in innovation and research. Since 2011, a joint forum of scientists and companies has worked to exchange innovation.

Also, the European Union and China reemphasized cooperation at the recent EU-China Summit in Brussels. Both sides have said the Sino-European relationship is more important than ever, while the new administration in the United States seems to go for a less open and less cooperative approach.

However, there is still a long way to go before cooperation between European and Chinese companies, as well as European and Chinese societies, will yield fruit that both sides want to harvest.

The conclusion of the Comprehensive Agreement on Investment which is now in its fourth year of negotiation, will boost the willingness of European companies to invest in China, according to a recent survey by the EU Chamber of Commerce. At the EU-China Summit recently, both sides committed to intensify the negotiations. Refueling this optimism is needed to create meaningful cooperation in bringing China and Europe forward.

The Chinese market is huge and the cooperation that led to the most modern of factories (BMW in Shenyang is considered the best BMW factory in the world) can and should be deepened.

Modern factories also transformed Germany in the 1970s and '80s, when polluted rivers and air were a burden to our citizens. Sharing the know-how and providing investment opportunities that benefit both sides should be the way forward.

China and Europe, for the benefit of all, need to be leaders in resource utilization and upgrading of industry to be less polluting and wasteful. This is a chance that must be captured for future generations.

The author is a CEO and Founder of SinEuSyn Consulting.

Contact the writer at Stefan.Sack@SinEuSyn.com. The views do not necessarily reflect those of China Daily.

(China Daily European Weekly 06/09/2017 page9)