Digital transformation of China's manufacturing base gathers pace

As outlined in a blueprint for its development in the next five to 15 years, China will promote the deep integration of digital technology and the real economy, and empower the transformation and upgrading of traditional industries, so as to spur economic growth.

Hailed as the “world’s factory,” south China’s Guangdong Province is home to nearly 3 million industrial companies. Now the manufacturing hub is accelerating its digital transformation, exploring paths for the upgrading of its manufacturing industry.

On a giant digital screen that simulates the factory’s digital operation in a microwave oven factory of Midea Group, a Chinese home appliance giant, in Foshan City, red alarms flash to alert engineers to any problems with production equipment.

The factory is one of the largest microwave oven production bases in the world, with an annual production capacity of over 44 million units. About 47 percent of the world’s magnetrons, used to emit microwaves, are produced here each year, making it a major component supplier for global microwave oven manufacturers.

In March, the World Economic Forum listed the factory among the latest members of its global lighthouse network, which selects plants leading the way in the adoption and integration of frontier technologies of the Fourth Industrial Revolution.

To date, a total of 69 factories across the globe have been listed as lighthouse factories, including two under Midea Group, whose household air-conditioning plant in Guangzhou, capital of Guangdong, joined the list last year.

Zhou Xiaoling, director of information technology with Midea Group, said thanks to digitalization, the factory has increased its overall internal efficiency by 28 percent, improved product quality indicators by 15 percent, and shortened order delivery time by 53 percent.

“Midea started its digital transformation in 2012. The corporate revenue increased by 150 billion yuan (US$22.85 billion) while the number of staff fell by 40,000 from 2012 to 2019,” Zhou said, adding that “digital transformation has injected strong development momentum into the traditional manufacturing sector.”

Internet field

In Guangdong, a total of 15,000 firms have achieved digital transformation and 500,000 companies have gained access to cloud services, thanks to industrial Internet platforms, according to the province’s department of industry and information technology.

In recent years, bellwethers in the industrial Internet field such as Huawei, Midea, Tencent and ROOTCLOUD have grown rapidly. They have not only become pathfinders for their own digital transformation but also promoted the transformation of a large number of small and medium-sized enterprises.

According to Xu Zhijun, rotating chairman of Huawei, by the end of 2020, the company had built more than 40 industrial Internet innovation centers in China, providing digital transformation services for more than 20,000 enterprises in over 30 industrial clusters.

He Dongdong, chief executive officer of ROOTCLOUD, an industrial Internet service provider headquartered in Guangzhou, said by working with other leading companies in the industry, ROOTCLOUD has created more than 20 industry cloud platforms concerning construction machinery, environmental protection, textiles and home furnishings. It is now providing digital transformation services for companies in 81 industrial sub-sectors.

In 2019, ROOTCLOUD launched an industry chain platform for customized home furnishings. More than 20 companies in Guangzhou, Foshan and other cities have connected with the platform, where they can complete the front-end design, manufacturing, logistics and transportation of home furnishings with the help of the Internet.

“Digitalization marks a big leap for the traditional manufacturing industry. Since 2016, our business volume has been growing by 100 percent each year, which shows a strong demand for digital transformation in the manufacturing industry,” He said.

Despite the progress and achievements to date, the digital transformation of Guangdong’s manufacturing industry still faces arduous tasks.

Ge Changwei, director of the Guangdong Provincial Development and Reform Commission, said that only one-sixth of the nearly 3 million industrial enterprises in Guangdong have access to cloud services.

Most of the province’s industrial enterprises are small, medium and micro-sized firms. “They dare not, and are unwilling and unable to change,” said Tu Gaokun, director of the provincial department of industry and information technology.

In the next step, Tu said Guangdong will launch technological research projects and demonstration applications in the fields of industrial software, artificial intelligence and intelligent manufacturing, and strive to provide more support for the digital transformation of the manufacturing industry, especially for small and micro-sized businesses.