The industry 4.0 in China by Daxue consulting

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INDUSTRY 4.0
IN CHINA
SEPTEMBER, 2015
Daxue香港上海北京
Consulting

TABLE OF CONTENTS
1.0 INDUSTRY 4.0
• WHAT IS INDUSTRY 4.0?
• INDUSTRIAL REVOLUTION TIMELINE
• INDUSTRY 4.0 IN CHINA
2.0 GERMAN-CHINESE COOPERATION
• LEARNING FROM THE PIONEER COUNTRY
• AN OUTSTANDING OPPORTUNITY FOR CHINA
• CHINA’S INDUSTRY AND THE WEST
3.0 INDUSTRY 4.0 IN CHINA
• INDUSTRY 4.0 IN CHINA
4.0 WHAT THE MEDIA SAYS
• CHINESE MEDIA
• CHINESE SOCIAL MEDIA

A fourth
industrial revolution
is taking place

WHAT IS INDUSTRY 4.0?
Industry 4.0 connects
embedded system production
technologies and smart
production processes to
pave the way for a new
technological age

INDUSTRIAL REVOLUTION
TIMELINE
INDUSTRY 1.0
INDUSTRY 2.0
INDUSTRY 3.0
INDUSTRY 4.0
1Industrial Revolution
Water and steam
power is used to
create mechanical
production facilities
Electricity lets us
create a division
of labor and mass
production
IT systems automate
production
lines further
Internet of Things
and cloud technology
automate complex
tasks
1800 1900 2000 TODAY

FROM INDUSTRY 1.0
TO INDUSTRY 4.0
Technological advances have significantly
increased industrial productivity. A new phrase
is entering the vocabulary, thanks to a German
effort; Industry 4.0. China, as always, has its own
answer to this initiative.
The invention of the steam engine introduced
the first form of industry by powering factories
in the 19th
century, and with the use of electricity
and assembly lines in the early 20th
century,
Industry 2.0 was born and mass production was
launched.
Industry 3.0 is about automated industry which
developed thanks to the IT and electronic sectors,
starting in the 1970s. Industry has developed
further but the progress in industrial technology
was more incremental. Nowadays, a fourth
industrial revolution is taking place. This form
of manufacturing, called Industry 4.0, is about
smart factories.
1. http://www.gtai.de/GTAI/Navigation/EN/Invest/Industries/Smarter-business/Smart-technologies/smart-factory.html

In these factories, machines and devices use
communication technologies and information
to interact with each other with the help of
digitalized protocols and processes. These
intelligent and connected machines don’t only
work, they take decisions and optimize processes
intelligently and semi-autonomously.
Huge benefits are expected due to increased
flexibility, transparency and efficiency in the
manufacturing process. In the world of Industry
4.0, the mass-production of customized goods
at a cost-effective level is possible. Shoes, for
example, won’t necessarily have to follow a strict
formula to be produced in huge quantities.
In the world of
Industry 4.0,
the mass-production of customized
goods at a cost-effective level
is possible
A fourth
industrial
revolutionis
taking place

LEARNING FROM
THE PIONEER
COUNTRY
Economists say that if manufacturers want
to survive on the global market, they need
to implement the concept of connected and
intelligent production in the long term.
Companies as well as governments around the
world are working and investing in advanced
digitization of their industries with the aim of being
more efficient, productive and flexible. Germany
is the pioneer country in the development of
Industry 4.0.
2. http://www.dw.com/en/gabriel-pens-agreement-to-step-up-industry-40-cooperation-with-china/a-18582510
The government of Germany is investing
€200 million in order to support research and
development across universities, business and
governmental institutions. The future vision of
Industry 4.0 is already used in some German
companies,includingSAP,SiemensandDeutsche
Telekom.

AN OUTSTANDING
OPPORTUNITY
The German government has strengthened
its intention to cooperate with China in the
development of industrial digital technology.
For China this cooperation and the notion of
implementing industry 4.0 in China in general is
said to be an outstanding opportunity. Nowadays
China’s industry is effectively in transition from
Industry2.0toIndustry3.0.Forexample,industrial
software and manufacturing execution systems
are only used in 60 % of Chinese companies.
Automation has become more and more
prevalent in China’s industry, but digitalization
is new to most of the companies in China.
Industry 4.0
can be an outstanding
opportunity for China
China’s industry
is in transition from
Industry 2.0 to
Industry 3.0

CHINA’S INDUSTRY
AND THE WEST
Automationhasbecomemoreandmoreprevalent
in China’s industry, but digitalization is new to
most of the companies in China. The difference
between China’s industry and in the West is
still big: in Germany, the ratio is roughly 20
workers to 1 industrial robot, whereas in China
it’s roughly 10,000 workers. Although the
Industry 4.0 sector is a bit of a futuristic topic for
German industry, China has even more to invest
and even further to go in order to make industry
4.0 in China a reality.
This is why the cooperation between the two
governments has such a larger importance, as the
Chinese government hopes to find a solution for
its changing economy. Economic growth in China
is slowing down compared to previous years, and
wages of Chinese people are increasing. This
transition requires a new economic structure for
the country.
3. http://thediplomat.com/2015/05/chinas-master-plan-to-become-a-world-manufacturing-power/

This transition requires a new economic
structure for the country. The government
is planning to make China an industrial super
power (工业强国) that can compete with the
technology and quality of the western countries.
The implementation of industry 4.0 in China
could be the opportunity to do so.
Chinese economists estimate a productivity level
increase of up to 30% with the help of Industry
4.0 in China. Unforeseen production losses could
decline by 60%.
Characteristics of industry 4.0
Process innovation
New services
R&Dadjustments
Greater
customer focus
Efficiency increases
Even more
customer-specific
adaptation
Smart
data-gathering
Smartmanufacturing
Smart industry
Energy
efficiency

INDUSTRY 4.0
IN CHINA
The Chinese government is currently not only
undertaking investments in the development of
industry 3.0 but also in the concept of industry 4.0
in China. The government already launched a
strategy for the digitization of China’s industry
in 2007. The most important governmental body
in this area in China is the Ministry for Industry
and Information Technology (MIIT工业与信息化
部) that is promoting the so called integration of
industrialization and information, also known as
the 3i’s strategy.
While boosting the digitization for China’s way to
Industry3.0,thisprogramalsoplanstheintroduction
of Industry 4.0 in China. Other huge governmental
investments support similar matters; for example
the development of the internet of things, robots
and cloud computing.
4. http://english.gov.cn/state_council/2014/08/23/content_281474983035940.htm
5. http://www.forbes.com/sites/jacobmorgan/2014/05/13/simple-explanation-internet-things-that-anyone-can-understand/

Nevertheless, in some parts in the country the
dream about Industry 4.0 in China has come
a bit closer to reality: Sany (三一重工), China’s
largest manufacturer of machinery, is using
modern technology, with connected machines
and data about the production process being
recorded. This data is used for the optimization of
the production process. However, the production
at Sany is one of the rare examples of China’s
modern industry. That might not be the case for
long though, as more and more companies begin
to see the benefits.
6. http://www.sanygroup.com/group/en-us/

CHALLENGES &
OPPORTUNITIES
Opportunties & challenges
for the digital transformation
and use of exponential
technologies

CHINESE
MEDIA
“The disappearance of the demographic dividend,
the reduction of labor supply, the rise of labor
costs and the fall in manufacturing employment
aspirations of a new generation of labor form a huge
constraint on the international competitiveness of
China’s manufacturing industry. China has to be
among the first to enter the Industry 4.0 era to retain
competitiveness of manufacturing industries.
Source: http://wallstreetcn.com/node/211372
“Industry 4.0 is going to bring an era of reform to
China era. Intelligent plants, solutions companies,
and technology providers are expected to develop
to a large extent in China’s Industry 4.0.
Chinese government agrees more on Germany’s
“Industry 4.0” than America’s “Industry of Internet”
and defines the core purposes of Industry 4.0 as
intelligent manufacturing.
Source: http://mt.sohu.com/20150809/n418460363.shtml

CHINESE
MEDIA
“Lastyear,theincreasedexposureoftheIndustry4.0
concepts have made China’s manufacturing industry
panic. People are discussing many theories, such as
the complete eradication of Taobao by Industry 4.0 in
only10years.IntheIndustry4.0era,industrialworkers
will have a more comfortable working environment
and better welfare, which is probably the thing that
a lot of Chinese entrepreneurs were not concerned
with before.
Source: http://finance.sina.com.cn/zl/international/20150115/182021307856.shtml
“Initiated by Foshan City, Guangdong Province, a
Chinese-German industrial city league containing
six cities set up on September 10, 2015, aims to
explore the connection between Industry 4.0 and
Made in China 2025.
Source: http://news.xinhuanet.com/local/2015-09/11/c_1116527308.htm

CHINESE
SOCIAL MEDIA
[Made in China 2025 vs Germany Industry 4.0]
Academician Zhong Zhihua in Chinese Academy of
Engineering suggested: Manufacturing is the foundation
of the country and basics of a powerful nation. We
should focus more on the deep integration of information
technology and manufacturing industry.
The difference between Made in China 2025 and Germany
Industry 4.0 is their positions. China is transforming from
a big manufacturing country to a strong manufacturing
country while Germany is undergoing a transformation
from strong manufacturing country to a super power.
1

CHINESE
SOCIAL MEDIA
Internet + manufacturing is a thing that all traditional
manufacturing industries all over the world are
struggling to transition to.
Industry 4.0 from Germany, advanced manufacturing
industry from US and Made in China 2025 from China. All
of these suggest that manufacturing industry has no way
out if it cannot integrate with internet.
2

CHINESE
SOCIAL MEDIA
[German Industry 4.0 is a matter of great concern. Robots
grab people’s job] German industry 4.0 program is
attracting worldwide attention. Survey results show that
at least 18 million of 30 million existing jobs in Germany can
be replaced by intelligent machines and software. 86% of
the most basic types of jobs can be replaced. In absolute
terms, office work and secretarial work in the most acute
danger.
3

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Consulting
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