As over the past decades China has become the manufacturing hub of the world, cultural and technological innovation is required to address the challenges and opportunities ahead. Question is: can China build on its recent successes and go through a deep transformation of the existing model (based on low cost mass production), addressing the needs of deeper customization and environmental stewardship? In an engaging talk with Peter Marsh, author of The New Industrial Revolution, and Claudio Boër, author of Mass Customization and Sustainability, I have discussed about key trends in the manufacturing sector, and the new horizons for China.
Let me frame the context. First, China has a 1 to 8 productivity gap vs. US: to deliver 21% of world’s total industrial production, is employing 100M people while US are employing 10M workers to deliver 17% of goods. Second, manufacturing is the highest energy-consuming industry, absorbing1/3 of total energy production, but representing only 17% of global GDP. Third, a product-push model is leaving unsold on the shelves 10% to 40% of the production (depending on the industry). Furthermore, key emerging trends are threatening the position of China as manufacturing hub: industrial production is increasingly blending traditional techniques with leading edge technologies; innovation in materials and renewable energies are radically changing the old paradigm; there is a strong demand for mass customization and the ability to serve small niches; professional services are extending the production value chain; customers awareness about social and environmental issues is driving more and more purchasing decisions.
In this scenario, a radical shift of mindset and key strategic initiatives are required: adding a diverse set of skills (like product and services design) to existing industries, encouraging unorthodox thinking, develop the ability to manage inter-disciplinary teams with one mission at the core: design a value proposition and the supporting supply chain around customer needs, adding value added services to traditional selling, moving from product push to market pull model, adopting leading edge innovative materials, production techniques and renewable energies.
Bottom line: Is China ready to lead the manufacturing revolution? Strong financial muscles and traditional large-scale production are not certainly enough. What is needed: new skills, a cultural shift, a platform of rules and incentives to drive the change.
