Firms come to terms with up­grades in man­u­fac­tur­ing, spur in­no­va­tion

China Daily (Hong Kong) - - BUSINESS -

BEI­JING — Once known as the “world’s fac­tory” for pro­duc­ing cheap goods, China is re­lent­lessly mov­ing into an ad­vanced stage in man­u­fac­tur­ing up­grades at a time when the real econ­omy mat­ters like never be­fore.

Two years af­ter China an­nounced its “Made in China 2025” strat­egy, de­spite lingering pres­sure on over­all in­dus­tries, progress on new in­dus­tries, mass in­no­va­tion and smart man­u­fac­tur­ing is paint­ing a new pic­ture.

For many Chi­nese entrepreneurs, there have been hard times, es­pe­cially when fi­nanc­ing be­came dif­fi­cult as the vibrant real es­tate mar­ket and the fi­nan­cial sec­tor at­tracted too much fund­ing from in­vestors.

Ge Zhen­gang, chair­man of Longcheer, a smart­phone pro­ducer in southern China’s Guang­dong prov­ince, said while in­no­va­tion is vi­tal for in­creas­ing prof­its, it re­quires fi­nan­cial sup­port.

On the other hand, the higher costs of en­ergy, la­bor, lo­gis­tics and man­age­ment have fur­ther weak­ened the prof­itabil­ity of man­u­fac­tur­ing en­ter­prises.

Fac­ing pres­sure from fi­nanc­ing and ris­ing costs, some of the com­pa­nies that en­tered the busi­ness in the same pe­riod as Longcheer have al­ready turned to real es­tate, or even closed, ac­cord­ing to Ge.

The ten­dency of cap­i­tal flow­ing out of the real econ­omy should be re­garded as a warn­ing sign that “Made in China” prod­ucts need trans­for­ma­tion and up­grad­ing, ac­cord­ing to Xin Guobin, vice-min­is­ter of the Min­istry of In­dus­try and In­for­ma­tion Tech­nol­ogy or MIIT.

But Xin also pointed out that the prob­lem has not af­fected the fun­da­men­tals of the sec­tor, and such pres­sure is push­ing Chi­nese en­ter­prises to seek in­no­va­tion in high­end, smart and green man­u­fac­tur­ing.

Dong Mingzhu, chair­per­son of China’s lead­ing ap­pli­ances maker Gree Elec­tric Ap­pli­ances, said that with China’s econ­omy grad­u­ally firm­ing up, the “win­ter” for Chi­nese man­u­fac­tur­ers is pass­ing.

“In­stead of tak­ing a break, we stored a lot of en­ergy in the win­ter,” she told Xin­hua.

In the first quar­ter of this year, Gree Elec­tric Ap­pli­ances re­ported a year-on-year profit surge of 27.6 per­cent, up from a 23.05 per­cent an­nual growth in net profit in 2016.

Dong at­trib­uted the strong rise in profit to tech­no­log­i­cal break­throughs, which turned Chi­nese man­u­fac­tur­ers from fol­low­ers to trend lead­ers in the mar­ket. Her com­pany now has a re­search and de­vel­op­ment team of nearly 10,000 em­ploy­ees.

year-on-year rise in out­put of China’s high-tech sec­tor in the first half of this year rise in av­er­age pro­duc­tiv­ity of first 109 pi­lot projects in smart man­u­fac­tur­ing

In the larger pic­ture, in the first half of this year, high­tech and equip­ment man­u­fac­tur­ing sec­tors led the coun­try’s in­dus­trial growth, with year-on-year out­put in­creases of 13.1 per­cent and 11.5 per­cent, re­spec­tively, com­pared with a 6.9 per­cent rise in over­all out­put.

Mean­while, the Chi­nese gov­ern­ment has never ceased its ef­forts to push the in­dus­trial up­grad­ing progress to a fur­ther stage.

Ac­cord­ing to de­ci­sions at a State Coun­cil ex­ec­u­tive meeting chaired by Premier Li Ke­qiang on July 26, China will es­tab­lish na­tional-level demon­stra­tion ar­eas for the “Made in China 2025” plan, a blue­print to up­grade the coun­try’s man­u­fac­tur­ing sec­tor.

The na­tional demon­stra­tion ar­eas will be es­tab­lished in cities and city clus­ters in the east­ern, cen­tral and west-

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.