The country of manufacture, who can be prepared?

The World Economic Forum and AT Kearney released the "Future of Manufacturing" Readiness Report last year. Through the evaluation of 59 indicators, the current 100 countries and economies were assessed.

The report mainly provides two evaluation criteria, which can more objectively reflect the level of manufacturing in each country and whether they are fully prepared in the competition between countries:

First, the country's response Readiness for future manufacturing development (including current manufacturing structure). Key indicators include economic complexity, size.

The second is the driving factor that affects the development of the manufacturing industry and assigns different weights. Key indicators include technology and innovation, human capital, global trade and investment, institutional framework, sustainable resources, and demand environment.

We have selected several representative countries (from the United States, Europe and Asia) with high scores from the report for you to introduce their recent manufacturing developments.

Comments on the manufacturing industry in the eight countries

The United States:

The United States is the second largest manufacturing industry in the world, and its market value added (MVA) in 2016 was close to 2 trillion US dollars. The proportion of gross national product (GDP) is 12%, which is equivalent to 16% of the total value added of the global manufacturing industry.

The United States is known around the world for its innovative capabilities, and it belongs to the first echelon of major breakthroughs in emerging technologies of Industry 4.0. The U.S. ranks in the top five for drivers other than sustainable resources and institutional frameworks.

However, over the past 20 years, the competitiveness of domestic products in the United States has declined, and its attractiveness as a manufacturing destination has been severely challenged. In 2014, the United States released the "Accelerating American Advanced Manufacturing" report, hoping to make traditional manufacturing an important fulcrum of economic development through the manufacturing renaissance strategy. The 2017 U.S. tax reform cut the corporate tax system from 35% to 21%, aimed at attracting companies to relocate some production lines back to the U.S. This has been less effective, however, as policy and regulatory uncertainty around immigration and free trade agreements remain. In October 2019, Bloomberg criticized the Trump administration’s trade protectionist policies for disrupting the supply chains of companies and instead causing manufacturing to account for a decline in the share of the U.S. economy. In the second quarter of 2019, U.S. manufacturing value added accounted for 11% of GDP, down from 11.3% in 2018 and the lowest level since 1947.

Germany:

Germany has the fourth-largest manufacturing industry in the world and ranks high in all indicators of production drivers, with the highest scores in technology and innovation, human capital, global trade and investment, and Ranked in the top ten in terms of driving factors such as the demand environment.

Germany launched the concept of "Industry 4.0" in 2011, taking the lead in proposing to improve the level of digitization and networking in products, value chains and business models, so as to promote the transformation of digital manufacturing. One of the pioneers of the four industrial revolutions. The German Federal Ministry of Education and Research also launched the "Industry 4.0: From Scientific Research to Enterprise Implementation" plan in 2015 to help small and medium-sized enterprises solve the application of Industry 4.0 in actual production, effectively promoting the implementation of the strategy.

However, it is worth mentioning that the advantages of manufacturing level do not allow Germany to override the impact of the global economic environment. Since more than half of Germany's manufacturing products are exported, and Germany's economic structure is relatively simple, in addition to automobiles, the other two pillars (machine manufacturing and chemical industry) are also linked to the automobile industry to a large extent. Therefore, under the influence of multiple factors such as the structural adjustment of the auto industry, the uncertainty brought about by the global trade dispute and the Brexit, the operating conditions of the German manufacturing industry have fallen into the worst situation since the global financial crisis.

UK:

The share of manufacturing in the UK economy has been steadily declining in recent decades, from 25% in the 1970s to less than 10% today. UK manufacturing facilities, capacity, strength and jobs are shrinking as the share of the manufacturing economy declines. However, the manufacturing industry still plays a very important role in the British economy. 66% of the country's R&D expenditure is used in the manufacturing industry, and the salary level of the employees in the manufacturing industry is also higher than the national average. The UK's annual manufacturing report released in 2019 shows that UK manufacturers have strong confidence in the viability of the manufacturing industry. No matter how the international economic situation changes in the future, 77% of manufacturers believe that the UK has sufficient industrial strength to respond.

Although the manufacturing structure is inferior to similar leading countries, the UK has a strong technology platform and innovation capabilities, enabling it to gain a strong position in high-tech manufacturing industries such as aerospace and pharmaceuticals.

The British government has been less involved in guiding industrial development in the past. However, in 2016, the British government launched the "UK Industry 2050 Strategy", which aims to boost manufacturing. The strategy proposes that the manufacturing industry is not "manufacturing and then selling" in the traditional sense, but "service plus remanufacturing (production-centric value chain)", and its goal is to promote the integration of manufacturing and services and increase the number of highly skilled workers . At the end of 2017, the British government released an industrial strategy white paper, proposing the strategic goal of "leading the UK to the forefront of the artificial intelligence and data revolution". and data analysis techniques to increase productivity.

France:

France ranks 8th in the world in terms of manufacturing scale, but its contribution to GDP has decreased by half compared to 1970. It currently accounts for about 10% of GDP.

France performs well in all production drivers, ranking first in each country's individual rankings, but particularly in global trade and investment, demand environment, and sustainable resources .

The French manufacturing industry is in a leading position in the fields of aviation, high-speed rail, high-end electrical equipment, etc. The main challenge lies in how to continue to strengthen the industrial structure of the manufacturing industry.

In 2013, the French government launched the 10-year "New Industrial France" strategy, hoping to solve the three major problems of energy, digital revolution and economic life, and proposed driverless cars, robots, new high-speed rail, etc. 34 priority projects, hoping to reshape French industrial strength through innovation. However, due to the unclear main direction of this strategy, resources are too scattered. For this reason, the French government adjusted the original strategy in April 2015 and proposed the "New Face of Industry" plan. It aims to optimize the layout of industrial development, follow the example of Germany's Industry 4.0, and accelerate industrial revival.

Japan:

Japan's manufacturing industry currently ranks third in the world, accounting for 9% of the global manufacturing value added. China, the United States and Japan together account for nearly half of the global manufacturing value added.

Japan is performing particularly well in terms of the demand environment due to its complex consumer base, strong corporate activity and large market size. Japan ranks in the top 20 for technology and innovation and institutional framework. Japan will have to face challenges related to human capital due to its aging and declining overall population, as well as a low number of new immigrants compared to other countries.

The focus of Japan's manufacturing development strategy has undergone an ever-expanding, pragmatic evolution process:

2013 "Japan Manufacturing White Paper" emphasizes the development of robots, new energy vehicles , 3D printing, regenerative medicine, the 2014 edition continues this tone.

In 2015, the Japanese government launched the "New Robot Strategy", claiming that it would become "the world's first robot application country and lead a new era of development of the world's robot industry". The "White Paper" also emphasized the importance of big data, the Internet of Things, and software, reflecting the practical attitude of the Japanese manufacturing industry in the face of new changes.

In 2016, the government launched the "Society 5.0" strategy, which aims to drive the transformation of manufacturing through emerging technologies, and even bring about changes in society as a whole. In addition, the government proposed the "Connected Industries" plan in 2017 to support industries such as manufacturing in Japan to create new value through the connection of resources, people, technology, organizations and other social elements. But not many new ideas have been proposed.

In the 2018 "Japanese Manufacturing White Paper", Japan no longer adheres to the concept of "Continuous Improvement" (Kaizen) represented by Total Quality Management (TQC), but acknowledges that the world is already in a "discontinuous state". In the era of innovation", it is no longer only the pursuit of efficiency improvement, "the important thing is to obtain new added value through the flexible use of digital technology". This shows that the Japanese manufacturing industry is beginning to face up to the problem that its own yield has been significantly lower than the level of the United States and Europe.

China:

China's manufacturing industry surpassed the United States in 2010, becoming the world's largest in terms of scale. Total manufacturing value added in 2016 was nearly $3 trillion, accounting for about a quarter of global manufacturing value added. Smart manufacturing in China has been growing at a relatively fast rate. As of 2018, my country has become the world's largest industrial robot market for six consecutive years.

In the past 20 years, China has embarked on a road of upgrading from low-cost products to high-end products. However, the level of modernization in different sectors of the manufacturing sector varies significantly, and the disparity between some of the best manufacturers and low-end manufacturers is even more alarming, thereby reducing the readiness of the entire country.

In terms of manufacturing drivers, the global ranking of economic sophistication is only 26th. But China is particularly strong in the demand environment and the drivers of global trade and investment. Ranked in the top three in terms of technological innovation and human capital, there is still a need to continue to improve workforce capabilities, develop skills required by future industries, and increase the level of innovation within companies.

In 2015, the Chinese government put forward the "Made in China 2025" plan, which aims to realize the transformation and upgrading of China's manufacturing industry and provide financial support for manufacturing innovation. Relevant departments have successively launched national-level pilot projects to promote the development of the intelligent manufacturing industry. At present, 4 batches of companies have been announced, with a total of 307 companies. A large number of industrial parks have also been born in various places, and a large number of intelligent manufacturing enterprises have been incubated. China's intelligent manufacturing industry belt is taking shape.

Singapore:

Singapore has a strong performance in high-value manufacturing sectors such as R&D and product design, and in all manufacturing drivers except sustainable resources All have good performance. According to data from the Economic and Commercial Counsellor's Office of the Chinese Embassy in Singapore, Singapore ranks among the top five in the world in terms of business environment, economic freedom, innovation index and talent competitiveness. Singapore is one of the most open and environmentally friendly countries in global trade and investment. In addition to matching the upstream and downstream supporting systems for leading industries, the Singapore government also attaches great importance to improving the labor skills and R&D technology of its nationals. About 70% of the scholarship. A strong institutional framework has contributed to Singapore's success in many manufacturing sectors.

This achievement is due to the fact that Singapore has always been oriented to the future development of the manufacturing industry during its many industrial transformations. In the 1960s, Singapore's manufacturing industry accounted for only about 11% of GDP, and the population was extremely educated. By 1970, the proportion of the uneducated population was 53.4%, which is equivalent to more than half of the national population. is illiterate. At that time, the Singapore government vigorously attracted labor-intensive enterprises and quickly built industrial parks to support the country's transformation into a manufacturing base.

But then the Singapore government was worried that it would rely too much on cheap labor and produce products with low added value, which would be detrimental to long-term economic growth. Therefore, in the 1980s, the Singapore government began to invest in capital and technology such as electronics, chemistry, machinery and transportation equipment manufacturing. Intensive industry transfer, cooperation with Japan, France, Germany and other countries to establish technology centers to train specialized workers in the fields of electronics and other fields.

Although after entering the 1990s, the Singapore government has positioned the service industry as another pillar of economic development in order to optimize the economic structure. However, the proportion of its manufacturing industry in GDP has remained above 20% all the year round (the peak in 2000, about 28%). From 1991 to 2001, Singapore's manufacturing output showed an overall growth trend, but its employment continued to decrease. By 2002, the proportion of manufacturing employees in the country's total employment had dropped from 28% 10 years ago to 19%. %, but its per capita GDP remains at a high level, ranking 12th in the world in 2019, comparable to the United States. This shows that Singapore's manufacturing industry has been transitioning from low value-added labor-intensive to high value-added with the introduction of information technology. At the end of 2017, Singapore released the Singapore Smart Industry Readiness Index, which aims to help manufacturing companies to further tap the full potential of the fourth industrial revolution.

South Korea:

Over the past few decades, South Korea has experienced significant economic growth, evolving from a backward agrarian society in the 1960s to the manufacturing powerhouse it is today. South Korea currently has the sixth largest manufacturing industry in the world and the fourth largest in the world in terms of economic complexity.

South Korea performed well in all production factor indicators except sustainable resources. Its technology and innovation indicators are particularly eye-catching, ranking in the top five in terms of R&D spending and average patent applications per million people.

In 2014, South Korea proposed the "Innovation 3.0 in the Manufacturing Industry" strategy to assist small and medium-sized enterprises in establishing intelligent and optimizing production procedures. In 2015, the Korean government announced the implementation plan of the strategy after further supplementation and improvement. The strategy focuses on balancing the relationship between the government and the market, focusing the government's work on improving the business environment and providing support and training for SMEs. To this end, in June 2015, South Korea set up a "smart factory" promotion group of government-private cooperation to actively assist small and medium-sized enterprises to build "smart factories" suitable for their actual conditions.

The end is not yet there, there are still opportunities

From the interpretation of the representative countries in this report, we can draw the following conclusions:

1. The transition route is not the only solution.

There will be many different routes in the process of transformation of manufacturing systems in various countries. Not all countries will pursue advanced manufacturing. What is important is that each country finds its own differentiated position, carefully weighs the global economy and its own characteristics, and formulates a unique strategy. Countries leading in advanced manufacturing technology have higher manufacturing levels, and countries that provide cheap labor can also get a share of the pie, while the rest of the countries have to try to avoid the embarrassing situation of being squeezed at both ends.

2. The road to improvement has not yet reached the end, and overtaking opportunities still exist.

There is room for improvement in all countries. Everyone is on the starting line of manufacturing transformation, and no country has passed the finish line, let alone fully realized the potential of Industry 4.0. The specific industrial activities of each country will be challenged by different production paradigms in the future.

With the emergence of some new industries, countries have the possibility of overtaking on curves. However, only a few countries are able to seize this rare opportunity.

3. The transformation of the manufacturing industry requires continuous investment at the national level, and collaboration from all walks of life is the key.

Countries interested in participating in the race to transform manufacturing need to invest in the industrial environment and develop strategies to seize opportunities, but some industrial conditions cannot be created in isolation. Accelerating the pace of transformation requires innovative collaboration between government and the public and between industry, academia and society.