Key Points

More small-and-medium-sized entrepreneurial manufacturing companies should follow closely the national industrial layout and the advance of industrial technologies and persist in manufacturing and technological innovation. The unleashing of the innovation power of these SMEs will surely enhance the technology capacity of strategic industries and that of core industrial chains in key areas, so as to help make China’s manufacturing industry stronger and more “intelligent”, and thus give impetus to the country’s overall economic growth.
Industrial manufacturing being an important vehicle for China’s economic upgrading  

The concept of “Made in China 2025”was first put forward in this year’s government work report. Recently the establishment of a national leading group for the upgrading of China’s manufacturing industry marked the start of the implementation of“ Made in China 2025”, the first ten-year national plan to make the country a manufacturing power.

Industrial manufacturing is one of the important pillars of China’s economy and a major tool for the country’s economic upgrading. This is decided not only by the role of manufacturing industry in the country’s economy, but also by the change of world economic structure and China’s current economic development phase. As pointed out by Premier Li Keqiang: “Financial crisis dampens world economy and countries around the world are considering adjusting their development strategies. Developed countries are carrying out reindustrialization and developing countries are sticking to or quickening industrialization and urbanization. At this moment, we put forward “Made in China 2025”with the aim of achieving industrial transformation and upgrading. We should steadily implement the ten-year plan so as to create new engines for China’s economic growth.” Currently China is faced with the challenges from advanced economies such as the United States and Japan with their renewed efforts in developing manufacturing. Meanwhile, as labor costs surge in domestic China, foreign manufacturing companies are shifting production to Southeast Asian countries. Therefore, China has been caught in a predicament where it is difficult to attract high-end manufacturing businesses and equally difficult to keep low-end manufacturing factories. To resist the downward pull of a slowing economy through the transition between old and new industries and that between the traditional and new engines of growth, China should persist in integrating new-type industrialization with informatization, follow new technologies such as the Internet and new trends of industrial transformation, and encourage high-tech entrepreneurial efforts in the manufacturing sector. In doing so, we aim at giving “Made-in-China” new advantages and providing sufficient support for maintaining medium-to-high speed economic growth and achieving medium-to-high level of development.

Therefore more small-and-medium-sized entrepreneurial manufacturing companies should follow closely the national industrial layout and the advance of industrial technologies and persist in manufacturing and technological innovation. The release of the innovation power of these SMEs will surely enhance the tech capacity of strategic industries and that of core industrial chains in key areas, so as to help make China’s manufacturing industry stronger and more “intelligent”, and thus give impetus to the country’s development.

Intelligent manufacturing entering a golden age of development in China

As “Made in China 2025” has began to be put into practice to transform China from a manufacturing giant to a manufacturing power, there is no better time than now for the country to develop intelligent manufacturing. Firstly, manufacturing technologies are undergoing big changes. New technologies such as product digital design and rapid prototyping manufacturing have helped manufacturers achieve faster time to market with lower R&D costs, which is helpful for startups to focus on small-volume or customized consumer demands and to quickly and effectively transform core techs into marketable high-tech products. Secondly, high-tech SMEs have more stable sources of human capital. There are now a large number of talents graduating from higher education institutions at both home and abroad with bachelor and even higher degrees. As the environment for entrepreneurs are getting better and peoples’ understanding of jobs are changing, talents of all kinds are much more willing to take a position in entrepreneurial SMEs. Some talents mastering cutting-edge industrial technologies are also coming back to China pursuing entrepreneurship. Thirdly, the application of internet technologies is making manufacturing more digital, network-oriented and intelligent, and thus innovates the way of production organization. Meanwhile, internet techs allow users to participate in the whole product life cycle including product R&D, manufacturing, operating management and sales service. The marketing approach is changing in a way that is beneficial for entrepreneurs. Therefore, with the help of the Internet and big data, high-tech manufacturing start-ups can achieve bigger and better. Fourthly, it is getting easier for high-tech manufacturers to raise capital. Since the second-board market was established in 2009, most of the blue-chip stocks have been high-tech manufacturing companies. Some high-tech startups have provided investors huge returns after going public, and investors therefore have had much more confidence in the high-tech manufacturing industry. Many high-tech businesses have since inception attracted the attention of venture capital funds and have been financed by different funds in every phase of development. Finally, the business environment is getting healthier in China. IPR laws and regulations are improving. Businesses and research institutions are working more closely for innovation. And it is much easier for a company to find partners to work on non-core techs and components. All these allow entrepreneurs to concentrate on the R&D and transformation of core technologies.

Manufacturing entrepreneurs having a sense of responsibility to pursue leapfrogging development

Though the current technological, economic and social conditions are all favorable to high-tech manufacturing entrepreneurs, they ultimately have to stand on their own feet in order to succeed in their ventures. Firstly, entrepreneurs should have the sense of responsibility and the faith to transform China into a manufacturing power. Especially at this moment when some internet businesses get strong financing and high valuation only based on their marketing and concepts even though their performance are poor, manufacturing entrepreneurs shall have phenomenal patience. Secondly, startups should persist in innovation in segment markets. Given the intense competition globally, each segment is highly-competitive. High-tech manufacturing entrepreneurs shall therefore work hard to concentrate talents and capital on the innovation in specific industrial segments, and by doing so gradually gain tech advantages in certain aspects so as to be able to break tech blocks through IPR protection. Thirdly, high-tech startups should work hard to build their own brands. Entrepreneurs shall attach great importance to the establishment and protection of their own brands since the very day their businesses are launched. They should try to transform their technological R&D capacities into great consumer experiences, their innovation advantages into brand contents and their entrepreneurial efforts into brand legends. Fourthly, entrepreneurs should adopt aggressive global strategies. As globalization deepens, businesses shall have both the confidence and strategies to “go abroad”. High-tech manufacturing startups should focus on small-volume and non-standard customized products to build their own global consumer platforms. Fifthly, under the new normal circumstances where consumer demands are becoming tailor-made and diversified, small-and-medium-sized manufacturers play an important role in meeting Chinese people’s sophisticated demands. Entrepreneurial high-tech SMEs, based on their innovated technologies, are especially able to develop quality products to meet and even guide the consumer demands of both urban and rural China.

Shanghai is stepping up its efforts to build a globally most influential technological innovation center. Meanwhile, the local government attaches great importance to the development of advanced manufacturing and is determined to create new innovation-driven advantages for the city. The government urges mass entrepreneurship and innovation to help tap into the huge creative potential from product design to manufacturing, and encourages more entrepreneurs to pursue ambitions in the city’s high-tech manufacturing industry.

(Jin Fuan, Secretary of the Party Committee of the School of Economics & Management of Tongji University)

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