A worker on a tire production line at CITIC Dicastal Co. Ltd. in Qinhuangdao, Hebei Province

n the plant of a hi-tech company in south China's Shenzhen, rows of mechanical arms are polishing and burnishing electronic parts that will become mobile phones. "It needed 650 people [earlier] to do the work manually. Now it can be done by 60 with the help of these robots," Xiang Sheng, General Manager of Shenzhen Everwin Precision Technology, an electronics component manufacturer, said with pride.

Besides reducing labor costs, the product quality is also better and more reliable. When the work was done manually, 25.2 percent of the components had to be rejected. Now the rejection ratio has been slashed to 4.5 percent. Earlier, production capacity was over 8,500 equipment sets. Now, it has jumped to 21,511 sets, according to company statistics.

That's just one instance of Chinese companies upgrading from low-end to mid- and high-end manufacturing. The bid received impetus after the State Council unveiled the Made in China 2025 plan on May 19. The basic principle of the plan is that manufacturing has to be innovation-driven. It urges intelligent and environment-friendly manufacturing, with a focus on quality and Internet integration. The goal is to lift China from its current position as a powerhouse in the manufacturing industry to a superpower. China is eyeing complete transformation by 2049.

Miao Wei, who heads the Ministry of Industry and Information Technology (MIIT), has outlined the four advantages China has to realize the ambition: "China has a huge market and a vigorously growing market demand; vibrant enterprises; a long-term guideline for the development of its manufacturing sector; and a myriad of high-quality professionals."

Recipe for vitalization

Mao Weiming, Vice Minister at the MIIT, advocates innovation in production, learning, research and application. "Innovation is conducive to increasing competitiveness, creativity and productivity," Mao said. "As far as Made in China 2025 is concerned, the recipe for vitalizing the manufacturing industry lies in technological innovation."

Mao points out that China's manufacturing industry is large but not strong because of a lack of independent innovation capacity. Also, the core technologies are still controlled by foreign multinationals.

The vice minister holds up chip manufacturing as an example: "Currently, 80 percent of the chips used in Chinese-made products are manufactured by foreign companies. In this segment, most Chinese enterprises are placed on the low end of the value chain, such as processing and assembling."

Zhang Monan, an associate research fellow at the China Center for International Economic Exchanges, thinks China will gradually climb to the mid and high end of the industrial value chain. This will come from breakthroughs in core technologies employed by strategic emerging industries, both in their upstream and downstream stages of operation.

Zhang adds that an innovation chain should be created to shore up traditionally predominant industries. Enterprises that have core and key technologies should be encouraged to pool in their best resources to drive the industrial transformation.

Power of branding

China lacks globally influential multinationals and brands, and there are the occasional scandals over product quality, Mao said. "Considering that, priority should be given to improving brand and quality."

The manufacturing industry faces several bottlenecks. There is high dependence on importing key components as the quality of domestic products is suspect. Also, the design and manufacturing of high-end industrial products made locally are generally inferior to those of developed countries.

Sha Nansheng, Deputy Director of the MIIT's science and technology division, says the bottlenecks can be overcome by focusing on quality. High-quality products contribute to the sustainability and stable development of the manufacturing industry. To stimulate demand and consumption, efforts should be made to increase the added value of products by enhancing their performance.

"What props up Germany's Industry 4.0 [the Fourth Industrial Revolution characterized by smart factories, intelligent machines and networked processes] is quality and brand, the essence of a leading manufacturing power. Without them, China will be ousted from the position of manufacturing giant and lose its goal," Sha said.

Reshuffle on cards

Made in China 2025 considers intelligent manufacturing an effective approach and a major direction.

MIIT Minister Miao says it is of paramount importance to combine informationization with industrialization, "Since most industrial robots are program-controlled, if they are run wrong, workers may get injured. [But] if artificial intelligence is added to them, they will stop operation when people come too close for safety."

Li Dong, Deputy Director of the MIIT's equipment manufacturing division, says intelligent manufacturing will significantly boost production and resource utilization efficiency. It will also reduce time, operating costs and the rejection ratio of products considerably.

There are concerns that the intelligent production model will also slash jobs. Li says for a single enterprise, intelligent manufacturing will undoubtedly reduce the labor force. But it will also improve the quality of manpower. From the perspective of the entire manufacturing sector, it will cause the labor market to restructure itself, making the labor force flow from processing and manufacturing to the service sector.

Industry 2.0 - the Second Industrial Revolution - meant electrification, and Industry 3.0 - the Third Industrial Revolution - meant automation. Industry 4.0 is interpreted as intelligentization. However, some Chinese enterprises are still struggling to implement electrification, indicating uneven manufacturing development. "Intelligent manufacturing be realized only in steps, with different guidance for enterprises at different levels of development, and applying different measures," Li said.

The MIIT has affirmed that over 30 intelligent manufacturing pilot programs will be jump-started this year. Their scope will be expanded in 2017.

Made in China 2025 says to accelerate the development of intelligent equipment and products as well as the intelligentization of production processes, the Internet has to be more widely used in the manufacturing sector. For this, the Internet infrastructure has to be strengthened. An Internet Plus plan has been drafted to promote the integration of informationization and industrialization.

"It's not a rigid combination of manufacturing and the Internet," explained Gong Xiaofeng, Director of the MIIT's Center for International Economic and Technological Cooperation. "Rather, it's integration of the two, which means the new information technology will be employed to improve the model of production, investment, management and business."