Made in China 2025 must change thinking

After all, the crisis will not cover up. After the economy has entered the new normal, the elimination of backward production capacity and industrial transformation and upgrading are imminent. Under this condition, the goals and paths of China's manufacturing transformation and upgrading are particularly important, but we must change our mind before starting “Made in China 2025”.

The "Made in China 2025" plan is getting hotter and hotter. From the Prime Minister’s proposal in the “Government Work Report” to the warming up of the Ministry of Industry and Information Technology in recent days, to the emergence of high frequencies in the media, and the buoyant capital markets, people’s concern for manufacturing in China has been rising.

"Intensified integration of informatization and industrialization will focus on the development of a new generation of information technology, high-end CNC machine tools and robots, aerospace equipment, marine engineering equipment and high-tech ships, advanced rail transit equipment, energy-saving and new energy vehicles, and electric equipment. New materials, bio-pharmaceuticals, high-performance medical devices, and agricultural machinery and equipment in 10 areas, strengthen industrial infrastructure capabilities, improve technological level and product quality, and promote smart manufacturing and green manufacturing."

The above statements made by the State Council's executive meeting and the implementation steps of “three steps” and “Made in China 2025” can be regarded as the top-level design and path selection for the transformation and upgrading of China's manufacturing industry.

The transformation and upgrading of industries, especially the transformation and upgrading of the manufacturing industry, is not a new formulation. After the international financial crisis in 2008, it began with the crisis of foreign trade survivors encountered in the OEM cluster of the Pearl River Delta, and how to increase the added value of Chinese manufacturing. Getting rid of the fate of the “smiling curve” has always been a proposition of Chinese thinking and exploration. However, in the next two or three years, the transformation crisis of manufacturing in China was overshadowed by the economic prosperity brought about by high investment. The path and long-term goal of China's manufacturing upgrade have not yet been shaped.

After all, the crisis will not cover up. After the economy has entered the new normal, eliminating backward production capacity and transforming and upgrading the industry are imminent. The urgency of the transition in the early stage of the financial crisis was to solve the problem of low value-added products and lack of brands, and to balance the relationship between external demand and domestic demand. The current transformation and upgrading is no longer a simple internal and external demand market problem, but the drastic changes in the domestic production factor environment and the foreign competition pattern are superimposed. For example, the rise in domestic labor costs makes the “Changdi” advantage no longer evident. Japan and other traditional manufacturing powers emerged from the crisis to re-strengthen their manufacturing status.

Under this condition, the goals and paths of China's manufacturing transformation and upgrading are particularly important. Of course, we have various disadvantages. However, the implementation of “Made in China 2025” may be a good opportunity for the Chinese economy to take off for the second time. On the one hand, China has manufacturing industries. The good foundation, even if the overall foundation is at the low-end, but a full range of industrial categories, a large R & D team is a qualitative change; on the other hand, China's Internet industry has developed in the forefront of the world, "Internet thinking" has been Deep into all walks of life, the "China Made 2025" and "Internet" superposition of two major strategies, more imaginative space.

However, the context of China’s economic development shows that the government-driven industrial development planning and implementation steps are often double-edged swords, which not only has the advantage of concentrating on large-scale tasks, but also has the susceptibility to over-capacity. The upgrading and transformation path given by “Made in China 2025” has already broken through the traditional manufacturing category and requires a new transformational thinking.

First, it is necessary to adjust the investment impulse of local governments to avoid the formation of new overcapacity and to avoid taking the old road of developing the key industries.

The period of time has dropped by 5 years. In October 2010, the "Decision of the State Council on Accelerating the Cultivation and Development of Strategic Emerging Industries" was released. Energy conservation and environmental protection, a new generation of information technology, biology, high-end equipment manufacturing, new energy, new materials, new energy vehicles, etc. Large areas are listed as key development targets. The key development areas of “Made in China 2025” are similar to those of 5 years ago. There was no authoritative assessment of the extent to which these industries were advanced five years ago. However, the consequences of planning impulses and capital impulses are obvious to all.

After 2009, the capacity of the new energy industry, represented by photovoltaics, expanded rapidly. Local governments competed in various strategic emerging industry projects. Various industrial parks were on the rise, and some companies even took the opportunity to enclose. The leading role of the policy on capital often exceeds the rational judgment of the enterprise on the market. Photovoltaic and wind power have subsequently fallen into a situation of serious overcapacity and faced with anti-dumping in the West.

Since the official planning text of “Made in China 2025” has not yet been issued, the relevant actions of the local government have not been put on the table, but we must be alert to the inertia of local governments clinging to the planning of the thigh. The excess production capacity of the previous round of 4 trillion investment is still being digested. This digestion is not simply a subtraction. The social cost of digestion may exceed its own value.

Second, vigorously promote the cooperative development of state-owned enterprises and private enterprises, both to play the advantages of state-owned enterprises' capital and technology, and provide opportunities for the creativity of small and medium-sized enterprises.

According to public information, some state-owned enterprises have already responded positively to "Made in China 2025". If there is already a person in charge of the company, they are preparing for smart manufacturing. For SMEs in transition, it is not easy to participate, and the transformation itself will bring pain. The new transformation is aimed at the so-called “Industry 4.0”, which is for most of the Chinese who have just entered “Industry 3.0”. For manufacturing companies, it is undoubtedly difficult. The more realistic question is: Who will pay for the leap-forward transformation? In layman's terms, transformation requires capital. Capital is the glue between the various elements, and there is no capital. The technology and talents needed for the transformation will not be discussed.

Where does the money come from? Premier Li Keqiang proposed that “mass entrepreneurship and innovation” may inspire more private capital to participate in industrial transformation and form an upgrade and transformation stage in which society participates, shares, and shares. However, for most enterprises, the solution to the financial problem has to rely on the government and financial institutions. Policy has always been the guide for the capital, accompanied by the tilt of fiscal and taxation and financial policies.

Third, Chinese companies need to pay more attention to intellectual property rights, not only single technology, but also should be more active in the layout and integration of intellectual property rights. "Going out" Chinese companies need to shift their focus from heavy assets to light asset transfers centered on intellectual property rights.

“Made in China 2025” puts forward ten key areas for development. Information technology and robotics represent the general trend of integration of manufacturing and the Internet. This is also the core of the “Industry 4.0” of Germany. The existing concepts and theories all indicate that the future of smart manufacturing is a converged industry. It is also a collection of wisdom. Without intellectual property rights, Chinese manufacturing may also become a factory made in the West.

At present, China’s patent applications have been ranked first in the world, but they still face the dilemma of low conversion rate. On the one hand, some patents are difficult to land and the coordination between production, study and research is not good. On the other hand, China has fallen behind the United States, Europe, and In Japan, individual patents cannot break through the "encirclement" of patents in the West. This has caused Chinese mobile phone manufacturers to collectively work for Qualcomm.

Fourth, "Made in China 2025" is beautiful, but the United States is not the whole of China's economy, not even all of China's manufacturing. Chinese industry encompasses all industrial categories in the world. This is not comparable to Germany, which has implemented the “Industry 4.0,” but it is precisely these leak-proof categories that are distributed from the so-called 1.0 to 3.0. Therefore, it is difficult for us to count on China as a whole. All manufacturing industries are upgraded overnight.

No matter how smart manufacturing will change our lives and economy in the future, one of the pressing issues before us is still to "stabilize growth and ensure employment." Therefore, considering that China's manufacturing has entered the first camp, it must also handle the practical contradiction of resolving excess production capacity and “steady growth”.

Therefore, when considering “Made in China 2025”, we must also be rational and avoid taking the old path of “one move up”.