China, Smart Manufacturing Giant

By Michelo Maunga

Within the Zambian context, the People’s Republic of China has featured prominently in recent weeks and months. Beginning with the role of the Chinese in our debt restructuring agreement, to President Hichilema’s just-ended state visit, the all-weather friendship between our two countries is at its strongest. Much has already been written on the results of this trip; my analysis will, therefore, direct the conversation toward a less explored but contemporary aspect of Chinese Industry, specifically, Smart Manufacturing.

Before, I delve into this, allow me to provide some context. China has over the years positioned itself as the hub of the world’s manufacturing. Capitalizing on an abundance of cheap labour, having only been recently overtaken by India as the most populous nation, multinationals the world over relocated their production to the East African nation. Added to this was the widespread implementation of Special Economic Zones, further raising the country’s value proposition as a viable destination to cater to the world’s manufacturing needs. The end result was rapid economic growth, consistently in excess of 8%, culminating in China becoming, today, the world’s second largest economy.

This growth has, however, moderated recently. Growth targets have been revised downwards in the region of 5-5.5%. Several reasons have been provided for this, amongst which are; the natural decline in growth rates for large economies, shifting demographics and the state of the world economy. With respect to shifting demographics and its retarding effect on economic growth, the Chinese People’s Congress, has devised an array of interventions, one of which is Smart Manufacturing. Smart manufacturing becomes particularly crucial, when viewed in light of the fact that China can no longer attract investment on the basis of cheap wages.

What then is Smart Manufacturing (SM)? The term refers to the mass digitization of production processes, encompassing; product design, supply chains, production, distribution and sales. It leverages the Internet of Things (Iot), other emerging technologies such as Machine Learning and Artificial Intelligence (AI), in networking machinery, warehouses and other components of production, with a view to enhancing seamless communication and interoperability between devices, equipment and personnel. Data analytics also plays a key role in this process. The utilization of sensors enables the collection of real time data, thereby allowing Analysts to monitor production processes in real-time ensuring optimal efficiency at all times. This goes further when AI is adopted with machines being able to make decisions, for instance implementing corrective measures for faults. Added to this is the aspect of modelling, where virtual plants allow for simulations prior to implementation of changes to physical production processes.

Broadly with Smart Manufacturing Industrial processes become more autonomous as diverse parts of production systems communicate with each other. Heralded as the Fourth Industrial Revolution, it is set to revolutionize industry with an effect, potentially, as significant as the steam engine to the First Industrial Revolution. Primarily, SM will drive down costs, increase efficiencies, ultimately resulting in lower costs for consumers.

It is against this backdrop that China has been transitioning its model of industrialization towards one increasingly premised on SM. To this effect a five-year plan for the development of Smart Manufacturing was released in 2021, which intends to see at least 70% of all large-scale firms attain digitization by 2025. The plan outlines strategies to increase technical and market competitiveness of intelligent manufacturing equipment with a call to promote research in AI, 5G, Big Data and Edge Computing, all essential in a digitalized industrial ecosystem. Coincidental to this are plans to strengthen the robotics industry, wherein a five-year plan has also been developed. This plan envisages the creation of 3-5 robotics industry zones and a doubling of the intensity of robot manufacturing.

Two years down the line several firms have exploited this policy direction vis a vis Smart Manufacturing with the country’s scale of intelligent manufacturing equipment currently worth $420 billion. In Shenzhen, which was part of President Hichilema’s tour, the robotics industry output was reported at roughly $21 billion.

Smart Manufacturing represents a leap in the means by which Manufacturing has traditionally been undertaken; the nature of economic systems being such that continuous improvement is imperative. In the globalized economic system currently at play, nations that will benefit the most from international trade will be those that constantly pursue ways to lower costs and improve efficiencies. For certain economies, such as China, this began with the sheer size of their population. As time has evolved, however, this is no longer enough. True to the industrious nature of the Chinese, they have now set their sights on Smart Manufacturing as the next frontier that will usher them into even more prosperity.

I will end with a call for the Zambian economy to draw inspiration from China. Indeed, it was not too long ago that China and Zambia were of comparable economic fortunes. Building on the President’s state visit, and the Chinese FDI that will ensue, let us maximize on technology transfer that can be assimilated into our local production processes. And whilst we may not be able to adopt SM in the immediate future, I am confident that we have at least begun the long journey of progression in our manufacturing sector which will eventually see us adopt technologies such as those being pioneered in China.