China's main production base hastens digital transformation

GUANGZHOU－As outlined in a blueprint for its development over the next five to 15 years, China will promote the deep integration of digital technology and the real economy, and empower the transformation and upgrading of traditional industries to spur economic growth.

Hailed as the "world's factory",Guangdong province is home to nearly 3 million industrial companies. Now the manufacturing hub is accelerating its digital transformation and exploring paths for the upgrading of its manufacturing sector.

On a giant digital screen in Foshan, Guangdong that monitors digital operations involved in manufacturing microwave ovens, home appliance giant Midea Group uses the technology to alert engineers to any problems during production.

The factory is one of the largest microwave oven production bases in the world, with an annual production capacity of over 44 million units. About 47 percent of the world's magnetrons－used to emit microwaves－are produced there each year, making it a major component supplier for global microwave oven manufacturers.

In March, the World Economic Forum listed the factory among the latest members of its global lighthouse network, which is intended to select factories leading the way in the adoption and integration of frontier technologies of the Fourth Industrial Revolution.

To date, a total of 69 factories across the globe have been listed as lighthouse factories, including two under Midea, whose air conditioning plant in Guangzhou, capital of Guangdong, joined the list last year.

Zhou Xiaoling, director of information technology at Midea, said that thanks to digitalization, the factory has increased its overall efficiency by 28 percent, improved product quality indicators by 15 percent and shortened order delivery time by 53 percent.

"Midea started its digital transformation in 2012. Corporate revenue increased by 150 billion yuan ($22.85 billion) while the number of employees fell by 40,000 from 2012 to 2019," Zhou said, adding that "digital transformation has injected strong development momentum into the traditional manufacturing sector".

In Guangdong, a total of 15,000 companies have achieved digital transformation and 500,000 companies have gained access to cloud services, thanks to industrial internet platforms, according to the province's department of industry and information technology.

In recent years, bellwethers in the industrial internet field such as Huawei, Midea and Tencent have grown rapidly. They have not only become pioneers of digital transformation but also promoted the transformation of a large number of small and medium-sized enterprises.

Xu Zhijun, rotating chairman of Huawei, said that by the end of 2020, the company had built more than 40 industrial internet innovation centers in China, providing digital transformation services for more than 20,000 industrial enterprises in over 30 industrial clusters.

He Dongdong, chief executive officer of Rootcloud, an industrial internet service provider based in Guangzhou, said that by working with other leading companies in the industry, it has created more than 20 industry cloud platforms concerning construction machinery, environmental protection, textiles and home furnishings. It is now providing digital transformation services for companies in 81 industrial subsectors.

In 2019, Rootcloud launched an industry chain platform for customized home furnishings. More than 20 companies in Guangzhou, Foshan and other cities have connected with the platform, where they can complete front-end design, manufacturing, logistics and transportation of home furnishings with the help of the internet, thus dramatically increasing their operating efficiency.

"Digitalization marks a big leap for the traditional manufacturing industry. Since 2016, our business volume has been growing by 100 percent each year, which shows a strong demand for digital transformation in the manufacturing industry," the CEO said.

Despite the progress and achievements to date, the digital transformation of Guangdong's manufacturing industry still faces challenges.

Ge Changwei, director of the Guangdong Provincial Development and Reform Commission, said only one-sixth of the nearly 3 million industrial enterprises in Guangdong have access to cloud services.

Most of the province's industrial enterprises are small, medium and micro-sized firms. "They are unwilling and unable to change," said Tu Gaokun, director of the provincial department of industry and information technology.

Some companies are concerned about the large investment and long return periods in the industry, and rely heavily on the traditional development path, while others lack technologies and talent necessary for digital transformation, Tu said.

To speed up digital transformation, companies believe that more efforts are needed in industrial software research and other key fields. Meanwhile, entrepreneurs need to raise their awareness of digitalization and there should be more visible and usable digital services for small and micro-sized enterprises.

In the next step, Tu said Guangdong will launch technological research projects and applications in the fields of industrial software, artificial intelligence and intelligent manufacturing, and strive to provide more technological support for the digital transformation of the manufacturing sector, especially for small and micro-sized businesses.