[Introduction] Recently, six major economic provinces including Guangdong, Jiangsu, Shandong, Zhejiang, Henan, and Sichuan held economic work conferences to clarify the direction of economic development in 2023. Among them, the transformation and upgrading of manufacturing industry is one of the most concerned areas of each province. This is also a key deployment of our country in the future, that is, to build a modern industrial system with the high-quality development of the manufacturing industry. So, how to understand the current situation and development prospects of my country’s manufacturing industry?
In his latest speech, Huang Qifan pointed out that there are two outstanding problems in the development of China’s manufacturing industry compared with developed countries: first , before entering the ranks of high-income countries in developed countries, the proportion of manufacturing industry has fallen sharply, showing that it is not old. Declining momentum. Second, compared with the international advanced manufacturing level, there are still many shortcomings, which are reflected in: insufficient high-end and high-quality products, many products are at the low end of the value chain; serious homogenization competition, insufficient development of market segments; key technologies are stuck; Lack of leading international high-end brands, etc. According to China’s national conditions, in order to change the current trend, the decline in the proportion of manufacturing industry must be controlled. In any case, the proportion of manufacturing industry cannot be lower than 25% before 2035, and cannot be lower than 20% before 2050 . At the same time, it is necessary to increase investment in research and development, so that innovation ability becomes the first driving force of industrial manufacturing.
So, how to control the initiative in the layout of world-class industrial chain clusters? Huang Qifan proposed five breakthrough directions : one is to attract investment through the industrial chain, and build industrial chain clusters; Division of labor, and a leading manufacturing enterprise that can achieve vertical integration; the fourth is to cultivate China’s own, production-oriented chain main enterprises; the fifth is to plan and deploy a batch of complete machine products that meet future industrial changes. This is a new round of industry The commanding heights of change. Regarding the last point, Huang Qifan pointed out that in the next 20 to 30 years, China should carry out a forward-looking layout, focusing on the “five major items” at the trillion-dollar level – unmanned new energy vehicles, household robots, head-mounted AR and VR glasses And helmets, flexible displays and 3D printing equipment – forming a group of industrial chain clusters with global competitiveness.
This article was originally a speech given by the author at the 7th China Manufacturing Power Forum held from December 23 to 26, 2022. The original title was “Compensating for Short Plates and Forging Long Plates to Strengthen the Floor” .
To make up for short plates and forge long plates to strengthen the bottom plate <br /> Huang Qifan
It is a great pleasure to participate in the 7th China Manufacturing Power Forum. Based on today’s theme, I will focus on the manufacturing industry and speed up the construction of a modern industrial system, and I will talk about some thoughts.
The 20th National Congress of the Communist Party of China emphasized that we must persist in focusing on the real economy for economic development, promote new industrialization, and accelerate the construction of a manufacturing power, a quality power, a space power, a transportation power, a network power, and a digital China. Manufacturing is the backbone of industry, the foundation of the economy, and the guarantee of people’s livelihood. The high-quality development of manufacturing is a key part of China’s construction of a modern industrial system. Compared with developed countries, there are two outstanding problems in the development of China’s manufacturing industry.
On the one hand, the ratio of China’s manufacturing added value to GDP has fallen sharply since 2011. According to World Bank data, China’s manufacturing value added accounted for a peak of 32.5% of GDP in 2006, and then hovered at the peak, and began to decline year by year in 2011, and dropped to 26.3% in 2020, a decline in nine years. 5.8 percentage points, the world’s major industrial countries, such as the United States, Germany, Japan, France, Italy, the United Kingdom, South Korea, etc., have shown a significant decline in the proportion of manufacturing, all of which occurred after entering the ranks of high-income countries in developed countries . Compared with these developed countries, the proportion of my country’s manufacturing industry has declined from peak to decline, and the rate of premature aging is significantly larger and the speed is significantly faster.
On the other hand, compared with the international advanced level, China’s manufacturing industry still has many deficiencies in variety and quality. mainly reflects in:
First, there are insufficient high-end and high-quality products. Many products are low-end and low-quality. In terms of performance, reliability, lifespan, and yield rate, there is a big gap with the international advanced level, and they are often at the low-end of the value chain.
Second, homogeneous competition is serious, and the development of market segments is insufficient. There are a large number of enterprises in the same manufacturing category, but lack of division of labor and cooperation on the basis of specialization, it is easy to fall into homogeneous competition. When it comes to which industry is at the forefront, a large number of manufacturing companies often rush to engage in low-level repetition, and finally form vicious competition and overcapacity.
The third is that key technologies are stuck. We have not mastered the core technologies in many key links of the manufacturing industry and are controlled by others. Many industrial chains are easily blocked by others.
Fourth, there is a lack of high-end brands that lead the world. China’s manufacturing system has a lot of low-end processing, and lacks high-end brands and corresponding market channel advantages. It often takes more than ten years of specialization for a brand to gain market recognition and establish smooth and effective marketing channels. In China, tens of millions of companies are registered with industry and commerce every year, and a large part of them have closed down or changed jobs within five years.
The data shows that the average lifespan of small and medium-sized enterprises in the United States is 8 years, and 12 years in Japan. In contrast, the average life cycle of small and medium-sized enterprises in China is only 3 years, so it is naturally difficult to establish a brand effect.
The Outline of the 14th Five-Year Plan clearly stated that the strategy of manufacturing a strong country should be implemented in depth, the proportion of manufacturing industry should be basically stable, and the high-quality development of manufacturing industry should be promoted.
From the perspective of the law of economic development, there are four basic judgments as follows. First, the proportion of manufacturing industry will gradually decrease as the country enters the process of economic development into a developed country. However, it is not advisable to drop too fast and too early. At least it should wait until the per capita GDP of the whole country exceeds 15,000 US dollars before gradually declining. When our country’s per capita GDP was only about US$5,000 in 2011, the proportion of manufacturing industry began to decline at a relatively rapid rate. This is a problem. In the future, we must focus on delaying the decline in the proportion of manufacturing.
Second, compared with China’s national conditions, the proportion of manufacturing industry should not be too low. In any case, the proportion of manufacturing industry cannot be lower than 25% before 2035, and cannot be lower than 20% before 2050. In addition to the manufacturing industry, there are also mining, electric heating, water and construction industries within the industrial scope. Together with the manufacturing industry, they constitute the secondary industry. Generally speaking, this part accounts for 10% of GDP. If our manufacturing industry can maintain 25% %, plus 10% of the mining, electric heating, water, and construction industries, then by 2035, our secondary industry can maintain above 35%, and before and after 2050, it can maintain above 30%. We cannot go to the extreme where the secondary industry in the United States and other countries accounts for less than 18% of GDP. The manufacturing industry in the United States accounts for 11.5% of GDP, and the secondary industry in the United States accounts for about 18% of GDP.
If we can keep the secondary industry at 35% or more than 30% of GDP, this reflects an important difference between the Chinese-style modern industrial system and the American industrial system.
The third is that when the proportion of manufacturing in GDP reaches its peak and begins to decline gradually, in order to maintain the momentum of industrial development, it is necessary to increase investment in R&D and make innovation the primary driving force of industrial manufacturing. As far as a country or region is concerned, maintaining R&D investment exceeds 3-4% of the output value of the manufacturing industry, maintaining investment in basic research innovation from 0 to 1 accounts for more than 20% of the total R&D investment, and maintaining leading manufacturing innovation. More than 30% of the market value of the capital market is a sign of a strong manufacturing country. So at this point, we have not reached these indicators now, and the gap is still relatively large. We must catch up with these indicators in the next 5-15 years.
Fourth, the high-quality development of the manufacturing industry is accompanied by a certain proportion of productive services. In the process of the gradual decline in the proportion of the manufacturing industry in GDP, on the one hand, the proportion of the related service industry in the manufactured goods gradually increases to 10%. 30-60, that is to say, the proportion of services embedded in the hardware of a manufacturing industry, and the proportion of service value will reach 30-60% and so on. At the same time, the proportion of producer services accompanying the manufacturing industry will gradually increase to 50-60% of the added value of the manufacturing industry. When these four conditions are met, the added value of the real economy, with manufacturing, mining, construction and producer services as the main components, will account for more than 50% of GDP.
At this time, we can say that China has a solid foundation when it transforms from a big manufacturing country to a manufacturing power, and we have an industrial system with manufacturing as the focus and the real economy as the main body.
In addition to stabilizing the added value of the manufacturing industry and its proportion in GDP, the modern industrial system must also be proactive in order to fundamentally get rid of the situation where we are controlled by others in some fields. For this reason, we must have new iterative upgrades at the level of industrial organization such as the industrial chain and supply chain, and have a higher-quality industrial system. Only in this way can we take the initiative in the new round of technological revolution and industrial transformation, and we can use China as the largest single market. The advantages of mutual promotion of internal and external circulation.
In the future, we will strive to achieve new progress and new breakthroughs in the industrial chain and supply chain in the following five aspects:
The first is to build industrial chain clusters by attracting investment in the industrial chain. It is necessary to change from the past point-to-point investment promotion mode of attracting investment based on the project, and transform it into an industrial chain investment attraction, creating a strategic emerging industrial chain cluster with a high degree of spatial concentration, close coordination between upstream and downstream, economical and efficient supply chain, and a scale of hundreds of billions or trillions. . Judging from the response to this epidemic, those places with relatively complete industrial chains and industrial cluster support systems will recover faster than those places with both ends outside and highly dependent on international supply chains. This clustered production model reduces the risks brought about by purchasing parts from the world, reduces the cost of logistics, and highlights the competitiveness during the epidemic period.
Efforts should be made to promote the formation of three clusters. One is the cluster of upstream, midstream and downstream industrial chains of a certain product, such as automobiles, then its upstream, midstream and downstream industrial chains, including raw materials, components and various modules, form 70% to 80% of the components to form localized production , which is a class.
The second type of similar products and similar enterprises get together to form industrial chain clusters. When several large enterprises of the same kind settle down in one place, then its upstream raw material parts supporting industry can serve not only this leading enterprise, but also that enterprise. Form clusters.
The last one is the cooperation between the producer service industry and the manufacturing industry to form a producer service industry cluster, which is accompanied by the manufacturing industry’s upstream, midstream and downstream industrial chain clusters and the supporting producer service industry, which also interactively form producer services industry clusters. For example, in the process of new product development, there will be a lot of support for the location of productive service enterprises engaged in R&D and design, transformation of scientific and technological achievements, application of intellectual property rights, etc. This involves the extension of the innovation chain. Where conditions permit, conditions should be actively created. Promote the formation of these three types of industrial clusters.
The second is to further expand opening up, accelerate chain replenishment, expand chains and strengthen chains. Focusing on strategic emerging industries, we need to implement action plans for supplementary chain expansion and strong chain through greater level of opening up to achieve a higher level of horizontal division of labor and vertical integration, that is, to target relatively weak logistics, insurance, industry, design, and finance. We will step up efforts to attract advantageous foreign capital to enter the productive service industries such as production, science and technology, and the digital economy to make up for the shortcomings of our supply chain. This is the supplementary chain.
Or take advantage of the established trade relationship to introduce advantageous enterprises in the upstream and downstream of the industrial chain to form a new layout with a highly integrated industrial chain, which is chain expansion. Or to promote the existing advantageous enterprises to extend to both ends of the smile curve. Once the two ends of the smile curve are extended and the two ends are pulled up, we call it the horse face curve, like the face of a horse, then the horse face curve That is, the two ends of the smile curve extend upwards. If such a horse-faced curve appears, it will improve the position of Chinese enterprises in the global value chain. This is the purpose of strongly promoting the expansion of the chain. The same is to form a higher level of industrial chain clusters. When foreign demand is still weak, this kind of industrial chain clusters can ensure the healthy development of industrial chain clusters by creating an internal cycle that is driven by local and domestic demand.
When the foreign market recovers, further strengthen international cooperation and expand the scale and development quality of industrial clusters. By strengthening regional industrial chain cooperation, we can promote the global industrial chain cycle, which will not only help us prevent and deal with the risk of global chain disruption caused by natural disasters like the new crown epidemic, but also because the industrial chain cluster itself has formed a huge market. Shares can effectively deter the risk of being stuck in some key areas in the future.
The third is to cultivate and form a group of leading manufacturing enterprises that can not only organize the horizontal division of labor in the upstream and downstream industrial chains, but also achieve vertical integration. China has a complete range of manufacturing industries and enterprises. In fact, it has formed a very prominent industrial capability in the world, that is, the ability to assemble complex products. The final assembly plant of such high-tech and complex products is certainly in the middle of the smiling curve. Compared with the multinational companies that master these three chains, the added value of the middle link we are in is not very high. But this ability should not be underestimated, because it is a leading enterprise in the industrial chain composed of hundreds of thousands of enterprises. Behind these abilities is the integration of enterprise management level and supply chain organization ability, which is also a rare one for us. big advantage.
On the one hand, the formation of this capability is inseparable from the industrial chain cluster model of production and sale of real estate brought about by China’s ultra-large-scale market. On the other hand, it is also related to China’s infrastructure level, industrial supporting capabilities, and high-quality skilled workers. The team and the increasingly sophisticated scientific research and development capabilities are inseparable. In the past, multinational companies built many joint-venture auto OEMs, mobile phone assembly plants, home appliance assembly plants, etc. in China. After decades of reform and opening up, many of our domestic-funded enterprises have also learned this kind of management ability for large-scale manufacturing, which has laid the foundation for us to cultivate our own Foxconn and cultivate leading manufacturing enterprises in the new era.
The fourth is to cultivate China’s own production-oriented chain owners. Microsoft, Google, and Apple are typical examples of eco-oriented companies. Take Apple as an example. It is already a non-component manufacturer and a special business organization that organizes global value chains based on its intellectual property rights. Apple does not directly produce Apple mobile phones, but relies on its patents, trademarks, copyrights, brands, products, designs, software, databases, etc., to organize, manage and operate the standards of the global industrial chain before and after production. The link and the hub of the value chain dominate the entire Apple ecosystem.
At present, such enterprises have appeared in some fields in China, and we should cherish them even more. One is to use the big Chinese market to provide strong support for such companies to promote their applications and iterate their technologies. The second is to encourage such enterprises to establish a global vision, root in the genes of globalization, and help such enterprises develop the layout of intellectual property industry standards in the world by building platforms for international exchanges, project cooperation and market development. The third is to strengthen the protection of intellectual property rights. The common feature of ecologically dominant headhunters is to form independent intellectual property rights on the underlying technology, support the development and growth of such enterprises, and strengthen their intellectual property protection, which is fundamental to their competitiveness. Forming effective protection requires continuous strengthening in this regard.
Fifth, plan and deploy a batch of complete machine products in line with the direction of future industrial transformation, which is the commanding height of the new round of industrial transformation. The clustering of the industrial chain really lies in some worldwide durable consumer goods worth trillions of dollars. In fact, every 20 to 30 years in the world, 4-5 representative durable consumer goods will enter thousands of households and become the mainstream of consumption. This is true no matter in China, Asia or Europe and the United States. For example, watches, bicycles, sewing machines, radios, gramophones and so on in the 1950s and 1970s. In the 1980s and 1990s, it was air conditioners, televisions, refrigerators, washing machines, VCRs, and so on.
The 20 years since the beginning of the new century are mobile phones, basic computers, LCD panels, TVs, cars, etc. The market size of these products often exceeds one trillion yuan, and the global market exceeds one trillion U.S. dollars. Any country or city that can develop these industries will be at the forefront of international competition. At present, we should seize the four major and five major items in the future. The State Council’s 14th Five-Year Plan outline proposes to start with complete machine products that conform to the direction of future industrial transformation and build a strategic and global industrial chain. This is what it means.
In the next 20 to 30 years, five trillion-dollar projects will be formed , which generally include the following five types. One is unmanned new energy vehicles, the other is household robots, and the third is head-mounted AR and VR glasses and helmets. The fourth is flexible display, and the fifth is 3D printing equipment. It is necessary to actively carry out forward-looking layout and proactive attack, and form a group of industrial chain clusters with global competitiveness around these key industries.
Because in the course of the past 50 to 60 years, the four major and five major items in the past three eras were basically invented in Europe, America and Japan, and then we imported, digested and absorbed them. So no matter our washing machines, refrigerators, color TVs, laptops, and mobile phones are the world’s largest and top-notch in production capacity, in fact, its original innovations can be said to be imported products, which are the production capacities formed by introduction, digestion, absorption, and joint ventures.
Then for the four big and five big pieces of the future generation, in addition to further opening up and further introducing, digesting and absorbing, we must also have our own brand, our own production line, and our own newly developed products to form the three big and four big pieces Big Five. Such products are generally formed independently by us, so headhunters are formed by our own enterprises. The leading OEM is also arranged by our independent enterprises, so the entire manufacturing industry chain, whether it is placed in China or around the world, we have control of the initiative to arrange the layout of world-class industrial chain clusters.
In short, the construction of a modern industrial system centered on the real economy and the manufacturing industry requires steady progress, not only to build a more competitive industrial chain system in China, but also to have a number of industries that can be deployed globally This is the fundamental way for us to coordinate development and security. That’s all I want to talk about today, thank you all.
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