“Made in China 2025”? Is not Dead At All

05/06/2020

Although Chinese leadership no longer refers to it, ‘Made in China 2025’ is very much alive. Hitech accounts for 28.5% of all total China FDI

 

Despite the Trade War and latest turmoils between China and Washington, the ‘Made in China 2025’ plan drive is very much alive. Last year Chinese leadership didn’t mentioned it during official speeches, but China is even dubbing investment is hitech sector and seeking new partnerships overseas. European countries and Japan intend to capitalize on the country’s hunger for factory automation. 

For those unaware, the made in China 2025 initiative was initially designed to facilitate china’s rapid rise through the value chain and away from low cost manufacturing toward more high tech industries of the future.  

 

China 70

©123rf. Shenzhen was one of the first SEZ and it saw the rise of many hi-tech companies such as Huawei or DJI.

 

The goal is to move away from being the “world’s factory” (producing cheap, low-quality goods due to lower labour costs and supply chain advantages) and move to producing higher-value products and services, like aerospace and semiconductors, and to achieve independence from foreign suppliers for such products and services. 

China already has some hitech champions. Huawei, Alibaba, Norinco and more are just few names. Although Beijing no longer refers to the Made in China 2025 plan in public, it remains committed to the development of key technologies and promoting innovation to achieve a high-quality manufacturing industry.

By the way, despite diffuclites and challenges, about the industry’s prospects after overcoming the immediate turmoil, particularly in China, where he says the market has the potential to grow 10% annually. “The ‘Made in China 2025’ is still alive for the medium to long term”, stated Yutaka Miyanaga, executive vice president at Omron, the world’s largest producer of blood pressure manometers and nebulizers.

 

China already has some hitech champions. Huawei, Alibaba, Norinco and more are just few names.

 

Companies see the new pandemic outbreak as a challenge, but even as opportunity for business. Factories are crowded  and confined spaces where the coronavirus can spread readily, and precautions such as reducing staff require leaving more capacity idle. Western and Japense hitech companies look to offer solutions such as robots and remote monitoring systems that can reduce risky contact without sacrificing productivity. Moreover, the factory automation business fares in the post-coronavirus world will be key to hitech companies growth and give new energy to “Made in China 2025” plan. 

 

©Unsplash. China will continue to support its hi-tech sector.

 

In this framework, Western companies, in particularly European one, have a competitor: Japan. Despite Tokyo has recently condemned the new security law in Hong Kong and the Japanese government planned to introduce a new tech law to fend off Chinese influence, two countries business are getting closer year by year. Actually China is looking to “Japan’s Super City Initiative” as a model. Coronavirus pushed Tokyo closer to high-tech ‘super cities’ and the new project will reduce regulatory barriers to adopting technologies such as autonomous driving, telemedicine and remote education. This follows reforms prompted by a coronavirus pandemic that have forced many normally analog fields to go digital.

Hitech accounts for 28.5% of all total China FDI.

 

What’s next? In November 2019, The Advanced Manufacturing Industry Investment Fund (AMIIF), a state-owned Chinese investment fund, made US$7.1 billion investment to the country’s advanced manufacturing industries. “The media coverage of the US-China Trade War has negatively influenced perceptions about China as a foreign investment destination,” says Chris Devonshire-Ellis of Dezan Shira & Associates “and it is true that US investors making product in China for resale in the US were badly hit”.

However, China’s investment fundamentals are far more diverse than just that one market sector, as is its investor portfolio. The US is not the be all and end all for China investment. Foreign direct investment into Chinese hitech sector rose 6% in 2019, according to data released by Trading Economics. The increase means that China direct FDI reached US$124.39 billion last year. More details, foreign investment in China’s high tech industries led the way, jumping 27.6% year-on-year to reach RMB 240.7 billion and accounting for 28.5% of all total China FDI. Dear all, “Made in China 2025” is not dead at all.

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