While manufacturing has helped China skyrocket from a backward socialist country to a global economic powerhouse, the country is still faced with the challenges of disruptive digital technology.
While Chinese companies like Alibaba may do well in terms of web platforms for online sales, in terms of industrial manufacturing, factories in China -- with the exception of a few cash-rich Chinese corporations -- are stuck in their old ways.
Those manufacturers, most of them operating on a medium and small scale, are facing pressure to adapt after the Chinese government in May 2015 issued a new strategic plan -- Made in China 2025 -- said Gu Xin, director of digitalisation and intelligent manufacturing business, digital factory division at Siemens Ltd in China.
Spearheaded by Prime Minister Li Keqiang, Made in China 2025 is the latest strategic initiative intended to comprehensively upgrade Chinese industry over the next decade.
The strategy was inspired by Germany's Industry 4.0, which employs modern manufacturing technology like cyberphysical systems, the Internet of Things (IoT), cloud computing and automation.
"Factories in China are facing pressure from the trend of customised markets," said Mr Gu, who oversees the Siemens' Digital Experience Centre Lab in Beijing. "Instead of relying on cheap, mass-produced wares, they need to change, they need to shorten the manufacturing life cycle, they need to reduce production costs and respond to customised orders, and they need to move in on future manufacturing."
The centre, which opened in June 2017, is located at the company's China headquarters in the Chaoyang area, a business district and Westerner enclave. During the first six months of operations, about 5,000 local manufacturers paid a visit, Mr Gu said.
One client is China Aerospace Science and Industry Corporation. Casi is one of China's leading manufacturers to have adopted intelligent manufacturing, Mr Gu said.
The lab had been closed for six months before reopening in June 2018, when Siemens launched its first Belt and Road Initiative (BRI) Forum in Beijing.
Spanning just 700 sq m -- about the size of a car showroom -- the laboratory showcases Siemens's cutting-edge Industry 4.0 technology. The highly intelligent factory boasts cognitive computerising software integrated with machines, allowing companies to design, customise orders, protect information, test and produce in a way that optimises the whole value chain.
Highlighted technologies are collaborative platform (data backbone) that integrates product life cycle management; manufacturing execution system/manufacturing operations management; totally integrated automation; and life cycle and data analytics.
MindSphere is a cloud-based, open operating system for IoT. Another highlight is "digital twin", which can help conduct tests and optimise production.
"Digitisation changes everything, including how people live," Mr Gu said. "In the manufacturing sector, it changes how we gather information and how goods are made."
Future manufacturing designs give way to openness and transparency, he said.
"For digitisation you need to break down isolated units in a company," he said. "In the past, companies usually separated design, planning and manufacturing units into self-contained islands, which was not good for data protection."
Smart manufacturing will merge those departments into an integrated system for better predictive planning and optimal production, Mr Gu said.
Apart from the centre in Beijing, Siemens also opened a facility in Shanghai last year and another one focused on industrial software in the Chengdu High-Tech Industrial Development Zone. In August, the Digital Experience Centre will open at a company facility in Suzhou.
German connection
Siemens AG first set foot in China in 1872 to install a telegraph system. The company subsequently supplied motors for Tsingtao brewery and a hydro dam in Hunan district.
"Siemens has been good for China and China has been good to Siemens," president and chief executive Joe Kaeser said during an opening speech at the Belt & Road Summit held in Beijing in June.
"China has always taken the long view on the future," Mr Kaeser said. "The BRI can change the world, and it can change the world trade order -- people and tweeters should realise this."
The summit has provided the company with a platform to introduce the "digital Silk Road", a new marketing plan to cater to new technologies for Asian industrialists, targeting BRI-related projects.
Known for hardware manufacturing, Siemens has acquired several software firms to serve the engineering and pharmaceutical industries in line with Industry 4.0. The company's latest purchase was Mentor Graphics Corp, which makes software for designing semiconductors, for $4.5-$4.6 billion (150.4-153.7 billion baht), according to a 2016 Reuters report.
Mr Kaeser said Siemens is uniquely positioned to help ensure sustainable success of the BRI through its vast technology portfolio and in-depth knowledge of local market needs, based on the company's long-standing footprint in the respective economies covered by the initiative.
Under the BRI, China will invest in infrastructure along the route, which roughly traces the ancient Silk Road across Eurasia, as well as a maritime route in Southeast Asia. Investment in infrastructure projects in the BRI is forecast to reach $1.16 trillion, spanning 90 countries.
Building bridges
"The BRI is all about infrastructure and bridge-building," said Cedrik Neike, a member of the managing board of Siemens AG. "It is about bridges connecting societies, economies and cultures, but also about bridges between physical infrastructure and the digital world.
"Siemens is the No.1 infrastructure company when it comes to linking those worlds and being able to establish a digital ecosystem. It is our vision to co-create a 'digital Silk Road'.
"Technology such as digitisation and creating virtual simulations can help Chinese firms go into more advanced manufacturing, while improving quality and cutting turnaround times."
Such expertise has proved useful in various sectors. Among noted examples is the use of automated cleaning and feeding at a Thai fish farm to increase yield, as well as using that technology to reduce harmful emissions at a gas plant in South Korea, Mr Neike said.
"In Finland, we're simulating the country's future for the next 25 years with a digital model," he said, "and based on that, investments are being made on how we can push more and more de-carbonisation."
Siemens has joined forces with more than 100 leading Chinese engineering, procurement and construction firms, working in 100 countries over the last two decades.
For example, Siemens helped China Tianchen Engineering land the biggest order ever won by a Chinese firm in Turkey to build one of the world's largest soda ash factories. This project, which went operational in 2017, greatly promoted Turkish exports and created 2,000 jobs locally.
Furthermore, in September 2017, Siemens helped China Machinery Engineering Corporation enter the world's most advanced gas power market by winning the first H-class gas power plant EPC project -- Punjab Power Plant Jhang -- in Pakistan.
The new power plant will be capable of providing electricity that is equivalent to the total consumption of 4 million Pakistani households.
