2018 China Smart Manufacturing Report

About the report

Deloitte is studying smart manufacturing developments in China, determined to find solutions for China manufacturing industry transformation. To get a clear picture of the status quo of smart manufacturing in China, we interviewed 153 senior executives at large and medium-sized enterprises in China for the 2018 China Smart Manufacturing Report, seeking their views on the current deployment of smart manufacturing in their companies. Based on the executives' feedback, we identified the key challenges in transitioning to smart manufacturing and provided suggestions for how enterprises can tackle these challenges.

Viewpoints / key findings

• China smart manufacturing has entered a period of high-speed growth, mainly reflected in three aspects:
  • China's industrial enterprises have enhanced their digital capabilities, laying the foundation for the analysis, prediction and self-adaption of future manufacturing systems
  • In financial terms, smart manufacturing has substantially improved its contribution to enterprises' profits
  • In traditional application, China has become the largest buyer of industrial robotics, with strong growth in demand
• Five priorities in smart manufacturing deployment: digital factory (63%), tapping into equipment and user value (62%), industrial Internet of Things (8%), business model restructuring (36%) and artificial intelligence/AI (21%).
• Digitalized factory is the primary task. Smart manufacturing is centered on the intelligentization of production, with end-to-end data flow as a base and driving force. Building a digitalized factory is therefore regarded as a top priority for smart manufacturing deployment. At present, enterprises focus on connecting data flows from production to execution, leaving great space to improve product and value chain data flow.
• Tapping into equipment and user value. With intensified competition and increasingly transparent product prices, manufacturers need to find new sources of value. Exploring equipment and user value is the next priority for smart manufacturing deployment, with 62% of the surveyed companies actively exploring their value propositions.
• Enterprises have lower motivation for cloud deployment. 53% of the companies surveyed have not yet deployed industrial clouds. Among the 47% who are deploying industrial clouds, 27% are deploying private clouds, 14% public clouds and 6% mixed clouds.
• Reconstructing future business models. Smart manufacturing can not only help manufacturing companies lower costs and improve efficiency, but also provide opportunities for enterprises to rethink their value positions and reconstruct their business models. 30% of the surveyed companies will build business models centered on platform, 26% will follow massive customization, 24% will transfer towards solutions providers focusing on products and service, and 12% will focus on intellectual property.
• The impact of AI on manufacturing has two main aspects:
  • Applying AI in manufacturing and management processes to improve quality and efficiency
  • Disrupting existing products and services
• Three major tasks to bridge the gap. Reconstructing business models is a complex, arduous task. To succeed, a company first needs to enhance its capabilities in business model optimization, innovation management and cloud deployment to lay the foundation for business model reconstruction.