Manufacturing, a major cooperation sector for both Italy and China to remain at the forefront of the global economy

The following article is part of the conclusions of a document written by AsecorpChina’s current Intern. The main paper, Luca Masoero’s Bachelor Degree Thesis for Tongji University Shanghai, is a comparison between the Roadmap of the Italian Cluster “Fabbrica Intelligente (Intelligent Factory)” and the Chinese Plan “Made in China 2025” to stress similarities and distinctive traits of the two documents and find intersecting points which may arise some collaboration between the two countries in the manufacturing sector.

For more info contact the author (lcmasoero@gmail.com) or AsecorpChina Business Consulting.

Three primary forces, technology, globalization and demographics, are influencing directly the manufacturing sector and today’s businesses are challenging shifts that would have seemed unimaginable even a few years ago. Data have become a torrent flowing into every area of the global economy, advanced robotics and artificial intelligence are reinventing the workforce, additive manufacturing is innovating production, new technologies and new business models are presenting promising opportunities. Nations worldwide are trying to understand present and next waves of disruption. Italy and China, in different ways, have experienced some problems in the development of the manufacturing sector and are willing to boost growth through initiatives that can stimulate the industry.

The roadmap of the National Technological Cluster “Fabbrica Intelligente (Intelligent Factory)” clearly exhibits the determination to develop appropriate research and innovation programme to strengthen the Italian manufacturing industry. Research projects and the development of new enabling technologies are the main priority to maintain and cultivate advanced manufacturing skills in Italy. At the same time in China, with a more top-down approach, “Made in China 2025” was published with the aim of upgrading and consolidatingits manufacturing industry and transitioning from a big economy to a strong one. This national strategy addresses issues of quality, safety, and environmental protection beside encouraging companies to reach a more comprehensive manufacturing competitiveness.

The two documents have distinctive traits, but also share some similarities and intersecting points in which Italy and China may collaborate. China is undoubtedly a manufacturing superpower thanks to centralized planning of innovation and research policies involving private and public industrial entities, aiming to ascent the value chain of production in key sectors. In the face of these changes, many European countries have adopted action strategies aimed at structuring industrial collaborations with China. Italy has an indispensable need of strong guidelines that can direct researchers, institutions and individuals towards a more integrated collaboration and cooperation with Chinese entities. The Chinese market is far from being saturated and Italy can play a leading role, offering, above all, quality products that leverage on innovation.

According to Roland Berger Industry 4.0 Index (2015), Italy was considered, in the European scenario, a hesitator, not capable so far of properly market its strength and leverage its technology, know-how and capability in an effective way. Also, the European Innovation Scoreboard, in 2014, positioned Italy at the head of a group described as moderate innovator. However, opportunities are multiplying rapidly in the new technological and economic landscape created by the digitalization of commerce and productive activities: digital economy enables small enterprises as well to strike out on new paths of access to ever larger markets. Furthermore, the quality of human resources will remain a crucial factor, involving the social mechanisms for the creation and diffusion of knowledge, on which firms’ productivity and innovative capacity depend.

One of the most interesting results among the first programs launched by the Italian Cluster is the creation of the so-called “Lighthouse Plants”. These Lighthouse Plants are conceived as productive systems that evolve over time, together with emerging technologies and research and innovation results. They are not pilot projects, but true production plants, solving concrete problems and acting as an example and pride of Italian manufacturing. This Lighthouse Plants represent a great opportunity for Italy to export this method of testing new technologies in China. In fact, the State Council has recently released a circular, to establish MIC 2025 national demonstration zones in cities where distinctive leading industries and high-level innovative businesses are located and where research institutions and talent are strictly connected to the business environment.To these zones, the government is giving them the responsibility to carry out technological innovation, through reinforcing R&D in generic technologies and tackling key problems in core technologies.

The one of most important platform of the Sino-Italian cooperation, at least for its economic relevance, is China’s “One Belt One Road” initiative. Italy must seize the opportunities for growth and economic development offered by the Chinese Government. China’s Initiative of a new Silk Road, offers the opportunity for complementary benefits to both Italy and China: the new land connection, between a growing market, such as China, and Italy’s mature one, can help Italian enterprises increase the amount of exports.

Moreover, the interest of Italian companies to a greater penetration in the Chinese market has increased year after year, but the difficulties they encounter are numerous, such as cultural diversity or Intellectual Property. China is now seen by companies as a market in which to sell their products. However, China has some peculiar characteristics that compel companies to develop new tailor-made variants. This new product development has strong consequences where design is often done in collaboration with the customer, such as in the advanced manufacturing sector. As a matter of fact, R&D is the key intersecting point between the two countries.

The transformation of China into a knowledge production center is one of the most important phenomena under way in the country, that will have profound consequences overseas. The impact of this process in terms of publications and patents is already evident and has made China a manufacturing superpower thanks to a careful centralized planning of innovation and research policies, involving the industrial system, private and public, in the ascent of the production value chain in high-tech sectors. In the face of these changes, Italy has recently adopted an action strategy that directs its research centers and academic institutions towards a more effective promotional action in China, which is now more open to structured industrial collaborations. The tools are there but companies and institutions need to know how to use them properly. If and how much Italy will succeed in improving relations with China, in the area of ​​scientific and technological research, will certainly depend on the quality of specific initiatives, but also on the ability to integrate the efforts of all the actors involved. In fact, it is important that the whole research system and industrial associations continue to contribute to making cooperation with China more and more useful and effective.