In today’s world digitization is a must. The discussion if you have to embark on this journey, or if you can continue with business as usual has been settled.
The question is HOW to embark on this journey, especially with regards to China. China is the second biggest market in the world, for many SME’s it is already of key importance and continues to grow.
We will look at issues such as, can you still copy the head office digitization experience and roll it out? Or is China more advanced and you need to learn from China? As the IT worlds between the West and China are decoupling what will the consequences be? Does it make sense to revisit the issue of cooperation with local players. Joint-ventures used to be a burden, can some form of partnerships with locals become an asset again? What are some of the Do’s and Don’ts with digitization in China?
Digitalization is only useful if it covers complete process chains as every media disruption would destroy the intended productivity gain. This means that one must formalize knowledge, e.g., in the program code interpreting data, or explicitly by AI knowledge representation, in order to perform the tasks at hand. Here is where AI comes in: it allows for the explicit development of models for the process steps, be it by explicitly defining knowledge items in a taxonomy or an ontology, by using Machine Learning methods to convey knowledge from data, or by applying Deep Learning. The creation of well-suited models for the separate process steps in a process chain or a process network is the decisive factor of digitalization!
Digitization is generally not a new issue. In the current period, however, it is becoming more of a focus for politics, business and research, as digitalization gives its own dynamics in terms of opportunities and risks in the economic development of the countries and in market developments of companies.
China already has a leading position in digitalization, e.g. in goods trades and communications, but there is still a long way to go to the "digital factories" that global industrial companies have as their target.
German SMEs, should look strategically at the Chinese market. Successful "smart factory" applications and experience in China can be transferred to global production and can be competitive.
Germany is still ahead in manufacturing digitization, because Germany has been facing the labor problem since much earlier years than China. And the labor costs are always much higher than in China in the production area. Chinese companies should make the digitization more rationally, depending on the market, cost saving effort, data security, etc. like the Just in Time utilizing in the production.
Despite the downturn of the global economy, China leads the way in digital economy esp. E-commerce supported by China's unique e-payment and efficient logistic system. On the other side of the coin, digitalization is yet to be very successful in the context of manufacturing sector in China though the government is making efforts to promote digitalization and intelligent transformation of manufacturing industry with a bunch of new policies.
Digitilization can be easily realized in China. Especially in Foshan City, large Chinese Enterprises like MIDEA and COUNTRY GARDON is transforming the business scope and company operations through digitalization based innovations. German SMEs might tap into this market quickly and grab profitable business.