China's 2025 Manufacturing Industry Going Global And Supply Chain Restructuring
China's 2025 Manufacturing Industry Going Global and Supply Chain Restructuring
With the profound changes in the global manufacturing landscape, Chinese manufacturing enterprises are facing new development situations and unprecedented challenges. Going global has become a new choice for many enterprises, and how to build a new supply chain system that matches it has also become a focus of attention.
With the changes in the global manufacturing industry landscape, the trend of Chinese manufacturing enterprises going overseas is becoming increasingly evident, which brings about the need for the reconstruction and construction of China's manufacturing industry supply chain system. In this process, new logistics operation models and logistics technologies have been highly valued and widely applied by enterprises, and the manufacturing industry is in a critical stage of exploring and building a new supply chain.
The global manufacturing landscape has undergone profound changes
In recent years, the global manufacturing landscape has undergone profound changes, and China's manufacturing industry is also facing new development situations.
Since the beginning of the reform and opening up, China has officially integrated its own economic system into the world economic system dominated by European and American countries. In the initial stage of development, China's production technology level was relatively low, mainly relying on its own advantages of a large labor force and low cost of various production factors to develop the processing and manufacturing industry with supplied materials. It rapidly developed and occupied a large share in the mid to low end manufacturing industry. After joining the World Trade Organization (WTO) in 2001, China's manufacturing industry has achieved rapid development. Not only has the overall scale of the manufacturing industry been increasing globally, but its own manufacturing technology and level have also been continuously improving, occupying an important position in more and more high-end manufacturing fields.
Nowadays, China has become a manufacturing powerhouse and a manufacturing powerhouse. According to data released by the National Bureau of Statistics, all of China's top ten exported goods in 2024 will come from the manufacturing industry. Among them, the proportion of China's industrial manufactured goods exports in the total export value has increased from 46.5% in the early stage of reform and opening up in 1978 to 95.1% in 2023, occupying a dominant position in China's export commodities. Taking high-tech electromechanical products as an example, the proportion of China's electromechanical product exports to total exports has increased from 7.8% in 1980 to 58.5% in 2023. It can be said that the export of high-end manufacturing equipment has become the main product of China's foreign trade. China has become the center of global manufacturing and supply chain with its strong industrial chain supporting capabilities, complete industrial system, and good logistics foundation.
However, the rapid development of China's foreign trade and manufacturing industry has also brought new challenges to itself. On the one hand, due to the rapid expansion of China's foreign trade scale, it is inevitable to have trade frictions with other countries; The upgrading of China's industries will inevitably touch upon the vested interests of the previously dominant industrial countries. Especially the United States, which was once China's largest trading nation, began to suppress China's foreign trade and industries (especially manufacturing) in order to maintain its dominant position in the world economy. It restricted China's foreign trade and industrial development through measures such as increasing tariffs and key technologies in the industrial chain. According to calculations by the Bank for International Settlements, the proportion of Chinese companies' direct US customers will decrease by about 10% from 2021 to 2023.
On the other hand, due to the COVID-19, the Russia Ukraine war, the European energy crisis and other factors in the past few years, the original global industrial chain has been severely impacted and damaged. In this context, Chinese enterprises, especially manufacturing companies, need to expand their business globally and promote industrial development by going global and restructuring their supply chain system.
The surge in China's new energy vehicle exports and the wave of Chinese manufacturing enterprises going global
Based on the principles and laws of market competition, enterprises that can develop overseas must come from industries with competitive advantages. As an important force in the global manufacturing industry, Chinese enterprises occupy leading positions in multiple sub sectors of the manufacturing industry, such as steel, home appliances, new energy vehicles and other industries. Chinese enterprises in these industries have strong production, manufacturing and supply chain capabilities, which are the foundation for their overseas development. According to the joint statistics released by the Ministry of Commerce, the National Bureau of Statistics, and the State Administration of Foreign Exchange, as of the end of 2024, manufacturing enterprises have become active entities in China's outward investment, with a large number of enterprises and a considerable proportion of investment stock. The number of overseas factories built by listed companies continues to increase, distributed in multiple fields, with the automotive manufacturing industry being particularly prominent.
Mr. Qiu Fusheng, General Manager of Shanghai Tianrui Logistics Consulting Co., Ltd. and Vice Chairman of the Logistics Engineering Branch of the Chinese Society of Mechanical Engineering, said, "Going global and restructuring the supply chain system is an important opportunity for Chinese manufacturing enterprises to expand their business and achieve global layout. However, going global is not just about building a factory. 'Chinese enterprises' own supply chain layout also needs to go global together, and it is not simply copying the domestic supply chain model. Chinese manufacturing enterprises not only need to seize the opportunities in foreign markets, but also take on the responsibility of global leaders, improve international competitiveness through innovation and optimization of supply chains. At the same time, enterprises must have a sense of social responsibility and global vision, and contribute to the stability and sustainable development of the global industrial chain
Enterprises need to consider multiple factors when developing overseas and expanding globally. According to Qiu Fusheng's analysis, driven by cost optimization factors, many Chinese companies are building factories in countries such as Vietnam and Indonesia, hoping to enhance their competitiveness by utilizing local low-cost labor, taxes, logistics, and raw materials; From the perspective of market demand driven development, some emerging industry related enterprises will prioritize markets with huge business digestion capabilities when expanding overseas. For example, some Chinese automobile manufacturing companies or new energy battery companies may consider setting up factories in Europe and America; From the perspective of risk avoidance, policies in countries such as the United States encourage Chinese companies to relocate their production bases. Some Chinese companies usually invest, set up factories or trade in "intermediary" countries such as Vietnam, India, and Mexico, indirectly completing the final trade with the European and American markets.
China's manufacturing industry is going global, and digital technology will be widely applied, posing new challenges to supply chain and logistics operations
Qiu Fusheng believes that from a strategic perspective, in order to guide Chinese manufacturing enterprises to go global and reconstruct and expand their supply chain systems on a global scale, the most important thing is to establish top-level design and provide guidance for enterprises from a methodological perspective, which is currently lacking.
He said, "Although many Chinese companies have already gone global or are trying to go global, the lack of unified strategic standards and guidance has led to everyone fighting on their own. Even though some companies have formed a relatively successful layout globally, their experience has not been systematized, and they have not been able to form a model or standard for reference
In terms of operational details, Qiu Fusheng analyzed that after Chinese manufacturing enterprises go global, compared to the original relatively complete and mature domestic supply chain system, the newly constructed cross-border system often has longer supply chain chains, more nodes, and more unexpected situations to face, making management more difficult. In the past, when the supply chain was in China, managing logistics transportation and warehousing might have been enough. However, when factories were moved overseas, some components or raw materials would still be purchased in China, which involved various links such as production planning, shipping planning, import and export customs clearance, international transportation, domestic pickup, overseas warehousing, inventory management, and final delivery. The complexity of operation management became extremely high, and unexpected situations could occur in each link, leading to a large number of difficulties and pain points in supply chain management for enterprises during the operation process
In addition, after Chinese enterprises go global, they need to face different regulations, demands, and cultural differences, so the reconstruction of the supply chain is also inevitable and necessary. Qiu Fusheng once again emphasized that going global for enterprises is not only a process of capacity transfer, but also a process of technological upgrading and operational model upgrading. Enterprises should aim to meet global market demand, coordinate and make reasonable use of domestic and foreign resources, explore new supply chain models and technologies, and ensure that they maintain and increase competitiveness in the global market.
Intelligent logistics equipment and systems provide strong support for new supply chains and logistics systems
New logistics and supply chain technologies are widely applied
In the process of enterprise overseas development and supply chain restructuring, it also provides a new stage for the application of new logistics and supply chain technologies. Qiu Fusheng believes that technologies such as digitization, intelligence, and greenization will have a relatively broad application space. For example, digital twin technology and simulation systems play an important role in the construction of overseas supply chains. Simulation technology can be used to test the operational effectiveness of the supply chain in a virtual environment, avoiding the problem of being unable to adjust or having excess resources discovered after investing a large amount of resources at once.
Nowadays, many logistics automation equipment and systems have the functions of data storage and processing, which provides a solid foundation for the construction of digital supply chains. Through the development and application management of digital systems, it is possible to achieve visualization of the entire supply chain, real-time monitoring of nodes along the entire chain, and risk prevention. This enables application enterprises to better control the real-time status of the global supply chain, thereby enhancing their control over the supply chain system.
The digitization of the supply chain is not only reflected in the digital application of a single link or field, but also focuses on achieving network collaboration and value enhancement of the supply chain ecosystem through industrial interconnection. The digitization of logistics supply chain can not only improve logistics efficiency through real-time data sharing and intelligent decision support, but also assist manufacturing enterprises in achieving precise supply-demand matching and rapid response to market changes through integrated and collaborative supply chain platforms, thereby enhancing the agility and risk resistance of the entire industry chain.
In today's logistics systems of manufacturing enterprises, the application proportion of various intelligent logistics equipment and technologies is increasing. Qiu Fusheng emphasized that due to differences in laws and regulations, employee quality, and many other aspects between overseas markets and domestic markets, using intelligent and automated equipment has been proven to be a relatively successful solution for overseas enterprises to ensure that their production processes and efficiency are roughly the same as those of domestic factories.
Currently, Chinese manufacturing is also moving towards intelligent manufacturing, adopting automated logistics technologies and solutions such as 3D warehouses and AGVs to optimize production processes and improve efficiency, which has become the choice of many enterprises. From the perspective of products and technology, intelligent conveying equipment mainly includes drum conveyor lines, belt conveyor lines, suspension chain systems, etc. Intelligent access equipment includes AS/RS Miniload, The material box passes through the three-dimensional warehouse and the four-way shuttle of the pallet, and the intelligent sorting equipment includes bag type, narrow belt type, flip tray type, etc. In addition, mobile robots such as AMR and AGV, as a product technology that differs from traditional automated logistics equipment, are increasingly being applied in intelligent manufacturing factories.
Qiu Fusheng is also optimistic about the application of green technology in overseas markets. He gave the reporter an example to introduce that his company team had designed and implemented a paperless circular packaging solution for an overseas supply chain of a home appliance manufacturing enterprise. This plan was originally designed for the domestic supply chain of the enterprise, and after multiple modifications, it was finally successfully implemented.
Due to the strict environmental requirements of some overseas markets, traditional logistics packaging solutions such as wooden box packaging or cardboard box packaging require high environmental treatment fees. This has made green logistics circular packaging solutions quickly popular in the market and highly successful.
He also gave an example of the application of the technology of integrating shelves, warehouses, and racks overseas. The installation and construction plan for this project may encounter legal obstacles when implemented domestically, but in overseas markets such as Southeast Asia, this technology is allowed to be applied. This enables relevant enterprises to achieve simultaneous production, installation, and commissioning when building factories locally, greatly reducing the overall delivery cycle.
In short, the overseas development of Chinese manufacturing enterprises is an inevitable choice under the changing global economic landscape. Although facing many challenges, through reasonable strategic adjustments and policy support, it is expected to achieve sustainable development in the international market and contribute more Chinese strength to global economic development.
Chinese enterprises should rely on their domestic industrial advantages, increase investment in emerging markets, deeply cultivate traditional markets, build overseas parallel industrial chains, create a supply chain system with internal and external linkage, and further enhance and develop the competitiveness of Chinese manufacturing and Chinese supply chain.
