New Transformation of Shanghai Manufacturing Industry

During global economic winter, how can China manufacturing industry develop a new space by means of transformation? A few days ago, at "2008 manufacturing industry informatization science and technology project -- Modern Manufacturing Service Industry Seminar", "stepping into service industry" was regarded as a direction and path for many enterprises who want to transform.

The development of productive service industry will be impossible without the mature information. Sources from Ministry of Science and Technology of the P.R.China said, facing the current financial situation, the next direction for transformation is productive service industry. During the 11th Five-Year Plan, manufacturing industry informatization science and technology projects will be started in 31 provinces and regions in China, one of which is to train a group of productive service enterprises to reduce the cost of both serving companies and companies being served, through providing information sharing platform and other methods.

In the process of manufacturing enterprises expanding into service industry, parts of production processes are peeled off, which offers a new opportunity to small and medium-sized enterprises. The e-commerce company affiliated with Baosteel -- Dongfang Steel Co. is now planning how to offer e-commerce platform to more steel enterprises besides Baosteel, expanding into third-party service industry of steel industry. Now there are 1500 users on the e-commerce platform of Dongfang Steel Co., which is expected to reach 3,000 next year.

It's known that over the recent years, the former informatization departments of large enterprises, like FAW-VW Automobile Co., Ltd., Chery Automobile Co., Ltd., Baosteel, etc., have been peeled off from their parent companies to become independent professional service companies, shifting serving objects from themselves to society.

From manufacturing to service, it's not that easy like "turning round". Most enterprises endured lots of "turning-around" before finding their proper direction.

Huang Wennong, General Manager of Shanghai Biaowu High-Tensile Fasteners Co., Ltd., gave three stages for transformation "manufacturing – export – logistics distribution". With increasing business cost, those low-end fastener makers gradually find it hard to survive. For them, there're only two ways out: one is to adjust product structure, producing high-end products; the other is to adjust industrial structure, making it big in marketing, purchase, logistics and other high added value links of industrial chain to expand into modern service industry.

Thanks to the transformation, the economic benefit of Shanghai Biaowu High-Tensile Fasteners Co., Ltd. still increases under current severe export situation, with expected foreign exchange earnings to reach US$0.2 billion this year. At present, the company has cut down the products completely manufactured by itself to 20%, with 40% from reprocessed the semi-finished products and another 40% from assembled the finished products. Thanks to the combined supply chain with over 150 makers nearby of different fasteners, Biaowu reduced most of the risks caused by the financial crisis.

Experts attended the seminar said, during the 11th Five-Year Plan, with the integration of manufacturing and service industries, there will be a trend that technology outsourcing develops to outsourcing service of business mode and infrastructure. For instance, professional third-party e-commerce platform develops rapidly; large enterprises train third-party organizations in the process of informatization, offering third-party service to the enterprises in the industry besides its own parent company. The above-mentioned successful experience all indicates that current enterprises can develop modern manufacturing service industry as a breakthrough to advance the restructuring and upgrading of manufacturing industrial structure, to gather strength for future development of manufacturing industry.

Source: Economic Daily News
Translated by Stephanie
www.chinaFastener.info