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After the outbreak of the epidemic, China’s manufacturing industry changed five times and the distribution of value chain globalization

2020-03-27

Source: Control Engineering Network
The epidemic will eventually be contained and life will return to normal. Many manufacturing companies have also paid a huge price, and even some small and medium-sized manufacturing industries are on the verge of life and death because their markets are too narrow, their assets are too heavy, their personnel are too large and their cash reserves are not enough.
China’s manufacturing industry could change in five ways after the outbreak:
1.Industry Internet practices will accelerate


Manufacturing, which was hardest hit by restrictions on start-up, was the one that used the most workers and the more traditional management methods. The most typical example was the influx of foreign workers, especially from Hubei, into Wenzhou just after the sixth year, which led to the rapid “closure” of Wenzhou, indicating that most of Wenzhou’s factories still use a large number of workers and traditional management methods. The so-called traditional management method is that the workshop uses more workers, the supply chain, operating platform, marketing system is still relying on the traditional on-site, offline human processing, the whole value chain is basically labor-oriented and necessary on-site operation leading to the overall operation The high cost is not to mention that, in exceptional circumstances, this situation also reduces the efficiency and flexibility of the entire operation. Therefore, whether large enterprises or small and medium-sized enterprises, digital, networked, intelligent industrial Internet system will undoubtedly make manufacturing operations faster, more flexible, the overall cost is lower, but also make the total assets become lighter, more effective to face various market situations and emergencies. So, after the outbreak, Chinese manufacturing is likely to usher in a wave of industrial Internet landing climax.
2.The globalization of value chains may accelerate


The shutdown caused by the outbreak not only brought direct losses and crises to manufacturing, but also sounded a wake-up call: if your factory was only in one place, or even all at home, the losses suffered were comprehensive, if your layout was global, in north america, europe, southeast asia, or the middle east, then your operations would be flexible, and you would comfortable with such regional objective environmental crises (so-called force majeure, but it could happen, and some businesses would “die suddenly “). So after the outbreak, many manufacturing industries, not just large enterprises, even some small and medium-sized enterprises, may also think about the global layout of their own value chains, or closer to the target market, or closer to the supply chain, or where there is a more cost advantage.
3.Lean manufacturing-based cost reduction and efficiency activities will become more common


Faced with rising overall costs (mainly labor costs, taxes and fees costs, and environmental management costs), in recent years, chinese manufacturing companies have reduced costs and increased efficiency to varying degrees, with the aim of minimizing employment, minimizing costs that are no longer directly cost effective (many start cutting training fees), leaner practices in production workshops, and continuous lean manufacturing and production improvements by more lean-thinking bosses in japan, germany, and even south korea, from workshop sites, production processes to supply chain management, marketing management and logistics management. But Yes, there are still a lot of manufacturing enterprises, even think that lean manufacturing itself to spend a lot of money, rather than the business links to waste, rather than systematic lean manufacturing practice.
After the outbreak, lean manufacturing in the whole chain of value chain may become the mainstream consensus of manufacturing industry, because the cost problem can not be solved only by cutting off training and spending less on transportation, because the most important waste link is still the same, only by establishing systematic lean idea and realistic overall practice can the overall cost be reduced effectively. I see some manufacturing enterprises, the gross profit of the product is very high, but the net profit is extremely low, even more than 20% of the gross profit actually has no profit. It is conceivable that its cost control consciousness is what. The outbreak caused the shutdown to take a bloody crisis course for all manufacturing bosses, which must be made The concept of cost changes, so that the concept of lean deeply rooted in the people.

4.Industrial restructuring aimed at improving value chain capability becomes inevitable


An unexpected change in china’s manufacturing industry after the outbreak could be an increase in industrial restructuring aimed at increasing value chain capacity, as some companies, especially small and medium-sized enterprises, can hardly resume their operations on their own and can only accept restructuring, while some stronger manufacturing enterprises may take the opportunity to “bottom” and use this opportunity to strengthen their value chain control capabilities. Some people put forward “group heating “, in fact, this is a false proposition, from the historical point of view, once there is a crisis or business difficulties, the so-called group heating is dead, a number of difficult manufacturing industry. Isn’t it more difficult to hold together? Self-help is a false proposition. If you can save yourself, it is not a difficult situation, at best called difficulties. In the face of difficulties, small and medium-sized enterprises can only “near the big money” or find a strong external power to rely on the way to live. In China, the government can either rescue the government, the government can come forward, the most is to reduce taxes and fees, can not solve your survival problem, if it is government subsidies, can get subsidies are very few, can not solve the large number of small and medium-sized enterprises to survive; or rely on partners, and such partners must be strong business partners or capital partners, otherwise, they themselves I can’t take care of you.
5.A cash-flow-enhancing business model will be sought after


Almost a lot of bosses know that cash flow is important, but they don’t feel it personally without a deep crisis. Before that, many manufacturing industries knew it was important, but in reality, operators were still engaged in crowd tactics and asset tactics, especially some listed companies, expanding with relatively easy financing capabilities and shareholders’ lack of money.Even more ridiculous is that a group of small and medium-sized manufacturing enterprises that are not listed are also big-handed, doing this operation and doing that operation, is no cash flow strategy. In the event of a crisis, crash immediately, and then attribute the cause to “bad environment “.

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