For the past few decades, China, dubbed the Workshop of the World, has been using advanced manufacturing equipment and technologies to manufacture products under other manufacturers’ names. As a result, less than 10% of the total operating revenue of its manufacturing firms have come from service offerings, far below the 30%+ enjoyed by developed countries and 70% for General Electric, an industry giant from the U.S.A..
To address the above concerns, the Chinese Ministry of Industry and Information Technology (MIIT), together with Chinese National Development and Reform Commission and China Academy of Engineering, jointly released a guideline calling for improvements to be made in the service-oriented manufacturing sector and outlines targets to be achieved by Chinese manufacturing firms by 2018 to keep in pace with its international counterparts.
“Service-oriented manufacturing” refers to a new industrial segment that combines both manufacturing and service and encourages manufacturing firms to personalize, customize, and be more innovative with their production, operation management, and business practices. With the above transformation and upgrading efforts, Chinese manufacturing firms may focus more on service offerings, rather than merely product sales, and thus, add more value to their products, increasing their competitiveness and improving the productivity.