Innovation, Supply Chain Efficiency Key to Manufacturing Competitiveness in China

As costs of production and labor continue to increase in China, U.S. manufacturers are increasingly focused on product and process innovation and supply chain efficiency to boost productivity and manage costs. This was according to top executives from leading U.S. companies in China at the AmCham Shanghai 2013 Manufacturing Summit on October 17.


The 2013 AmCham Shanghai Manufacturing Summit, held at the Ritz-Carlton Shanghai Pudong, was attended by more than 100 top business leaders from Dow Corning, General Motors, Cisco Systems, Bayer MaterialScience, Dover Corporation, Alcoa, Honeywell, KPMG, APCO and dozens more.


"As China continues its industrial structure adjustment and economic upgrading, U.S. manufacturers maintain a leading edge during this transformation by offering innovative business processes, cutting-edge products and China-based R&D that can tailor products for local needs," says AmCham Shanghai President Kenneth Jarrett noted in his opening remarks.


"By doing so, American manufacturers are not only well equipped to address the intensifying challenges of manufacturing in China, but also well positioned to tap into the growing opportunities in China's domestic market."


Jeremy Burks, President of Dow Corning Greater China, said during his keynote speech, "Rising cost forces manufacturers to rethink their strategies. The shift we've observed from working with our customers is that instead of asking for low cost products, they are increasingly looking for products and solutions that could boost their productivity and efficiency as well as optimize their operational process."


Dow Corning has invested in a state-of-art technology manufacturing facility in Zhangjiagang, Jiangsu province, where the company has "applied the best possible scale and practice in order to provide innovative products that allow our customers to maximize productivity output and succeed."


Burks remarked on Dow Corning's selection of China to locate this manufacturing facility as a strategic decision. "The Market is here," Burks said. He referred to the AmCham Shanghai 2012-2013 China Business Report finding that nearly 60 percent of surveyed companies reported they are 'in China for China" to tap into growing opportunities that come with China's economic growth transformation that is being driven by domestic consumption and an expanding services industry.


Highlighting key trends in global manufacturing, Jeff Dobbs, Global Sector Chair & US National Section Leader - Diversified Industrials and Global Lead Partner for General Motors at KPMG, noted the resurgence of innovation is gaining traction at a time when manufacturers globally are experiencing a period of slow to modest growth and intense global competition.


"Innovation is a critical element of growth… In terms of where manufacturers fulfill the various aspects of the value chain. Compared with four years ago, there clearly is a shift to increased focus on R&D, product development and high intellectual property production in China in order to stay competitive," said Dobbs. "On projected R&D expenditure, the group spending more than 6 percent of their sales revenue on R&D has increased by 12 percent in China, which is pretty significant when compared with a 15 percent increase in the group spending 4 percent of their sales revenue on R&D globally," continued Dobbs, referring to the KPMG 2013 Global Manufacturing Outlook Survey.


Supply chain efficiency was another key theme that Thursday's summit addressed. Leading companies in manufacturing are building strong supply chain partnerships and leveraging key suppliers to create a value chain that sustains long-term mutual benefit.


Hanbo Wang, Director of Supply Chain Operations of Cisco Systems, said during a panel discussion that in addition to making its own product design to fit supply chains for cost reduction, Cisco is also committed to partnering with strategic suppliers and helping them optimize products and processes for shared value creation. Wang noted that automation is a key way that Cisco is working with its electronic manufacturing services (EMS) suppliers to improve supply chain efficiency, adding that the use of big data also has great potential.

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