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China is embarking on an innovation-driven transformation and upgrading of manufacturing to enhance global competitiveness and foster high-quality development for the long run, Deloitte said, as its latest report found most surveyed manufacturing companies are seeking innovation in products, services and technologies.
The 2021 China manufacturing innovation report found that 32 percent of surveyed companies achieved innovations in products and services during the past three years, while 31 percent and 19 percent of those companies have been engaged in technological innovation and management innovation activities, respectively. Nine percent of the companies are seeking green innovation, and 8 percent worked on innovation in business models.
"China has made strides in boosting innovation in manufacturing, powered by its huge manufacturing system and the market-oriented application innovation," said Jill Qu, director of Deloitte China Research. "However, there is still a long way for China to pursue innovation-driven and high-quality development of manufacturing."
Rising uncertainties and risks have emerged amid the spread of the COVID-19 pandemic, and China's manufacturers need to ramp up efforts in core technologies and manufacturing key equipment to build a high-end manufacturing system, and foster green, low-carbon and sustainable development, Qu said.
The report said while surveyed manufacturing enterprises are focusing on building digital technology capabilities and research and development strengths, they have not yet come up with clear technological innovation strategies and mechanisms to boost sustainable and effective innovation.
The report also found that companies still face many significant challenges, such as talent shortages and lack of innovation mechanisms. Though considerable innovation progress was seen in fields such as information management, human resources and financial management, most of the surveyed enterprises have not built a management innovation mechanism.
"Innovation is closely linked to a wide range of fields including products, services, technologies, business models, corporate management and sustainable development," said Ricky Tung, leader of industrial products and the construction industry sector at Deloitte China.
"Such various types of innovation activities will complement each other. For instance, products and services innovation usually requires the support of technological innovation, and the effectiveness and sustainability of innovation activities are closely linked to management innovation."
Given the precarious global situation, the report suggested enterprises build systematic innovation capabilities through ways such as setting clear and quantifiable targets and designing assessment criteria.
During the first 10 months, investment in the high-tech manufacturing sector jumped 23.5 percent year-on-year in China, said the National Bureau of Statistics.
"The development of advanced manufacturing is conductive to strengthening the industrial chain and injecting new impetus to the economy," said Luo Zhiheng, deputy director and chief macroeconomic analyst at the research department of Yuekai Securities.
Looking ahead, Luo said manufacturing investment will rise next year amid improved profitability and government incentives to reduce carbon emissions and strengthen industrial chains.