Read our latest guide for manufacturers looking to adopt data-driven production in the China-APAC region. This eBook goes through the opportunities and challenges that exist in the market for European manufacturers. Plus, we go over how to overcome the challenges to ensure your success today and into the future.
Challenges for manufacturers in adopting data-driven production and networks Insights into innovative technology and global network solutions to support your Europe-Asia operations
Table of Contents
Networking across borders in the Digital Age
4
Importance of manufacturing in Europe and Asia
7
Top 5 Reasons European firms see the economic and technological potential of China-APAC region
9
Overcoming the challenges for manufacturing companies operating in China-APAC region
15
Your checklist for successful operations in China-APAC
22
How China Telecom (Europe) can support you
23
Get ahead with interconnected manufacturing
29
2
3
Networking across borders in the Digital Age
as machine learning, cloud computing and big data analysis, one area in particular is currently the focus of the fourth industrial revolution: operational technology (OT), and in particular the Internet of Things (IoT). The Internet of Things uses IT and communication technology to network physical and virtual objects. In private households, this is implemented as a smart home, for example, to switch lamps on and off or regulate the heating via your smartphone. In industrial context with the smart factory, the possibilities are many times greater. Automated processes from ordering to delivery can not only increase efficiency and productivity, but also significantly reduce mistakes by collecting data for error analysis along the entire value chain. It is no coincidence that the global industry has invested upwards of 128.9 billion USD in IoT for 2020. 4 The largest share of this spend is accounted for by IoT services and the corresponding hardware and software. Forecasts for the next few years predict a further increase in IoT investments. By 2025, these are expected to amount to 411.9 billion USD, more than three times the amount spent in 2020.
From the first craftsman to the invention of the assembly line and ultra-modern mega- factories, the manufacturing industry has always been shaped by new ways of producing using innovative technologies and solutions. And to a certain extent, it is even dependent on these developments. Manufacturing is constantly confronted with having to respond to greater demands, changing requirements and complex challenges. For your company, the willingness to innovate is therefore not just a nice-to- have, but a requirement to ensuring long-term competitiveness.
Entire business models are being rethought or newly developed. This is because networking not only takes place within a company, but also across industries. This is seen in many companies in the manufacturing industry that are connected with suppliers, logistics companies and technical service providers. In Europe, around 66% of manufacturing companies use at least one digital technology like IoT, AI, Big Data, etc. 1 As you dig into this further, the contrast in the size of the company is stark. Only 30% of companies with fewer than ten employees have already introduced digital technologies, while this figure rises to 79% for companies with more than 250 employees. However, most view Industry 4.0 technologies becoming more widespread in the near future. For instance, 33% of companies plan to implement solutions around virtual or augmented reality in the coming years. 2 And 64% also want to use networking sensors, while 22% plan to use robotics. Interestingly, there are already an average of 225 robots per 10,000 employees in Western Europe and 204 robots per 10,000 employees in Northern Europe - the highest robot density in the world of manufacturing. 3
Transformation towards Industry 4.0
The digital age is also influencing and reshaping the entire business world. Industry 4.0 is driving digitisation and networking by integrating production with information and communication technology. This uncovers extensive optimisation potential such as minimising production costs, reducing manufacturing times, and increasing the transparency of your supply chains.
411.9 Billion USD to be spent on IoT by 2025
The term Industry 4.0 relates to the three previous industrial revolutions. Each of these time periods accelerated the development of business and industry with major technological advancements.
Internet of Things driving greater change
Comparion of Europe to Asia for IoT
In addition to transaction technologies such as e-commerce platforms and blockchain, as well as information technologies such
Germany, the UK, France, Italy, Spain and the Netherlands are leading in Europe with regard to the use of IoT technologies. 5 Eastern
3 - https://ifr.org/ifr-press-releases/news/robot-race-the-worlds-top-10-automated-countries
1 - https://www.eib.org/attachments/efs/eibis_2019_report_on_digitalisation_en.pdf
4 - https://iot-analytics.com/2021-global-iot-spending-grow-24-percent/
2 - https://www.pwc.de/de/digitale-transformation/digital-factories-2020-shaping-the-future-of- manufacturing.pdf
5- https://www.cbi.eu/market-information/outsourcing-itobpo/industrial-internet-things/market- potential
4
5
Importance of manufacturing in Europe and Asia
industry and the market in China-APAC, why tapping into the market is worthwhile and how to build the necessary digital infrastructure locally.
European as well as Nordic countries are also increasingly strengthen the country‘s using the technology. In 2019, the European manufacturing industry invested €17.8 billion in IoT technology. In fact, European industrial companies are devoting larger portions of their budgets to IoT year after year. 6 This is because the variety of solution applications increases with every innovation. For example, just under a quarter of the companies surveyed plan to use IoT to optimize their own supply chains in the next few years. 7 Among European countries, IoT is taking a particularly powerful role in the German industry: 98% of leaders in C-level positions rate the technology as the most important from the Industry 4.0 space, according to one study. 8 In the rest of the world, only 72% of CXOs see it similarly. Especially in Asian companies, the use of IoT and also cloud computing is low compared to North America and Europe. At the same time, there are more government initiatives in Asia that promote the use of innovative digital technologies. 9 The Chinese and Asia-Pacific markets in particular offer enormous sales potential that European companies can secure through the use of intelligent technology. For European companies, there is an opportunity in the Asia-Pacific (APAC) region that needs to be seized. In this e-book, you will learn what you need to know about the manufacturing
The manufacturing industry transforms raw materials into important resources for other sectors. Through the production of goods and products, it epitomises economic activity and is the foundation of productivity and stability for the global economy. It is no wonder that almost every tenth company in the European Union belongs to the manufacturing industry. 10 In the APAC region, especially in China, the manufacturing industry has played a key role for some time.
the United States. China‘s manufacturing industry is responsible for nearly 4 trillion USD of the country‘s total economic output in 2019. According to Xiao Yaqing, Minister of Industry and Information Technology, China offers the most comprehensive industrial system in the world, leading in 40% of the 500 most relevant industrial products. 12
Manufacturing industry in Europe and Asia
Made in China 2025
With more than two million companies and almost 30 million employees, the
The enormous capacity of the Chinese manufacturing industry clearly reflects China‘s importance in the global economy. The tradition- rich country, which just a few decades ago was heavily agricultural, has developed ever more rapidly from an emerging market to an industrial state. Within just forty years, China has managed to increase its own gross domestic product (GDP) by a factor of 225. 13 To further enhance the efficiency, structure and quality of China‘s manufacturing industry, the Chinese government unveiled the Made in China 2025 strategy paper in 2015. It is intended to upgrade and strengthen the country‘s own
manufacturing industry is a central building block of the EU economy. 10 The European manufacturing portfolio is highly diversified and enjoys a strong reputation globally. In 2019, the sales value of industrial products in the European Union amounted to €4,943 billion (in 2020, it was only €4,599 billion due to Covid-19). 10 Overall, 22 percent of industrial products worldwide came from Europe. 11 However, this is still nothing compared to the output of the Asian manufacturing. More than every second industrial product comes from Asia. Countries such as India, South Korea and Japan lead the way here. However, there is one country that is far ahead of all others in terms of manufacturing output: China. Since 2010, the China has occupied the top position in the global manufacturing industry. China accounts for 28.37% of global manufacturing output; +10% higher than the longtime leader,
6 -https://www.bain.com/insights/europeans-extend-their-lead-in-the-industrial-
internet-of-things/
7 - Logistics and Supply Chain Technology Report 2021
8 - https://www2.deloitte.com/de/de/pages/innovation/contents/industrie-40-
studie-bereit-fuer-den- wandel.html
9 - https://iot-analytics.com/industry-4-0-adoption-2020-who-is-ahead/
10 - https://ec.europa.eu/eurostat/statistics-explained/index.
php?title=Manufacturing_statistics_-_NACE_Rev._2
11 - https://howmuch.net/articles/map-worlds-manufacturing-output
12 - http://german.china.org.cn/txt/2021-09/14/content_77751721.htm
13- https://www.degruyter.com/document/doi/10.21078/JSSI-2020-487-17/html
6
7
Top 5 Reasons European firms see the economic and technological potential of China-APAC region
No matter whether you want to establish a presence in China-APAC or expand your existing presence, entering the Asian market is worthwhile. Companies in the manufacturing industry have the unique opportunity to benefit from the steadily increasing potential of the region and to position themselves internationally.
industry and to make it more resilient in light of international competition. The program includes the following points, among others: → The realisation of five major projects, also called five initiatives, before 2025, including the establishment of research, innovation and development centers, the development of innovative high-tech facilities in key industries, smart manufacturing, sustainable and green production, and the strengthening of industrial bases, thus ensuring widespread self-sufficiency for core materials and components in key industries. → Increasing the innovation, efficiency and quality of the industry and solving existing problems such as insufficient production quality or pollution caused by the industry. → Increasing the supply capacity of the manufacturing sector. → Strengthening the vitality and productivity of companies by renewing systems and mechanisms. → Better allocation of resources by market and government. → Expanding openness to international
profitable but not always easily accessible markets of Japan and South Korea, the lower profile countries in the region represent worthwhile investment options. With Bangladesh, Myanmar, Taiwan and Vietnam, four locations in the APAC region are in the top ten areas in the world with the highest growth in gross domestic product in 2020. 15 The ASEAN region (Association of Southeast Asian Nations) is particularly noteworthy. In 2020, the estimated total GDP of all ASEAN countries was about 3.08 trillion USD, a significant increase from previous years. In fact, the GDP of the ASEAN region has been surging for several years, reflecting the region‘s thriving economy. Forecasts see the region growing to be the fourth largest economy in the world by 2030. 16
Similar initiatives in theAPACregion
The Asia-Pacific region comprises a large number of diverse economies with a wide range of industries. In general, industrial development in Asia since the end of the SecondWorldWar has been exceptional. Most spectacular was the rise of Japan as a global industrial superpower in the early postwar decades. More recently, the focus has been on countries like South Korea, Taiwan and Malaysia. Yet, Asia‘s industrial output is still far smaller than its share of the world‘s population. In addition, although heavy industry has always been important to the economies of the larger Asian countries, light industry there stands out most. China is not the only country in the APAC region with a plan to strengthen its own manufacturing industry. India‘s Make in India program, for example, also aims to develop the high-growth manufacturing sector. Japan has the Industrial Value-Chain Initiative - a body composed of industrial and academic members working to promote smart manufacturing for a connected industry. South Korea‘s Manufacturing Innovation 3.0 , Singapore‘s Smart Nation Programme , Thailand‘s Thailand 4.0 and Malaysia‘s National Industry 4.0 Policy are all initiatives that work to develop manufacturing in their respective countries.
1. Huge Consumer market growth
The APAC region is home to 4.3 billion people, or 60% of the world‘s population. 14 With 1.4 billion inhabitants, China is not only the most populous country in the world, but also the second largest economy in the world. 15 The economy is growing relentlessly and even if the gross domestic product has only risen by a comparatively few percentage points in recent years, there is little reference to stagnation. For instance, economic growth of 8.4 percent year-on-year is forecast for 2021. 15 At the same time, people in China are becoming wealthier. Estimates for 2030 predict that the Chinese middle class - incidentally the largest in the world - will be responsible for almost a quarter of global consumption. 15
cooperation and contributing to the global transformation of the manufacturing industry.
Made in China 2025 was inspired by the German government‘s high-tech strategy Industry 4.0 . However, the implementation of Industry 4.0 technology is only one part of the strategy. It goes far beyond that and plans nothing less than a complete restructuring of manufacturing in China.
Producing for the entire APAC region
2. Digitally savvy and enthusiastic about tech
But it is not only the market potential in China that is huge. Particularly with regard to the partly oversaturated markets of the West, the entire APAC region offers promising business prospects. In addition, to the fundamentally
Digital technology has long been an integral part of everyday life in the APAC region. Japan and South Korea
14 - https://asiapacific.unfpa.org/en/node/15207
15 - https://www.statista.com/statistics/796245/gdp-of-the-asean-countries/
16 - https://www.austrade.gov.au/asean-now/why-asean-matters-to-australia/asean-economic-growth/
8
9
IoT, which require a lot of bandwidth, cannot develop their full potential or cannot be used at all. And even existing technology may not run reliably. The consequences range from relatively minor issues such as poor accessibility to serious business risks such as downtime and lost revenue from the inability to run operations. Chinese companies are far removed from such worries. There are 916,000 5G base stations in China. That corresponds to 70% of the global stock. Even on the summit of Mount Everest, climbers can access uninterrupted 5G network thanks to the base station set up there by China Telecom - at 8,848 meters, the highest base station on earth. 22 The world‘s lowest base station is also located in China, more specifically in the Xinyuan coal mine in Shanxi province. Here, a station was built 534 meters below the surface with investments from the government. The local manufacturing industry in particular benefits from the extensive 5G infrastructure, as it is the basis for building fully digitalised and increasingly automated smart factories. For example, 100 initial pilot projects are already concretely planned, with a further 1,000 factories to follow.
necessary for adoption are not equally present in every country in Europe. In the Nordic countries Finland, Sweden and Denmark in particular, digitisation is already well advanced in various relevant areas. While countries such as Italy, Romania and Bulgaria; on the other hand, still urgently need to catch up. Greece also ranks last in terms of connectivity. In contrast, the Chinese government is driving digitalisation forward on a massive scale. The importance of transformation as an economic driver was recognised in China years ago, and digital solutions are firmly anchored in industry today. In the southern Chinese economic area of Guiyang ( 贵阳 ), for example, over 85% of local industrial companies use cloud technologies. 21 For manufacturing companies from abroad, this builds up optimal conditions for the use of new technologies and the establishment of smart factories.
in particular are well-known for innovative developments and widespread use of modern technology. The ASEAN region is the fastest growing internet market in the world with 125,000 new users per day. 17 And then, China, in particular, is now more digitally savvy than almost any other country: the majority of global e-commerce sales comes from China. Almost two-thirds of the population (close to a billion people) use a smartphone and more than a third pay via WeChat Pay or Alipay, dominant mobile payment platforms in the country. 18 A report by the World Economic Forum puts China in first place by a wide margin in the global ranking of digital competitiveness (also notable, Indonesia is another country in the APAC and ASEAN region in the top 10). 19 The will to digitise and technological optimism are important factors in the strengthening of the Chinese economy.
ASEAN includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
3. Largest 5G network in the world
An enhanced digital infrastructure is integral to technological development. Of particular importance are fast, stable internet and high quality connections. Although Europe is a global leader in the development of 5G technology, it lags significantly behind in 5G deployment. If current trends continue, 5G will account for just 35% of networks in use in Europe in 2026. Insufficient connectivity can have major drawbacks. New technologies like
916,000 5G base stations in China (70% of global stock)
Nationwidedigitalisation
Digital transformation is also a key topic in the European manufacturing industry. Nine out of ten industrial companies think that digitalisation is more of an opportunity than a risk for them. 20 However, the conditions
5G network will grow denser in the future
China is still a long way from reaching its goal when it comes to 5G. The national
17 - https://www.weforum.org/projects/digital-asean
18 - https://newzoo.com/insights/rankings/top-countries-by-smartphone-penetration-and-users/
19 - https://www.weforum.org/agenda/2021/09/countries-rank-highest-digital-competitiveness/
21 - https://www.presseportal.de/pm/134463/4911452
20 - https://www.pwc.de/de/digitale-transformation/digital-factories-2020-shaping-the-future-of- manufacturing.pdf
22 - https://www.maschinenmarkt.vogel.de/china-beschleunigt-5g-rollout-fuer-die-fertigungsindustrie-a- 1061472/
10
11
is declining. For example, Hong Kong and Singapore built their economies through manufacturing but have gradually shifted to services. South Korea is a special case, while it is considered highly developed, industry still generates a large share of GDP. In emerging India, a similar development to China is being seen. The service sector accounts for 53.89%, while industry is 25.92% and agriculture 20.19%. 28 ASEAN countries such as Vietnam, Indonesia, Thailand and Malaysia are also moving from an industrial to a service- focused economy - albeit at a much slower pace than China and India. Industry still accounts for the bulk of GDP there. For foreign manufacturing companies, the shift in focus in the APAC region represents an opportunity to fill the gap. You can use smart solutions, automated processes and robotics as a competitive advantage. Using them will not only enable your company to increase efficiency and productivity, but also to meet and optimise health and safety standards.
government‘s step- by-step plan envisages a significant expansion by 2023. This should give 560 million people in China access to the 5G network. In addition, the government passed an economic stimulus package in the amount of 4.8 trillion USD in March 2020. 23 Beyond 5G expansion, these actions are intended to promote new data centers, artificial intelligence (AI) and smart manufacturing. But 5G also plays an important role in large parts of the rest of the APAC region. In South Korea, where the first 5G network was set up, 60% of mobile communications are expected to run on 5G by 2025. Today, 5G is already available in 85 cities there. In Thailand, there are already 24 cities (as many as in the advanced economy of France). At present, 5G expansion in the ASEAN region is primarily determined by questions of financing. With appropriate funding, a good 200 million people could have access to 5G there by 2025. 24 Singapore, an economically advanced nation, is currently leading 5G developments in ASEAN, having launched 5G in 2020. By 2025, the city-state is expected to have nationwide 5G network coverage. Vietnam, Thailand, Malaysia and the Philippines are pursuing similar goals. Businesses like yours could also benefit from this progress in infrastructure when expanding to China-APAC region. These developments only help to build the case for setting up smart factories there.
4. Increasingly mixed sector economies
The role of the manufacturing industry varies greatly across APAC countries and is highly dependent on their level of economic and socio-economic development. This can be illustrated very well by the example of China. The country has long been considered the workbench of the world . The export of consumer products of all kinds and the production of mass-produced materials brought the country rapid economic growth from the early 1990s onwards. 25 Between 2007 and 2017, production costs in the China rose by a full 60% due to this development. 26 This is one reason why the Chinese government has been promoting a new normal since 2014: a phase of transition in which economic growth is comparatively moderate at 6%-7%. Although China is still the world leader in manufacturing and exports, the contribution of industry to GDP has shrunk continuously over the past decade (the Made in China 2025 program is therefore no coincidence). At the same time, the share of the service sector has grown by more than 10% since 2010 and now accounts for the bulk of GDP. In Beijing, it even reached a share of 83.1% in 2019. 27
An additional opportunity for your manufacturing company is, for example, to offer a pay-per-use or production-as-a-service model. In this case, you sell production capacities to other companies. Data- based business models, i.e. trading with product and production data, are also an option in this context.
5. Foreign expertise is needed
The industries of many APAC countries are highly concentrated in specific manufacturing sectors: for example, electronics in Malaysia and Vietnam, automobiles and packaged food in Thailand, machinery and petrochemicals in Indonesia, semiconductors, packaged
APAC economies are in transition
This shift can also be observed in other APAC countries. Advanced economies are mainly focused on the service sector, while the importance of agriculture and industry
food and apparel in the Philippines, biopharmaceuticals and aerospace components in Singapore. Insufficient
25 - https://www.bpb.de/izpb/275570/von-der-werkbank-der-welt-zur-innovationswirtschaft
23 - https://news.sap.com/germany/2020/08/china-industrie-intelligent-resilienz/
26 - https://www.welt.de/finanzen/article187572810/China-Die-Werkbank-der-Welt-hat-ihren-Zenit- ueberschritten.html
24 - https://www.aseanbriefing.com/news/investing-in-aseans-digital-landscape-new-opportunities-after- covid-19/
27 - https://www.china-briefing.com/news/fuehrende-trends-im-chinesischen-dienstleistungssektor/
12
13
28 - https://statisticstimes.com/economy/country/india-gdp-sectorwise.php
Overcoming the challenges for manufacturing companies operating in China-APAC region
One thing is certain, the China-APAC region represents a huge opportunity for manufacturing companies. But to make the most of it, you need to be aware of the challenges it presents and how to address them.
diversification may become problematic for countries in the future - especially in terms of global supply shortages and unstable supply chains. China would like to avoid such a situation for itself and is therefore - as Made in China 2025 demonstrates - increasingly relying on production in its own country. However, as rapidly as the Chinese manufacturing industry has grown, it is still has its shortfalls. In the past, the main focus was on large-scale production. While the focus on quantity used to be a clear competitive advantage, it is more problematic in times of increasing quality and sustainability awareness. Chinese industry has recognised these issues. However, the move towards quality-oriented manufacturing is proceeding at a slow pace. Compared with other advanced manufacturing nations such as Germany, Japan and the USA, China is also falling behind in the areas of efficiency and structural optimisation. For instance, the situation with skilled workers where in a survey from 2017, 52% of the participants stated that skilled workers in China had only limited opportunities for further development. 29 More than one- third also said that professionals lacked qualifications and skills. One reason for this is that training and studies in the industrial sector in China often cannot keep up with Western quality standards. In addition, academic professions are generally held in higher esteem in China than technical ones
and are therefore more attractive for qualified young people.
Benefiting from the European-Chinese partnership
For European manufacturing companies, this presents an opportunity to profitably contribute their expertise and position themselves in the Chinese market. Not only does China welcome the quality of European industrial products; China is also the EU‘s most important trading partner. With an import and export volume of 586 billion euros, European-Chinese trade accounted for a full 16% of the EU‘s total trade in goods in 2020. 30 Accordingly, the European Union is working hard to ensure fair competition in China. For example, the Comprehensive Agreement on Investment (CAI) negotiated between the EU and China since 2013 is intended as a first step towards opening up the market. Among other things, this agreement provides for a ban on forced technology transfer and requirements for state-owned enterprises to conform to market standards. In addition, China committed itself to opening its own markets as early as 2001 in the course of its accession to the World Trade Organization (WTO) - a lengthy process that is still ongoing but offers good prospects for European companies in the future.
#1 Challenge: Culture and Language
China is a country steeped in tradition that is proud of its millennia-old culture. Chinese influence is also still evident in many other countries in the APAC region, especially in language, cuisine and customs in neighbouring countries. At first glance, the rich cultural layer as well as common bias may be unsettling. The worry of offending in tone or hurting cultural mores is a common concern in contact with foreign partners - especially who are far away in the APAC region. The language barrier poses an additional challenge. After all, in the manufacturing industry, very precise communication and mutual understanding are essential. The Chinese language family in particular, with its many different dialects, tonal pronunciation with a few exceptions, and use of written characters, is structured quite differently from European languages. This also applies to many other languages in the region: complex writing systems are found in Thai and Japanese, for example, and tonal languages are spoken in Vietnam and Laos, among others. Although more and more people in the APAC region are learning English, you should not take it for granted that your counterpart speaks the language.
Exceptions are countries like India, Malaysia or the Philippines, where English is an official secondary language and therefore more widely spoken.
29 - https://www.imove-germany.de/de/alle_news/China-Fachkraefte-in-der-Gesellschaft- unterbewertet.htm
30 - https://www.destatis.de/Europa/DE/Thema/Aussenhandel/EU-Handelspartner.html
14
15
connectivity is one of the biggest challenges for manufacturing companies. In the worst-case scenario, this can lead to production downtimes and stops. Unnecessary production downtimes lead to losses in two respects: financially on the one hand, but also in terms of the reputation of your company. Customers as well as your partners can lose trust and possibly even leave. If you want to digitise your supply chain and integrate suppliers, sufficient connectivity is essential in order to be able to obtain the resources required for production and to remain capable of acting as a production company. In addition, poor connectivity can also hinder your data collection and analysis, as well as sharing between multinational teams. In the end, benefits from solutions like Enterprise resource planning (ERP) software will not be fully realised.
viable commercially via digital channels. In addition to the connectivity already mentioned - the quality of which is the basis for establishing a connection between the various locations at all - you need software and hardware solutions to meet your requirements.
How you can address this challenge:
How you can address this challenge:
Choose a reliable telecom provider that can provide you with versatile connectivity services and solutions. These solutions must have sufficient bandwidth and low latency. At the same time, they should be future- proof, meaning they can handle exponential growth in transactions and data exchange. For instance, if you want to expand your production or set up manufacturing facilities in additional countries, you should be able to obtain high-speed Internet on site with the right telecom partner. #3 Challenge: Communication across different time zones Locations across multiple region with large distance brings further challenges because as a manufacturing company, you want to be able to view production at any time. This goes from viewing the premises of all your production facilities and extends to the digital retrieval of data and information. This includes monitoring of production statuses in order to read progress or troubleshoot issues in products or process. It is essential so that operations can be designed efficiently and adjusted quickly if necessary. A time difference of several hours makes the exchange with your production site in China-APAC region even more difficult - especially since more advanced manufacturing requires exact timings and the fulfillment of precise scheduling agreements. However, communication is almost only
Don‘t see cultural differences as an obstacle. Cultures throughout the APAC region are extremely diverse. Chinese culture alone is so diverse that it is difficult to speak of one culture. Get involved in constantly learning new things and you will be richly rewarded. Also, as a rule, most people are open-minded and extremely forgiving. They will forgive you for small faux pas. In order to be optimally positioned, it makes sense to have the support of local specialists for the region. This is not only about understanding cultural subtleties and avoiding missteps from the outset: With expert support, it is easier to penetrate and develop the local market and optimise cooperation with regional partners. The language barrier can also be overcome and the exact exchange of information for error-free production can be managed in this way.
#2 Challenge: Sufficient connectivity
If you are a manufacturing company headquartered in Europe and want to set up a production site in the China-APAC region, connectivity will be one of the most important issues you‘ll face. The quality of connectivity over such long distances will depend on many factors and it will affect the basic communication between headquarters and off-site location, the control of productivity and efficiency, and in the last instance, the stability of your entire production. Poor network performance and inadequate
16
17
How you can address this challenge:
How you can address this challenge:
You benefit most when your telecommunications provider provides you with comprehensive support in setting up or expanding your digital infrastructure. This means that you receive solutions from a single source that is well coordinated and meets your needs and requirements. In addition, you can be sure that everything complies with the regulations and legislation of the respective country. For example, in China there are strict requirements for storing and transferring data abroad.
The IT industry is responding to the rising cybercrime rate with increasingly effective developments. In addition to appropriate protection software, the basis of your digital security should be encryption of your channels. The best way to achieve this is with a VPN (Virtual Private Network) specifically for your company. A VPN redirects data traffic so that it cannot be viewed by third parties. This way, you can not only encrypt communication within your company, but also send data from Europe to China-APAC region without risk. Good to Know: The protection of intellectual property has increasingly improved in China in recent years. Chinese companies are more innovative than ever and have a great interest in protecting their ideas and developments.
Fortunately, a lot has happened in recent years and decades, especially in this area. Platforms that enable chats, meetings and file uploads have long been established. Neither time differences nor national borders are an obstacle to continuous exchange these days with the right solutions. By setting up a WAN (Wide Area Network, a geographically wide-spanning computer network), you can network your locations and optimise communication. Modern cloud solutions further simplify collaboration on an international level by making data and documents available regardless of time and location. The biggest opportunity, however, comes from modern technology in the form of IoT solutions that collect relevant machine, process and manufacturing data needed to analyse productivity, efficiency and process optimisation. With these, you can identify potential improvements, evaluate production processes and even discover new potential revenue streams, even from a distance. IoT solutions such as smart camera systems give you even more assurance that your production is running according to plan. Through automation alongside AI and Big Data technology, you can find more potential for optimisation.
at the same time, they rely on the powerful 5G network to deploy advanced technology solutions and connect their production.
#4 Challenge: Digital Security
Data security and cybersecurity are among the greatest challenges multinational companies who are dependent on digital technologies to bridge the large distances of their offices and production facilities. Cybercrimes such as hacking, sabotage or data theft should be of concern. Online crime also often targets industrial assets and inadequately protected operational technology. A study on cybersecurity in the manufacturing industry reveals that 60% of companies surveyed have not holistically protected their operational technology against cyberattacks. 31 Ultimately, the stability of your digital infrastructure is the foundation of successful cross border manufacturing operations. Intellectual property theft is also a concern, and one that is well justified against a backdrop of growing competition.
How you can address this challenge:
The strong roll out of 5G network in China and much of the APAC region is first and foremost a great advantage. However, you should be aware of the risks that come with it - even if they are small and the benefits far outweigh the disadvantages. With the aforementioned security measures and the right security strategy for your digital infrastructure with your telecoms provider, you can compensate for the issues with 5G architecture.
#5 Challenge: Risks and opportunities of 5G
5G is much more than a faster 4G network . The technology is much more focused on advancing software capabilities. This is a great advantage when implementing IoT solutions. However, vulnerabilities in software can also be exploited as a primary gateway for cyberattacks. Since all software systems have such vulnerabilities (especially in the early stages), this is likely to apply to the complex 5G software architecture as well. As mentioned earlier, manufacturing companies are particularly vulnerable to cybercrime - but
31 - https://home.kpmg/de/de/home/themen/2020/09/gefahr-durch-cyberkriminelle.html
18
19
Especially in the ASEAN countries, it is also difficult for foreign manufacturing companies to keep up with the low local production costs. Against this backdrop, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam are considered among the world‘s most difficult markets to access in the manufacturing industry.
more than two-thirds are optimistic about their business future in the China. Although the Chinese government‘s current five-year plan still aims to strengthen the domestic market, this also means opportunities for foreign companies - especially as Beijing has set its sights more on reforming the healthcare and social systems and the financial market in the near future. And under the CAI agreement, there are legitimate hopes of increasing market openness for companies from Europe. Low production costs and extreme competition should also not deter you. On the one hand, costs in ASEAN countries are also rising steadily as the economy grows. Wages in the Vietnamese manufacturing industry, for example, have risen by an average of 5% annually over the past five years. 34 On the other hand, production quality and equipment cannot keep up with European standards. To stay with the Vietnam example: the manufacturing industry there is still much more based on manual labour and less mechanised. Moreover, the level of qualification required is comparatively low.
#6 Challenge: Regulatory environment
In the future, there will probably be some changes with regard to international norms and standards. In Europe, for example, bodies such as the Industry 4.0 sub-working group (UAG I4.0) of the German- Chinese Commission for Cooperation
Rules, regulations and standards often vary from country to country. While international standards exist, they do not cover all relevant aspects. For multinational manufacturers, modern technologies raise questions in this regard. After all, these are often so new that certain standards have simply not yet been created. In addition, in a market as complex as the China-APAC region, there are sometimes very different approaches in the individual countries. In China, for example, regulations on production and distribution can vary from province to province or even city to city. It is very important for manufacturing companies to be aware of regional regulations. Because even if the differences are minimal, can lead to changes in production at great expense to your business or your manufactured goods may not be distributed - in either case, a financial loss is likely.
in Standardisation (DCKN) or the cooperation of the German
Standardisation Council Industry 4.0 and Plattform Industrie 4.0 with the Japanese Robot Revolution & Industrial IoT Initiative are already developing international standards for the digital manufacturing industry.
How you can address this challenge:
Entering a new market always involves a certain risk, but working with regional experts help. The case of China is special in that the Chinese state plays a more important role in the economy compared to European countries. However, Beijing is well aware of the importance of foreign investors and companies in its own country. According to a study by the EU Chamber of Commerce, 59% of European companies surveyed found; Foreign and Chinese companies are treated equally. 33 Less than a tenth intend to make no investments in China. In the manufacturing industry, only 4% intend to withdraw part of their investment from China, and just 1% intend to withdraw all of their investment. In contrast, 59% plan to expand their business in China. More than half of European companies also said they expect to have achieved an EBIT above the global average in China in 2020. And
#7 Challenge: Local competition in Asia
While the European-Chinese partnership is a mutual give and take at the international level, many companies fear entering the Chinese market. The main reason is the fear of being disadvantaged. State-owned enterprises, for example, are supported by the Chinese government and account for almost a third of the country‘s economic output. 32 However, non-state-owned companies have subsidies that are available, creating some advantage over competitors from abroad. At the same time, foreign companies in China encounter a fairly closed domestic market and already existing digital ecosystems and business networks.
How you can address this challenge:
Here too, the support of experts for the region is worth its weight in gold. It makes no difference whether you are still planning your expansion to China-APAC or are already active there. Due to the constant changes in local legislation, it is advisable to call in professionals for technological as well as legal or economic policy issues, for example, in order to avoid severe fines and production stops. Compliance expenses for the observance of requirements are worthwhile: as a rule, they make up for the risk of possible large scale penalties.
32 - https://www.bpb.de/izpb/275570/von-der-werkbank-der-welt-zur-innovationswirtschaft
33 - https://www.rolandberger.com/publications/publication_pdf/RB_BCS_EN.pdf
34 - https://www.bcg.com/publications/2020/manufacturing-strategy-built-trade-instability
20
21
How China Telecom (Europe) can support you
Your checklist for successful operations in China-APAC Now that you know the opportunities and challenges of the China-APAC region, you can maximise its benefits. It doesn‘t matter whether you are still planning to expand or are already active in the region. Use our checklist to know how well positioned your company is in operations and where there is still potential to optimise.
The key to successful production is to bring together specialised expertise and apply it in a targeted manner. With China Telecom (Europe), you can benefit from our expertise in two ways. On the one hand, as a leading telecommunications provider in China-APAC region, we are experts in what is the most profitable markets in the near future. Secondly, we offer a wide range of connectivity solutions and services to make your company Industry 4.0-capable through and through including SD-WAN, VPN, Multi- Cloud Access, CDN, IoT, low latency links and more. We are active in 21 countries in Europe and can therefore support European manufacturing companies quickly and personally on site. As a leading provider of private network services between Europe and China- APAC, we connect the Asia-Pacific region to the world with our Digital Silk Road. In addition to our 83,000-kilometer fiber optic network within China, we have an extensive infrastructure network of international land and sea cables. Thanks to our high-speed connections, connectivity between your headquarters and your production sites can be gained that include strong Service Level Agreements (SLAs). With our expert advice and active support, you can rely on guidance on technology and telecommunication issues - including legal compliance around your data. Our wide range of products enables you to build a secure, efficient and reliable digital infrastructure.
Are your offices equipped according to modern standards? Not only should your production be high-tech: The tech equipment of your offices and business premises affects your company‘s ability to act on data driven decisions. Is your infrastructure comprehensive? The better the individual elements of your digital infrastructure are coordinated, the more reliably and effectively they can work together. Construction and planning to create a single source of truth is therefore a clear advantage. A general alignment of your infrastructure is almost always profitable to ensure long-term competitiveness. Do you use Internet of Things solutions? The use of IoT technology is more than just a trend. With the help of smart tools and objects, you can collect, evaluate and data driven decisions as well as increase the profitability and productivity in your company. Robotics and autonomous solutions are especially beneficial for the manufacturing industry. Are your digital data channels protected? Cybercrime is on the rise worldwide. Your security strategy should not only consist of software protection, but also include your connectivity network. This way, you make communication between your different locations more secure.
Do you have productionmonitoring including capability to retrieve data? Even from thousands of kilometers away, you should always have an overview of your production and associated information. The possibilities here are diverse - with expert advice you could find game changing ways of operating. Are you using cloud services effectively? The application areas for cloud computing are versatile - from mere data storage to building complex software systems. By using it wisely, you can save costs, decentralize information for better collaboration and make processes more efficient. Are you able to fully realise your digital technologies? Reliable infrastructure and best-in-class connectivity are essential to leverage IoT solutions, modern communication tools, and applications like ERP software in your worldwide operations. Do you have the support of local experts? China-APAC experts can help you comply with regional regulations and avoid penalties. Language barriers can also be overcome with these valued advisors.
22
23
manufacturing company. And rest assured that the entire setup complies with Chinese cyber regulations. At the same time, you can rely on our services such as Bandwidth on Demand, Zero-Touch provisioning and 24/7 on-site device replacement to quickly adapt your network to specific situations such as new locations and operation sites.
China Telecom (Europe) solutions and services of interest to the manufacturing industry include:
Software DefinedWide Area Network (SD- WAN)
An SD-WAN differs from an ordinary WAN in that it has a reduced reliance on on- premise hardware and data centers. Instead, SD-WAN is more cloud and software based. As a result, SD-WAN is more powerful and effectively supports data protection and security measures such as firewalls, gateways, and VPNs. This also allows you to implement IoT technology, which requires stable connectivity. IoT-driven machines then achieve higher productivity and efficiency. At the same time, our SD-WAN can prioritise traffic to actively assist in completing time- critical jobs. In addition, the cost of an SD- WAN is significantly lower compared to a traditional WAN setup. China Telecom (Europe) SD-WAN solutions customise to your needs and the needs of your business. With SD-WAN Essentials you can network your sites and equip your SD-WAN with relevant features. SD-WAN Plus extends the Essentials package with additional useful features such as WAN optimisation or cloud connections to your infrastructure-as-a-service (Iaas) and software-as-a-service (SaaS) solutions. Whether you want network controls, secure and manage data, or provide access to employees, customers and partners, you benefit from maximum flexibility and security. All the while, you get the features and connectivity you need as a multinational
Dedicated Internet Access (DIA)
If your business is international, you need solid and flexible communication networks. Security, speed and scalability are critical to the growth of a networked manufacturing business. At China Telecom (Europe), we meet these needs with highly reliable international private lines. With a DIA, your company gets its own Internet access that it doesn‘t have to share with others. That means full use of bandwidth - without compromise, but at high speed on a fully managed network. Our high-quality Internet connections are thus a reliable basis for improving your digital infrastructure. Fast transit services and global connectivity allows internationally active manufacturing companies to act and facilitate communication across national borders with ease. Important data driven decisions can be made and passed on in fractions of a second. You can also integrate IoT solutions with high bandwidth requirements into your production and thus effectively modernise your manufacturing.
Virtual Private Network (VPN)
If your company uses public networks, it makes itself vulnerable to cyberattacks. Multinational manufacturing companies, where information transfer and communication primarily take place via virtual channels, are particularly vulnerable here. Lay the foundation for your digital security with our VPN solutions. In this way, you can prevent cyber criminals from sabotaging your production, accessing machines with digital interfaces or gaining access to sensitive company data. Plus, with your VPN, you can effectively bring together voice, video, data and cloud applications. With a VPN, you get the full bandwidth of your connection, so you can have the peace of mind that everything digital is running smoothly - from video conferencing to manufacturing monitoring. At China Telecom (Europe), you can choose between a Layer 3 Multi-Protocol Label Switching (MPLS) VPN and a Layer 2 Virtual Private LAN service (VPLS) VPN. Our MPLS
24
25
Page 1 Page 2-3 Page 4-5 Page 6-7 Page 8-9 Page 10-11 Page 12-13 Page 14-15 Page 16-17 Page 18-19 Page 20-21 Page 22-23 Page 24-25 Page 26-27 Page 28-29 Page 30Powered by FlippingBook