East to West – The Chinese Model gains traction in the global manufacturing industry


QINGDAO, China, Dec. 24, 2017 — The New York-based Institute of Electrical and Electronics Engineers (IEEE) announced a proposal to develop an international mass customization standard led by Chinese electronics manufacturer Haier at the National Engineering and Scientific Commission (Nescom) Conference held on December 6, local time. It is the first international standard created by IEEE based on the model and to serve as its technical framework since the organization was launched over 50 years ago. It is also the first time the development of an international standard was led by a Chinese company. This is yet another opportunity for China to showcase the Chinese Model, a third component of the redefining of the term “Made in China“, in addition to Chinese Product and Chinese Brand.

Currently, governments are focusing on and supporting the fast-growing digital-enabled industrial production and investment sectors. The world's manufacturing industry is looking for the best path to the next stage of its transformation, with IEEE providing a universal and scalable approach for upgrading manufacturing processes worldwide. The aim is to accelerate the progress of the new industrial revolution.

Why is China being the one to provide what becomes the selected standard? When it comes to the topic of the new industrial revolution, China, Germany and the USA are the countries coming up with their ideas. However, the ideas that end up getting the most traction, and becoming the trendsetter, these days, are practices developed in China.

In 2016, Dr. Winfried Felser, deputy managing director of the management and application center for logistics business at Germany-based Fraunhofer-Gesellschaft, said in his article published in The Huffington Post that “In the Industry 4.0 era, our efforts relied heavily on linear thinking, automation and the “efficiency trap”…, however, it will take both human-centric solutions and digitalization to help Germany win and strengthen its leadership position in the world.” Industry 4.0 critic Prof. Andreas Syska pointed out that “the human-centric Society 4.0 is bound to replace the technology-focused Industry 4.0.”

American freelance writer Chris Neiger said in the 3 Reasons Trump Should Worry IoT Investors published in The Motley Fool, a leading US-based financial information website for investors, in January 2017, that there is “pressure on manufacturing companies to keep people employed in jobs that could instead be automated with IoT tech…. If the Trump administration backs away from IoT investments, expect China's lead on the U.S. to widen even further.”  

By contrast, Haier, an iconic Chinese company, incorporates the user of the product into the industrial system and considers him or her as the core, the major player and the driver in the industrial transformation process. In addition, the company empowers the user to be a part of every step throughout the creation process with the aim of moving from Zero to One and transforming from mass manufacturing to mass customization.

It should be noted that the definition of mass customization is different from the concept of customization. Mass customization does not refer to the low production efficiency at a manual workshop and goes beyond providing the end user with module options. Instead, it allows the user to participate in the innovation process and the result of that process as well as benefit from the value generated throughout the life cycle.  

In fact, the concept, originally called the Prosumer concept, originated in the USA. As early as 1970, American futurologist Alvin Toffler presented the idea of mass customization in his book Future Shock. Later, the idea took root and began to mature in China.

As for the reasons behind the trend, an industry watcher noted that “Industry 4.0 is not the reindustrialization of industry. It represents the socialization of industry and especially, the mass socialization. The trend is fully embodied in Haier's practices.”

In 2005, Haier announced the rendanheyi business model, which transforms users to lifelong users and reshapes employees as creators. In addition, the model creates a long-term cooperation, co-creation and win-win relationship among users, employees and the brand rather than the one-time buyer-seller relationship.

The management change creates an ideal structural and cultural environment for mass customization. However, it is not likely to gain acceptance in European and American companies that rely heavily on linear management. The creation of the rendanheyi model by Haier paves the way for the development of the mass customization model, which gives users an opportunity to engage in every step of the process on Haier's platform.

Nowadays, technology reduces the distance between point A and point B anywhere on this planet. The One Belt, One Road initiative creates favorable conditions for the East to meet the West. “Made in China” is accelerating the transformation from Chinese Product, Chinese Brand to Chinese Model.

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