NIE 2023 | Roundtable Discussion: Industrial Upgrading in Manufacturing

Low-end manufacturing needs to focus on scale and refinement, and then apply corresponding technological empowerment, such as industrial AI accelerators. If high-end manufacturing wants to upgrade, it first faces the problem of breakthrough bottlenecks. Re-inventing existing inventions is a painful process, but its difficulty is actually reduced compared to blank experience, so I am quite confident about this. In general, if manufacturing wants to achieve breakthrough transformation, mid- and low-end manufacturing needs to achieve scale through mergers and acquisitions, integration, etc., while high-end manufacturing needs to break through the domestic market and create new products.

The industrial upgrading of manufacturing can bring about efficiency and product variety improvement. This is both necessary and desirable, and it can guide the upgrading of industries such as batteries. Regionally, the Yangtze River Delta is the leading area for manufacturing industrial upgrading. Our company has R&D centers in Changzhou, Shanghai, Suzhou, Kunshan, and other places. These regions have distinct industrial advantages, mainly due to the gathering of talent. In addition, there are favorable policies supporting the rapid development of manufacturing locally, such as Changzhou's pursuit of becoming a "trillion-dollar city." These favorable policies can drive the common development of related industries such as new energy vehicles and photovoltaics. Secondly, the local areas have relatively solid supply chains, which can enhance the core competitiveness of enterprises.

As President Liu mentioned, the Yangtze River Delta region also has an interesting advantage. The area is close to the sea and is closer to countries such as Japan, South Korea, Taiwan, and the United States, making Shanghai or Hong Kong the preferred destinations for foreign investors when they come to China. There is a leading effect here that can lead to many industrial divisions of labor. The Yangtze River Delta has been known since ancient times as a wealthy region in the south of China. With such a historical heritage, and the people of the Yangtze River Delta being down-to-earth, reliable, and low-key in their approach to things, these are all characteristics derived from the local historical heritage and are also one of the important genes for local enterprises to grow bigger, stronger, and go further.

I also mainly handle business in second- and third-tier cities along the Yangtze River Delta. The port export capacity, throughput, and talent capabilities of this region are indeed as the two experts mentioned, its local strengths. I would like to add some of my personal insights; I believe that talent is still at the core. For example, our enterprises in Suzhou tend to be more pragmatic, allowing us to solidly implement many new concepts. Additionally, we have a relatively large number of international talents because historically, places like Suzhou and Kunshan have been areas favored by foreign manufacturing enterprises.

Going global is a priority. Currently, many industries are highly competitive, making it an important strategy to develop overseas operations. We are currently preparing to set up branches in North America, Southeast Asia, and other regions.

The localization and substitution of chips is also an opportunity, especially for chips used in industry and military applications. Affected by international relations, there is currently a shortage in this area, leaving some opportunities available.

We also plan to migrate our business to Southeast Asia following the customer's lead, mainly to avoid high costs caused by marginal political issues and exchange rates. Many people think that migrating to the Southeast Asian market can reduce labor costs because local wages are about one-third of those in China. However, since local working hours in Southeast Asia are much shorter than in China, this does not actually reduce labor costs.

The lithography machine sector can still be broken through. First and foremost, we need to achieve domestic substitution for more high-end core components. Secondly, we must actively participate in international competition by going global and integrating into overseas business processes.

I believe that manufacturing is the foundation of a country. By developing high-end manufacturing on the basis of consolidating the manufacturing sector, we can remain invincible. At the same time, we must also vigorously embrace emerging industries such as new energy vehicles and AI, integrating manufacturing with terminal applications. By understanding the trends and directions of terminal applications, we can continuously enhance the commercial value of manufacturing products.

From a software perspective, one difficulty lies in the domestic confidence in domestic software rather than blindly pursuing overseas software. The second difficulty is intellectual property rights, as many domestic software products suffer from plagiarism issues. To solve this problem, we encourage continuous innovation internally to drive product iteration.