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Siemens sees opportunities in China’s manufacturing transformation

By Feng Xuejun (People's Daily)    10:19, December 20, 2017

Dr. Roland Busch, CTO of Siemens AG, gives a speech on the Innovation Day, Munich. (Photo: Provided by Siemens)

Munich (People’s Daily app) – Siemens AG Chief Technology Officer Dr. Roland Busch shared his positive outlook on the “Made-in-China 2025” and “Belt and Road initiative” in an interview with People’s Daily on the sidelines of Siemens AG’s Innovation Day Event, Dec. 15, noting that Siemens sees great opportunities in China’s manufacturing industry transformation.

Dr. Roland Busch (left) receives an interview from People’s Daily. (Photo: People’s Daily/Feng Xuejun)

People’s Daily: How do you define innovation?

Roland Busch: Innovation is all about people. You have to really encourage people to be as creative as possible, and bring in their competence. As a company head we have to try to help and support them in doing so.

First of all, you have to allocate enough capital to make them really have a chance to play. Secondly, we have to build up our own ecosystem; we are working very closely with our partners.

The third thing is that we really drive our innovations in the focus of our customers.

Journalist from People’s Daily (right) tests the Siemens Digital Twins. (Photo: People’s Daily Online/Jiang Jie)

People’s Daily: An Artificial Intelligence (AI) Lab recently was opened in Munich to serve as a co-working space for evaluating the feasibility of new ideas. How do you value AI?

Roland Busch: Firstly, when we talk about AI, we talk about bunches of technologies associated with AI. It is deep learning; it is enforce learning... It's all about creating value of data. So in order to do that, you need all these technologies.

Secondly, this technology will be used in all industries which are going on the digital path. No matter what you do, you need AI capability. This is the reason why Siemens builds up artificial intelligence experts at a fast speed.

China is rightfully pushing AI R&D now because it is the technology, which is now changing all industries. Sizing the population, the good education system in China, in my prediction, the developing progress of AI will go easily in China. With the encouragement from the government, the impact will grow very fast in AI field. The AI community will grow strong in China quickly.

People’s Daily: B&R was mentioned many times during the event. What’s your understanding of this initiative?

Roland Busch: When people talk about B&R, they often talk about train connection, it really connects economies. Developing countries along the line really have a chance, because when a country is emerging, it emerges in four ways: energy, infrastructure, manufacturing industries, and better quality of lives, like smart cities and healthcare system.

The Belt and Road initiative is really tapping on the second one, basically providing infrastructure. Many countries are working on their energy systems, by the way, the expansion of the grid. It’s more than just connecting transport. The grid connection is one element and you see it could connect the energy system, the logistics sector. And you can build upon, creating value chains for higher greater value industries the after.

People’s Daily: Does Chinese market play an increasingly important role to Siemens?

Roland Busch: Chinese market is outgrowing any other market. With a GDP growth at 7.2 percent in the last four years, it seems a little bit lower. Because some markets were a little bit depressed by overcapacities, like metal and mining; big growth of economic growth of China comes from services. China’s service industry is developing faster than manufacturing industry. Still, it is higher growth in other areas.

China has a very strong manufacturing industry. China’s manufacturing industry is transforming, it will go from labour driven to technology driven. This is the reason why Chinese government rightfully creates the Made-in-China 2025, while we have Industrie 4.0 in Germany. It’s basically the same, but the Chinese way -- China started differently. You will use similar technology and engage them very heavily. And we have the technology, which can help make Made-in-China 2025 real. We are seeing that there is a big growth coming from this digital factory business in principle. We see very a strong growth in China in particular either using our software, portfolio, MindSphere or other application along with the side. Therefore it’s a clear YES for the question: China is even more important for us.

People’s Daily: Why high-tech matters in economic growth?

Roland Busch: Chinese economy started from a quite low level of service business. So China is driving the high-tech industry transformation, which is important. I think it’s a smart move from the Chinese government. Each dollar coming in GDP coming from service creates 1.2-1.3 times jobs compared with those from industry. If you want more people to be hired, you need a high level of the service industry. And you are in an Asian society of a great population, you need more services. The digital part is to address the manufacturing industry as an investment which helps strive and maintain the growth rate there too. This is the pattern which we see in China and in any other kind of industrialized countries.

China’s industry had a tremendous trajectory of growth over the last years. It was basically driven by low labour cost. As Chinese economy is going faster, it is getting more emerging and more into a mature country. Everyone’s salary is increasing, which also takes the country away some of your competitiveness. The other one is, if I’m not mistaken, the Chinese labour market peaked already two years ago. The Chinese population is still growing, but the labour market peaked. So if you’re adding momentum from more labour, looking forward to the next 30 years, this momentum is declining. So you have to close the productivity gap into bringing more technologies. This is exactly where Made-in-China 2025 hits the point. Using technology to drive productivity, including robotic companies not only on heavy lifting robot but those might replace handwork. This is the reason why we are, for example, we are leading you saw that at our Corporate Core Technology views. We are leading the R&D of autonomous robotics in China exactly for these reasons because there are so much automation and robotics going on.

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Bianji, Liang Jun)

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