Industry 4.0 – An international comparison Huawei and the Handelsblatt Research Institute present a study on the competitiveness of China, Germany, Japan and the USA

[Berlin, Germany, June 6, 2016] So far, none of the four major economies competing in the digitisation of production – China, Germany, Japan and the USA – have managed to gain an unbeatable edge. The manufacturing industry in Germany can reap special benefits from the substantial service expertise of the German ICT sector. Besides competition, partnerships form another vital source of innovation.

These are just some of the findings of the study "Industry 4.0 – An international comparison", which was commissioned by Huawei Technologies Germany and carried out by the Handelsblatt Research Institute. The findings were presented today as part of the Handelsblatt dialogue at the Hotel de Rome in Berlin. The study compares the competitiveness of China, Germany, Japan and the USA in terms of Industry 4.0, analysing the strengths and weaknesses of their economic policies.

Matthias Machnig, State Secretary at the Federal Ministry for Economic Affairs and Energy, emphasises the need for international cooperation to provide German enterprises with access to bigger markets. "The study carried out by the Handelsblatt Research Institute on behalf of Huawei makes an important contribution to an analysis of the international competitive environment. It highlights steps that Germany can take to secure an Industry 4.0 leader position and bolster the competitiveness of its industrial base. We particularly welcome international partnerships such as the cooperation in Industry 4.0 between Huawei and SAP."

Victor Zhang, President of Huawei European Public Affairs and Communications, explains: "The study confirms the advantages of a close cooperation between Germany and China. Germany is able to benefit from the expertise of Chinese companies in ICT hardware, and China profits from the service expertise of Germany's ICT sector. An international network and shared standards strengthen the competitiveness of both countries. By focusing on win-win situations and persisting in their work together, Huawei and its partners will achieve innovative breakthroughs."

Dirk Hinrich Heilmann, Managing Partner of Handelsblatt Research Institute: “No industry sector is as strong as the German when it comes to staying innovative through permanent micro-innovation. However, it is not to be taken for granted that Germany will also be leading in the field of Industry 4.0. The study hints that there is room for improvement in some areas.”

This study underscores the significance of the digital transformation in all four countries surveyed:

• The USA is diversified and excellently positioned, possessing a very strong ICT sector. However, it is questionable whether its industry is substantial enough to benefit from the development.
• Germany's position is reversed, with a very powerful industrial base. The questions that arise here concern whether Germany's digital economy is strong enough to prepare the industry for the next industrial revolution, and whether, in light of its own strength, the industry itself can see a need for action, and demonstrate the requisite will to innovate.
• Japan has an industry renowned for innovation, and the political will to support Industry 4.0 However, the nation's economic position has been difficult for some years.
• China brings up the rear in most of the rankings, but the country has developed at breathtaking speed in recent years. This applies not only to its growth rates, but also to sectors in the context of Industry 4.0. Given the fact that China's ICT industry is prospering, unlike that of Germany, if it can continue its trend in Industry 4.0, it may be able to make even more headway.

The study draws the following conclusions for Germany:

• Industry expenditure for research and development should be increased. The German ICT sector lags behind in the international comparison, but its service expertise is competitive.
• International partnerships should be pursued with more vigour. Shared standards would secure access to much larger markets for German enterprises from the outset. A cooperation with China, with its growing ICT industry and large market, presents itself as a good opportunity.
• Germany must also improve its approach to promoting entrepreneurship. In addition to the difficulties in gaining access to venture capital, a paradigm shift is required: at present there is insufficient willingness to take risks.
• Investment has to increase in order to meet the growing requirements of many Industry 4.0 applications.

About the study.

The study "Industry 4.0 – An international comparison" analysed the competitiveness of Industry 4.0 in two stages. The first stage consisted of creating an overview of the significance the topic enjoyed in each of the four countries. The main points of the public discourse were elaborated and the measures undertaken by private businesses and policymakers to promote digitisation compared. The second stage employed five categories in a macroeconomic strategy analysis to examine the prerequisites that each of the four countries possess to successfully transform their economy to the Industry 4.0 standard. Each of the categories was operationalised with a set of indicators and subjected to a quantitative and qualitative comparison using macroeconomic parameters.