China has made efforts to establish standards for service-oriented manufacturing and facilitate its new development models and formats. Photo: TUCHONG

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Service-oriented manufacturing, a new type of industry that arises from the deep integration and development of advanced manufacturing and modern service industries, is an important direction for the transformation and upgrading of the manufacturing sector. Through years of policy-driven and practical exploration, China’s service-oriented manufacturing has made remarkable achievements, with ever-growing models and formats for innovation. However, various constraints persist. In May 2024, China’s Ministry of Industry and Information Technology issued a guideline to establish standards for service-oriented manufacturing and facilitate its new development models and formats.

Propelling high-quality development

Service-oriented manufacturing can facilitate high-quality economic development and closely aligns with China’s new development philosophy. It can innovate with and optimize forms of production and organization, operation and management methods, as well as business development models, thereby giving rise to new models and formats such as large-scale models of personalization and customization, and “hardware + software + platform + service” system integration solutions. 

By establishing a shared manufacturing platform and a distributed production network, the manufacturing resources and technological advantages of China’s developed eastern region can benefit the central and western regions and other lesser-developed regions, thereby promoting coordinated regional economic development. 

Grounded in the global supply chain network, Chinese enterprises have promoted the deep participation and competitiveness of China’s manufacturing industry in the global market by providing global after-sales services and technical support, which is conducive to promoting high-standard opening up. Shared manufacturing platforms and on-demand production services can lower the threshold for small and medium-sized enterprises, enabling more of them to participate in high-end manufacturing and share the dividends of industrial development.

The development of service-oriented manufacturing can fuel domestic demand and foster a new development pattern. First, the integration of advanced manufacturing and modern service industries has reshaped the relationship between supply and demand and addressed the diverse needs of China’s super-large-scale market. It has also alleviated the information asymmetry and resource mismatch on both sides of supply and demand, and bridged consumer demand and manufacturing supply, catering to the ever-growing demand for personalized, high-end, and diversified products. 

Moreover, service-oriented manufacturing also continuously explores and creates new demand. Through the supply-side connection across fields, products, and industries, it expands supply scenarios and prompts both the manufacturing and service chains to work together and extend themselves. By doing so, service-oriented manufacturing constantly transforms potential and implicit demand into actual demand, promoting a higher level of dynamic balance between supply and demand.

Service-oriented manufacturing enhances the resilience and competitiveness of both industrial and supply chains. In recent years, rising international instability has prompted adjustments and restructuring in global production patterns and the division of labor, demanding higher levels of security, independence, and controllability in industrial and supply chains. Amid the systemic reshaping and overall transformation of global industrial and supply chains, developing service-oriented manufacturing serves as a vital strategy for adaptation and a key driver of resilience and competitiveness.

Independence and controllability, along with high flexibility, are the cornerstones of improving the resilience of industrial and supply chains. With technological innovation as its fundamental logic, service-oriented manufacturing deeply integrates information and internet technologies. By implementing full-chain management, encompassing R&D, design, manufacturing, maintenance and repair, and recycling, this approach helps to achieve precise control of the entire process of independent R&D, production, upgrading, and maintenance of both hardware and software.

Furthermore, service-oriented manufacturing promotes the close collaboration of related entities and transforms the traditional static chain model into a dynamic, flexible, and stable topology, thereby significantly improving industrial and supply chain resilience in the face of external shocks. 

In addition, service-oriented manufacturing enhances the competitiveness of industrial and supply chains by creating added value and facilitating resource integration. Added value stems from the addition of service factors, which shifts the core of the profit model from relying solely on the value of manufactured products to emphasizing the value of accompanying services and supporting solutions, including customized services, integrated solutions, and after-sales services. Resource integration is grounded in resource sharing and collaboration in service-oriented manufacturing: by sharing R&D resources and production facilities, resource advantages of the industrial and supply chains are effectively integrated and shared.

Fueling new quality productive forces 

Developing service-oriented manufacturing is an important pathway for enterprises to cultivate and develop new quality productive forces. First, it has promoted revolutionary technological breakthroughs and disruptive innovation. Service-oriented manufacturing has redefined traditional industrial relations, establishing a new industrial form that deeply integrates manufacturing and services, and spawned new technological innovation pathways and application scenarios. Manufacturing enterprises have created a new innovation model by integrating resources of service providers, conducting cross-border cooperation, and jointly developing new technologies, products, and services, which is conducive to achieving integrated technological innovation and leapfrog development.

Moreover, service-oriented manufacturing enables innovative allocation of factors of production. It creatively integrates traditional factors of production (labor, capital, land, etc.) with factors of productive services (logistics, finance, insurance, information technology, etc.), making the allocation of factors of production more flexible and diverse, and enabling enterprises to better adapt to changes in market demand.

Furthermore, the development of service-oriented manufacturing can deeply empower the transformation and upgrading of enterprises and promote the development of high-end, intelligent, and green industries. In terms of high-end development, it incorporates advanced, high-value service elements, significantly enhancing enterprises’ technological innovation capacity and products’ added value. It also integrates the application of cutting-edge technologies such as big data, cloud computing, and artificial intelligence, facilitating comprehensive intelligent upgrades encompassing digital R&D, automated production, and information management. Service-oriented manufacturing embraces green manufacturing, advocating energy conservation and environmental protection while relying heavily on professional services and energy performance contracting. This is conducive to achieving the dual strategic goals of efficient resource utilization and environmental protection.

Pathways for service-oriented manufacturing

Developing service-oriented manufacturing requires improving the policy support system to establish a comprehensive policy framework that covers the entire process. This policy system should focus on breaking down institutional barriers between the secondary and tertiary sectors, lowering market access thresholds for their integration, and streamlining industry access procedures and processes. It is necessary to eliminate policy differences concerning the manufacturing and service industries and encourage optimal reclassification of various types of industrial land. Government procurement policies also need to be improved to increase support for the procurement of products and services from service-oriented manufacturing enterprises.

Second, it is crucial to strengthen innovation-driven development. Enterprises should be encouraged to foster innovative teams and incubation platforms, while upstream and downstream enterprises in the industrial chain should strengthen collaboration to promote original and disruptive technological innovation. The manufacturing and service industries should accelerate their cooperation to enhance technological integration and innovation capacity. It is also beneficial to promote closer collaboration among enterprises, universities, research institutes, and end-users, and integrate the scientific research strength of enterprises, universities, and research institutes to further meet the needs of industrial technological innovation. Enhancing the intellectual property protection system is vital for ensuring effective protection of innovative outcomes under new models and new formats, especially the achievements of integrated innovation. In addition, China needs to establish partnerships with leading global technology companies and research institutes to share innovative achievements and jointly respond to technological challenges.

Third, research on and formulation of a system of standards for service-oriented manufacturing needs to be accelerated. Such a system requires continuous improvement and implementation, as well as exploration of replicable models. Relying on demonstration enterprises and demonstration platforms, a sound system of standards for service-oriented manufacturing can be established to lay a foundation. It is advisable to leverage the demonstration and leading effect of successful cases to promote the wider adoption and application of the standards. Meanwhile, leading enterprises and advanced regions in service-oriented manufacturing should be encouraged to actively formulate standards within the industry or region, and conduct trials of these standards at the enterprise, industry, and regional levels. China should actively participate in the governance of international service-oriented manufacturing standards, taking into account the development needs and realities of the sector. Enterprises should be guided to follow and also innovate with the standards, integrating the work of standardization with enterprises’ production and operation practices.

Fourth, it is essential to strengthen the empowerment of information infrastructure. New information infrastructure is a key link in supporting the development of service-oriented manufacturing. Sound information infrastructure is conducive to the construction of both industrial ecosystems and a virtuous cycle of development. The development of cloud computing centers, big data platforms, 5G communication networks, as well as information industry clusters and industrial parks should be prioritized. Data and resource sharing can be facilitated by establishing an efficient platform and promoting information circulation. The application of intelligent manufacturing technology needs to accelerate, driving the deep integration of the Industrial Internet, the Internet of Things, and artificial intelligence technologies with information infrastructure to enhance the overall intelligence level within the industry.

Fifth, it is vital to foster a modern industrial system. It is recommendable to establish and improve an industrial system that deeply integrates service-oriented manufacturing and modern service industries, and promote the transformation and upgrading of manufacturing to service-oriented manufacturing. Efforts should be made to accelerate the cultivation of new formats of service-oriented manufacturing, and promote the integrated development of the Industrial Internet across its value chain. Optimizing the spatial layout of service-oriented manufacturing is also important. It is advisable to cultivate a group of service-oriented manufacturing enterprise clusters and demonstration parks with international competitiveness, build a number of key laboratories and engineering research centers for service-oriented manufacturing at the national level, and strive to build a world-class modern industrial system.

 

Zhu Shujin is dean of and a professor from the School of Economics and Trade at Hunan University. Zeng Dan is a research fellow from the Hunan FTZ Innovation and Development Research Institution at Hunan University.

Edited by REN GUANHONG